Yahoo’s sea of troubles might have led to it to an unenviable position as it looks for potential buyers for its core business but despite appearances, analysts expect suitors to line up for the internet giant, driven by the promise of its media assets and a still strong visitor base. With the deadline for submitting bids having been extended by another week, to April 18, 2016, analysts are expecting more big names to consider making a move for Yahoo’s assets. The Wall Street Journal reports that as many as 40 suitors are expected to take part in the bidding.
The problem in Yahoo’s case, say analysts, is that despite Yahoo’s inability to make money out of its media properties, many potential suitors will be aware that this does not reduce the significance of Yahoo’s assets across search, mobile and the internet.
Manjunath Bhat, Research Director of Gartner agrees that any potential sale will need to be weighed in terms of the number of users the acquiring company will gain. He called Yahoo’s case as one of “iconic” brands which has gotten “tarnished” over the years. “The acquiring company can capitalize on millions of monthly users and its advertising technology viz. the Gemini platform to cross-sell other products. Yahoo Finance and News are the most valued assets compared to Search as Yahoo leveraged Bing on the desktop search front, up until mid-2015 when it severed the exclusivity deal with Microsoft. Yahoo has failed to make a dent in the internet ecosystem despite acquisitions like Tumblr because it failed to have a network effect and bring in additional revenue,” he said.
Meanwhile, the Wall Street Journal has reported that Verizon, the Daily Mail (backed by private equity companies), IAC and CBS are the front runners as potential buyers. Microsoft is also rumoured to be interested, as is Google. The acquisition of Yahoo makes sense for Verizon, which recently acquired AOL. Yahoo’s media assets could be a great addition to complement the AOL portfolio along with other digital advertising properties that Verizon stands to gain like the video ad unit BrighRoll, social network Tumblr, etc.
Similarly, Google might feel that an acquisition of Yahoo might make strategic sense by preventing a rival from acquiring these assets and thus avoiding the possibility of any major rivalry coming up in the future.
On the possibility of Microsoft’s interest, Bhat said that the key would be how does a Yahoo acquisition really further Microsoft’s ‘mobile-first, cloud-first’ strategy?
“Microsoft claimed to have made a bid back in 2008 as well but was rebuffed by Yahoo. A lot has changed since then with social networks like Facebook and Twitter becoming the primary source of Internet traffic in addition to Google Search. Yahoo does not have a lion’s share on its messaging platform either that yielded the market to the likes of WhatsApp and Instagram. Since Microsoft already has Skype, Yahoo messenger does not give it any added benefit from a technology perspective. The number of Yahoo email users could migrate to Microsoft Live or Hotmail, but Microsoft has to be careful after what it has experienced with other acquisitions such as Nokia,” he added.