Under immense pressure from activist shareholder Starboard Value LP, Marissa Mayer, its chief executive, is focussed on its sales, and meeting potential bidders and investors.
In a development that could play a significant role in helping Yahoo Inc.’s get a better price while auctioning off its core business, its first quarter results for this year beat estimates by Wall Street analysts by an extremely thin margin.
Of late, Yahoo has come under intense pressure from activist shareholders such as Starboard Value LP and others to which the internet pioneer has responded by ramping up a sale of its email, media and other web businesses under Marissa Mayer, it’s CEO.
Contrasting her earlier style, Mayer during a call to analysts harped on the message that her focus was on sales and meeting with potential bidders and investors while earlier she discussed plans to spin off the company’s core business assets, including its stake in the Chinese e-commerce giant, Alibaba Group Holding Inc.
The first bidding round closed on Monday. According to sources, Verizon Communication Inc. has put in an offer and is very close to be shortlisted. Among others private equity firms, Bain Capital LLC, Apax Partners LLP, Warburg Pincus LLC, Apollo Global Management LLC and TPG Capital LP, have also been shortlisted.
As per sources, Yahoo may want to play safe and close the sale by June before its AGM wherein Starboard wants shareholders to replace its board of directors.
“The numbers are providing some comfort things aren’t falling off a cliff. If you’re bidding for this company it’s nice to see them doing what they said they would do,” said Ronald Josey of JMP Securities.
Although its revenues have fallen by 11.3% to $1.09 billion its still managed to squeak past analyst’s expectations of $1.08 billion. Incidentally, this is its first decline after posting four straight quarters of growth.
Yahoo has reported a net loss of 10 cents a share, equivalent to $99 million. In comparison, in the previous year, it had posted a net profit of $21 million, or 2 cents per share. On the bright side, Yahoo earned an EPS of 8 cents a share against a Wall Street estimate of 7 cents a share.
“The results should build a little bit of confidence for investors that the sale is going to be completed,” said Murali Sankar, an analyst with Boenning & Scattergood Inc.
Despite the results, Mayer has told analysts that a spinoff is still in the cards. As per Victor Anthony, an analyst at Axiom Capital, this shows that she is still focussed on the sale.
Significantly, Yahoo has forecast its second-quarter GAAP revenue to be in the range of $1.05 billion to $1.09 billion, which is below analysts’ expectations of $1.10 billion.