Yahoo is Nearing the End of its Auction

  • Joanna Mei
  • July 18, 2016
  • 0

Yahoo’s auction is finally ending as its final bids are underway. Yahoo is selling its email, search engine, advertising and media operations and sales are due Monday. The board has to make a decision soon for those who asked for anonymity (bidding was confidential).

While Yahoo was once used by many people two decades before, Yahoo has unfortunately been overshadowed by bigger companies such as Facebook and Google. Due to Yahoo’s failed attempts at marketing and management, Yahoo is now only occupied by a small portion of internet goers. With Yahoo’s dwindling success Yahoo has decided to raise the white flag.

Yahoo had started their auction since February. Yahoo’s goal was to separate its more successful Asian business counterparts, Alibaba and Yahoo Japan, from its declining businesses.

Some bidders for Yahoo’s auction include companies such as AT&T, Verizon, Quicken Loans, and many private equity firms.

The sales of certain businesses will vary in value depending on the assets that are included but Wall Street estimates that the accumulated amount earned by Yahoo will amount to $6 billion including intellectual property and land.

Several companies have gone public with what they are planning to do with Yahoo. Verizon plans to combine Yahoo and AOL. The private equity firms, on the other hand, are going to diminish costs and hopefully profit from Yahoo’s remaining consumers.

The auction itself is competitive and there are no deal breakers as of yet.

While the auction is going on, Yahoo’s business continues to deteriorate with its new products, Radar and information bots for Facebook Messanger, failing to create an impact. Yahoo will release its second-quarter financial report on Monday. Analysts expect the report to record significant reduction in revenue and profit.

Yahoo’s sales are slow because of a deal made with Mozilla by Yahoo’s chief executive Ms. Mayer. Yahoo could be forced to pay an immediate payment of $1 billion to Mozilla.

In 2014, Mozilla accepted a deal proposed by Yahoo to pay $375 million a year to make Yahoo their primary search engine. This deal paid Mozilla $100 million more than a deal offered by Google.

In addition to the deal, Ms. Mayer gave Mozilla the right to demand any remaining payments if Yahoo were to be sold.

For Mozilla to get this payment, they would have to prove that Yahoo’s search engine service was hurting Mozilla’s brand name. If Mozilla were to change its search engine, Yahoo would only have to make up the difference between its $372 million guarantee and the cost compensated by Mozilla’s new partner.

With this revelation, people are expecting winning bidders to continue with Ms. Mayer’s expensive investments in Yahoo’s search engine despite its losing competition with Google. Despite Yahoo’s losing battle, its search engine racks up 42% of Yahoo’s $5 billion revenue.

Yahoo officials are refusing to talk about their contract with Mozilla. Mozilla is also refusing to speak due to the contract’s confidentiality clause but reveals that Mozilla has prevented itself from any losses.

Despite all these factors, investors are putting their trust in Yahoo, hoping that it can compete with Google.

Featured Image via Yahoo

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