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Bloomberg's Sherman on the Favored Bidders for Yahoo (Audio) · Bloomberg Intelligence

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  Speaker 1: Charlie from the Bloomberg newsroom. I'm Jill Schneider. This news
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  Speaker 1: You're listening to taking stock with Kathleen Hays and Pim
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  Speaker 1: Box on Bloomberg Radio. Yahoo. Yahoo said that its revenue
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  Speaker 1: in the second quarter fell fifteen percent. It's operating profit
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  Speaker 1: fell sixtent. The company also acknowledge that Tumbler, this is
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  Speaker 1: the biggest acquisition under its current chief executive Marissa Mayram,
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  Speaker 1: was now worth only a third of the one point
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  Speaker 1: one billion dollars that Yahoo paid for it in twent thirteen.
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  Speaker 1: For more on Yahoo, I want to bring It. Alex Sherman,
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  Speaker 1: Bloomberg News, m and a reporter focusing on technology, media,
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  Speaker 1: and telecoms. He can be followed on Twitter at Sherman
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  Speaker 1: four nine four nine all right, Sherman four nine for
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  Speaker 1: nine tell us about the numbers when it comes to Yahoo,
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  Speaker 1: like no one, No one really cares about the numbers anymore, PIM.
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  Speaker 1: Because this company is for sale. This will be Marrissa
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  Speaker 1: Meyer's last earnings call where Yahoo is an independent company. UH,
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  Speaker 1: at least in terms of you know, it'll be announced
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  Speaker 1: that the deal'll have to close, so she she may
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  Speaker 1: stick around for one or two more, but this will
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  Speaker 1: be the last one where there's no buyer for Yahoo.
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  Speaker 1: Unless something really, really surprising happens. We should have UH
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  Speaker 1: an idea or or in fact, an announcement of who
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  Speaker 1: buys Yahoo within the next week or so. Final bids
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  Speaker 1: were due yesterday. Verizon is a likely buyer of Yahoo. UH.
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  Speaker 1: Dan Gilbert's Quicken loans as a possible buyer. UH. A
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  Speaker 1: private equity firm called Vector Capital is still in the mix. UH,
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  Speaker 1: TPG and a t T also made bids. Those are
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  Speaker 1: the five. They're a little less likely UH to win
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  Speaker 1: as far as the sources that I have spoken to,
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  Speaker 1: But Yahoo is UH is not a good business these days. Him. Uh,
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  Speaker 1: it's it took a four eight two million dollar uh
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  Speaker 1: impairment charge for Tumbler, as you alluded to. That was
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  Speaker 1: Marissa Meyers, really her biggest deal, and during her tenure
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  Speaker 1: that yeah, who acquired that in Uh. You know, revenue
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  Speaker 1: continues to sort of bump along. The Yahoo posted revenue
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  Speaker 1: of one point three billion, that's up five percent year
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  Speaker 1: over year, but earnings are down. They're down about forty
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  Speaker 1: three percent per share from a year ago. And it's
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  Speaker 1: tough when a company is going through a very well
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  Speaker 1: publicized sale process us to motivate employees and to keep
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  Speaker 1: customers happy. And Yahoo has struggled. Yahoo has struggled. I
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  Speaker 1: wonder if you just go back to that Tumbler acquisition
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  Speaker 1: just for a moment. One point one billion dollars of
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  Speaker 1: shareholder money, right, this is not this is shareholder money.
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  Speaker 1: This is this is money that is owed to the shareholders.
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  Speaker 1: And it seems nobody cares that they're going to write
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  Speaker 1: off like two thirds of the entire purchase. Yeah. The
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  Speaker 1: reason I think no one cares is that Yahoo has
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  Speaker 1: traded as basically a stub for Ali Baba uh for
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  Speaker 1: years now. So yeah. In other words, if you look
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  Speaker 1: at Yahoo, whether it goes up or down on a
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  Speaker 1: given day with the market, it is almost always in
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  Speaker 1: line with whether Ali Baba moves up or down. So
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  Speaker 1: the Yahoo business in fact is actually worth zero uh.
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  Speaker 1: If you calculate sort of the some of the parts analysis,
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  Speaker 1: the market gives Yahoo business no worth whatsoever, which is
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  Speaker 1: part of the reason why Yahoo is actually selling its
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  Speaker 1: core business right now. Marissa Mayer realized is that if
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  Speaker 1: you want to maximize share holder value, we have to
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  Speaker 1: sell this thing for at least a few billion dollars
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  Speaker 1: because we're not getting credit for any of it right now.
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  Speaker 1: So Yahoo is made up of a steak in Ali Baba,
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  Speaker 1: a minority steak in Ali Baba, a steak in Yahoo Japan.
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  Speaker 1: Uh soft Bank owns the majority of the rest of
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  Speaker 1: Yahoo Japan, and then the Yahoo core business. So these
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  Speaker 1: three parts of make up Yahoo total. The Yahoo core
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  Speaker 1: business is only worth about four billion dollars or so uh.
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  Speaker 1: You know, the Yahoo steak in and Yahoo Japan is
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  Speaker 1: worth about seven and nine billion dollars depending on when
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  Speaker 1: you look. Uh. And then the rest of Yahoo's worth
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  Speaker 1: is all in Ali Baba, which is a lot more alright,
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  Speaker 1: So just one one last point question for you here,
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  Speaker 1: Alex Sherman. Um the longer that this all takes to
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  Speaker 1: resolve itself, what happens those businesses? Do they just die
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  Speaker 1: on the vine? It's not like there's not a lot
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  Speaker 1: of competition that's out there doing what they're supposed to
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  Speaker 1: be doing every day. Yeah, it's a great question, and
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  Speaker 1: I think it will depend on who the buyer is here,
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  Speaker 1: so soon we get an announcement within the next week
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  Speaker 1: or so. Each buyer has its own plan for Yahoo.
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  Speaker 1: So you know, if TPG, which is a private equity firm,
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  Speaker 1: buys Yahoo, you can expect some of those businesses to
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  Speaker 1: die on the vine. Uh. They they will, you know,
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  Speaker 1: do what a typical private equity firm does. They'll slash
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  Speaker 1: and burn, they'll fire people, they'll shut down businesses. Uh
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  Speaker 1: and and they'll sell off parts that they don't want.
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  Speaker 1: If Verizon buys it, some of those businesses may stick
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  Speaker 1: around for a little while longer because you can just
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  Speaker 1: merge Yahoo in a o L uh in a o
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  Speaker 1: L provides some uh that run by Tim Armstrong, still
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  Speaker 1: within Verizon, run some businesses that are sort of symbiotic
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  Speaker 1: to Yahoo. So some of that, some of the content plays,
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  Speaker 1: and some of the ad technology that Yahoo has can
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  Speaker 1: theoretically be merged with a O L And so some
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  Speaker 1: of the employees there may live to see another day.
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  Speaker 1: Tell us about soft Bank and the deal to buy
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  Speaker 1: ARM Holdings. So this one is a little bit of
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  Speaker 1: a surprise in terms of who the buyer is. Uh
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  Speaker 1: uh arm You know, is this chip licensing their chip designer,
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  Speaker 1: chip designer exactly. They don't actually make intellectual intellectual property,
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  Speaker 1: so Softing is not a semi connector company. So in
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  Speaker 1: terms of a buyer, you might think, oh, that's a
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  Speaker 1: little weird Softing because this Japanese wireless provider that owns
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  Speaker 1: or so of sprint in this country. So the idea
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  Speaker 1: that they want to buy a chip designer is a
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  Speaker 1: little out of the box. That's it. For regulatory reasons,
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  Speaker 1: it's a little harder for someone in the game to
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  Speaker 1: actually buy ARMED that the deal would likely be nixed
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  Speaker 1: by regulators. So if someone wanted to do this, it
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  Speaker 1: might have to be somebody out of the box. And
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  Speaker 1: Masasan is a three year plan for soft Bank. It's
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  Speaker 1: a bet on the Internet of things. That's really why
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  Speaker 1: he did this, thanks very much. Alex Sherman Technology media, telecom,
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  Speaker 1: mergers and acquisitions reporter for Bloomberg News. You can follow
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  Speaker 1: him on Twitter at Sherman for nine for nine, this
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