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Yahoo looks to sell off core biz; as pressure mounts

05-April-2016
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Yahoo looks to sell off core biz; as pressure mounts

The mounting pressure on Yahoo from shareholders has finally lead the erstwhile internet giant to announce that it is ready to receive preliminary bids by interested parties, with a deadline of April 11 now having been set. A total of 40 suitors, including the likes of Microsoft, Time Inc., Verizon Communications, AT&T, IAC Interactive, etc. are said to be interested in bidding to buy out Yahoo's core business.

Earlier, in December 2015, CEO Marissa Mayer's plans for a turnaround received a setback when the Yahoo board did a U-turn on a proposed plan to spin off its $30 billion stake in Alibaba; instead, saying that it would spin-off its stake in its core business, in online media and search, into a separate publically traded entity.

Under Mayer's guidance, who was appointed in 2012 to steer the company out of the financial morass it found itself in, Yahoo has had made some stuttered progress; reporting positive revenue growth in spurts but despite massive layoffs and organizational trimming, it has failed to pull itself out of the quicksand. Last year, Yahoo announced that it would be letting off more than 1,000 employees worldwide. Earlier this year, it decided to shut down Yahoo Screen, its online streaming service that was expected to be an answer to Netflix.

There have been some positive movement in terms of revenue growth but these have been in spurts and too inconsistent to have a large scale impact. Further, allegations of mismanagement of company resources and lavish spends by employees of the company's money have further added to shareholder distrust.

In a February 1, 2016 report, research firm eMarketer's Senior Forecasting Analyst Martin Uteras said, “Although they are growing, Yahoo’s so called MAVENS (mobile, video, native and social) businesses have not gathered enough momentum to turn around Yahoo’s advertising business, and we will continue to see the company’s market share decline in the near future.”

eMarketer currently ranks Yahoo fourth globally in the search advertising market with a share of just 2.1 per cent in 2016, down from 2.4 per cent in 2014. In display advertising, Yahoo is expected to take just 2.5 per cent of the total market share in 2016, compared to Google's 11.6 per cent and Facebook's 20.6 per cent, while in mobile advertising, eMarketer estimates that Yahoo's share further slid to 1.5 per cent in 2015 from 1.8 per cent in 2014.

At a time when newer platforms like Facebook and Twitter are increasingly corralling online ad revenues, Yahoo always had an uphill battle to fight and one that it seems to have failed to find a strategic solution to. For example, eMarketer said Twitter surpassed Yahoo in total US digital display ad revenues for the first time in 2015, this despite the fact that Yahoo's overall display ad revenues have increased. However, this is not affecting its market share due to more aggressive growth by the likes of the former two social platforms.

In India, speaking to digital advertisers suggests that many see Yahoo has a spent force with many citing that the quality (and quantity) of traffic from Yahoo Networks has been plunging for quite some time. 

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