At the height of its fame as a search portal, Yahoo was well worth $100 billion. In late 2004, its core business alone was valued at nearly $52 billion.
The tide has turned, though. The Wall Street Journal reported on Thursday that the ailing internet company is now up for grabs for only about $2 billion to $3 billion – significantly lower than the $4 billion to $8 billion range that analysts previously estimated.
A bit of chaos, however, ensued as CNBC’s David Faber called the report “completely wrong,” deeming the reported price lower than the lowest bids Yahoo was offered in the first wave of bidding last month.
Too Low An Estimate?
The focus has to be on what is being bid for: the different assets that Yahoo can bring to the table, according to SunTrust managing director Bob Peck.
“Given there are still multiple bidders, and Yahoo likely is looking for the cleanest way to maximize value, bids for the core may still come in higher than the reported $2 billion to $3 billion, depending on what assets are included in the bids," Peck wrote, as quoted by Business Insider.
The WSJ figure, he explained, would probably only be for Yahoo’s online advertising segment, which comprises its online properties. Those properties are producing about $300 million earnings before interest, taxes, depreciation and amortization.
Yahoo’s web intellectual property, though, is already estimated to be within $1 billion to $3 billion, which could inflate its core value. The company could also include its real-estate property as well as rights to Yahoo Japan royalties, each valued at $1 billion.
Yahoo has a stake in Chinese e-commerce giant Alibaba and sits on a wealth of over 6,000 patents, thanks in part to its numerous acquisitions. These acquisitions include social networking site Tumblr, self-destructing message app Blink, and digital content tech Bookpad.
Offers for the second round of bids should come in by the first week of June, and it is unknown whether succeeding bidding rounds are necessary.
Lost Glory
Bidders have reportedly lowered their offers after learning about Yahoo’s outlook and witnessing presentations from Yahoo CEO Marissa Mayer, who is hounded by charges of inability to turn the company’s fortune around.
Industry insiders, who see hope in the struggling company but believe drastic moves may have to be done, study the downfall of the once leading search portal.
Sue Decker, who could have sat as Yahoo CEO, said the firm was involved in too many matters without focus and success in one or two areas. Yahoo could go private again or become part of a much bigger company to stay afloat, she added, emphasizing the critical role of a change in leadership.
At its peak as a tech industry giant, Yahoo was worth $100 billion. In late 2004, it was valued at about $52 billion, a bigger market cap at that time than Amazon, Apple and Google.
Since then, however, Google became an advertising powerhouse, Apple launched the iPhone, and Amazon rose to the top with massive revenue streams. Yahoo faced dark days ahead, with its market value hitting around $56 billion in late 2005 and no longer reaching that level since.
Photo: Yun Huang Yong | Flickr
