Yahoo goes under the hammer

Want your own search engine? One-time leader Yahoo is to be sold for parts or repair

composite yahoo hammer

Firms that have signed the required Non-Disclosure Agreements (NDAs) have until Monday April 11th to submit initial bids to Yahoo for purchase of all or part of the company’s assets.

Some 40 or so companies have supposedly expressed interest, whether in Yahoo’s core Web business or pieces of it (such as Tumblr and Flickr). Some may also bid to purchase Yahoo’s stakes in Chinese ecommerce giant Alibaba Group. Others may be interested in buying into Yahoo Japan (a joint venture between SoftBank and Yahoo that now, ironically, relies on Google for its search results).

Potential buyers are being advised that Yahoo’s earnings and revenue will continue to decline this year. Revenues for 2016 are projected to be $3.5 billion, down from $4.1 billion last year and $4.4 billion in 2014. Earnings before depreciation, taxes and amortisation will fall to $750 million this year, according to tech website Re/code.

Notably, Yahoo is paying more to acquire traffic this year. The company pays TAC (Traffic Acquisition Costs) to get traffic from Mozilla’s Firefox browser and Oracle’s Java, amongst others. Costs reached $875 million USD last year, rising from around $200 million in 2014, and are projected to exceed $1 billion this year.

Why should you care?

Before Google, Yahoo was the search engine of choice for many. Yahoo was the first search engine to pursue ambitions to become a portal like CompuServe and AOL before it; a one-stop destination for anyone who also wanted news, stock market results, weather reports, horoscopes and more. And it did so aggressively, more often acquiring than partnering with other companies to build out its offerings.

In most markets outside the US and Japan Yahoo has already become a footnote in history, with ex-Google CEO Marissa Mayer’s attempts at a turnaround seeming to have failed spectacularly.

And yet… could a cashed up buyer emerge that gets the assets for a song and is able to turn around the company’s failing fortunes?

Google needs competition, and not just from Facebook, Apple and Amazon. And many of us who remember Yahoo’s early glory days can’t help but regret news of the company’s likely demise.

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About the Author Jeremy Templer

Jeremy is a Partner and Senior Consultant at SureFire. Jeremy has been working in search since 1996, when he joined the Australian search engine, LookSmart. After relocating to San Francisco, he was instrumental in the development of the company’s paid search ad platform. At analytics company Coremetrics (now owned by IBM) he established an in-house search agency managing campaigns for Coremetrics clients such as Macy’s, Bass Pro and Lands End. At Acxiom he managed members of the pioneering SEO firm Marketleap and worked with clients such as Capital One, American General Finance and Kaiser Health. Joining SureFire in 2009, he is the head of Paid Search Advertising and oversees the delivery of AdWords and other PPC campaigns. He also helps clients make sense of their website data.