Yahoo tells potential buyers earnings and revenue will continue to plunge: report

Yahoo’s earnings and revenue will keep plummeting this year, the company is telling would-be buyers, according to a report Wednesday.

The struggling company has set Monday as the deadline for preliminary bids from suitors, who must specify the assets they want and the price they would pay, the Wall Street Journal has reported.

Tech website Recode said Wednesday that it had obtained pages from the “book” of information about Yahoo’s financial situation that is given to parties interested in bidding on the firm. The website also said it talked to a number of possible buyers.

“While the Yahoo book is unusually confusing and perhaps purposefully so . . . it shows a company in what has been a serious free fall,” the Recode article said.

Although Yahoo has been slimming its workforce – more than 400 California jobs cut recently, for example, toward a company-wide goal of 1,600 fewer workers – CEO Marissa Mayer has been loading up key employees with share grants so they don’t jump ship, the article said. “At well over $400 million annually now [in share grants], that’s double what it was only a few years previously,” according to Recode. Activist investor Starboard Value, which has launched a proxy fight and seeks to replace the entire Yahoo board, referred to “egregious compensation” at the firm, in a March 24 letter to Yahoo shareholders.

Yahoo estimates its revenues, minus what it pays to companies that direct traffic to it, will drop to $3.5 billion this year, from $4.1 billion in 2015 and $4.4 billion in 2014, Recode reported. Yahoo estimates that earnings before depreciation, taxes and amortization will fall to $750 million this year from $1 billion in 2015 and $1.4 billion in 2014, the website said.

The “traffic acquisition” expenses paid to companies like Mozilla and Oracle that direct traffic to Yahoo have skyrocketed from around $220 million in 2014 to $875 million in 2015, and will hit an estimated $1 billion this year, Recode reported.

The website painted a picture of a messy and opaque sale process in which “Yahoo has shifted around everything so much that it is not easily clear, if at all, what is making money and what is not,” Recode reported. “Yahoo execs — including Mayer and [chief financial officer Ken] Goldman — have declined in meetings to give more detailed answers until buyers are approved for the next round.”

All that said, however, would-be buyers are not running and screaming from Yahoo, Recode reported. The suitors Recode spoke with were all planning bids, because the company is one of the biggest in the Internet business and “it is hard to be able to buy that kind of scale easily.”

 

Photo: Yahoo CEO Marissa Mayer (AP/NBC, Peter Kramer, file)

 

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