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Verizon May Now Be Front-Runner For Yahoo, As Comcast, Google Bail

Verizon ( VZ ) is the front-runner for Yahoo ( YHOO ), now that several rumored bidders including Alphabet ( GOOGL ) unit Google and Comcast ( CMCSA ) have dropped out, the Wall Street Journal reported on Sunday . Yahoo reportedly sent a letter to possible buyers last month, asking them to submit preliminary bids, which are said to be due today. Some buyers might be interested in all or part of Yahoo’s core Web business, while others might want Yahoo’s stakes in Alibaba Group ( BABA ) or Yahoo Japan. Some reports estimate that as many as 40 groups have expressed interest in the wilting Sunnyvale, Calif.-based Web portal. Royalties from Yahoo Japan, thousands of patents and plentiful real estate could boost Yahoo’s bids, wrote SunTrust Robinson Humphrey analyst Robert Peck in a recent research report. Minus a “potential upside” from those assets, SunTrust expects Yahoo to fetch bids in the $6 billion-$8 billion range for its core business. Yahoo has not commented. Yahoo rose 1 cent to 36.52 in the stock market today  Yahoo stock has sunk about 20% on growth concerns, compared to where it was trading this time last year. Verizon stock rose 0.7% to 51.73. AT&T ( T ), IAC/InteractiveCorp ( IAC ) and Time ( TIME ) have also decided not to join the bidding for Yahoo and its core assets, the WSJ said. Yahoo’s core assets include a 15% stake in China e-commerce giant Alibaba and holdings in Yahoo Japan. Time concluded it would be too hard to revive Yahoo’s finances, the WSJ said. Most of Yahoo’s value comes from its 15% stake in Alibaba. Yahoo’s market cap is $34.5 billion. Verizon was likely to face competition from private equity companies, including Bain Capital, Advent International and TPG, according to the WSJ report. YP Holdings, formed in 2012 from AT&T’s Yellow Pages, planned to bid for Yahoo, Bloomberg said. PE firm Cerberus Capital Management owns 53% and AT&T 47%. Verizon, with a market cap of $210 billion and about $4.5 billion in cash on its balance sheet, has the means to purchase Yahoo’s declining Web assets and a logical blueprint for folding them into its fledgling digital media business. Those include AOL properties it acquired last year for $4.4 billion, according to the WSJ report. Verizon has identified video services and online advertising to be the company’s next avenue for growth. It plans to combine customer data from smartphones with advertising inventory on AOL — and possibly Yahoo — to create an online advertising technology platform that can compete with Web giants such as Facebook ( FB ) and Alphabet-owned Google. “Verizon is trying to pivot its business from analog to digital,” Craig Moffett, senior analyst at telecommunications-research firm MoffettNathanson, told the WSJ. “Verizon believes that a combined AOL/Yahoo would provide the digital advertising platform they need to execute their video reinvention strategy.” Either way, news site Re/Code said that documents Yahoo provided to potential bidders predict that Yahoo’s 2016 revenue will drop by close to 15% and its earnings by more than 20%. Yahoo CEO Marissa Mayer has been unable to spark significant earnings and revenue growth since she came aboard in 2012, as Yahoo has struggled to build online- and mobile-ad revenue vs. rivals Google , Facebook and others. Yahoo is set to report Q1 earnings after the close Tuesday. Analysts polled by Thomson Reuters expect Yahoo’s Q1 revenue to fall 12% year over year to $1.08 billion. Yahoo is guiding Q1 revenue at $1.05 billion to $1.09 billion, down 14% to 11%. FactSet expects Yahoo to report revenue ex-TAC of $847 million, down 18%. TAC, or traffic acquisition costs, refer to fees Yahoo pays other sites to carry its ads. Yahoo TAC spending has climbed during each quarter of 2015. The analyst consensus calls for Yahoo’s EPS ex items to plunge 53% to 7 cents.

Yahoo News Sites Attract British Tabloid Daily Mail: Report

Yahoo ( YHOO ) stock rose Monday as British tabloid newspaper Daily Mail reportedly confirmed its interest in the Sunnyvale, Calif.-based Web portal, attracted to its news and media properties. The Daily Mail said that it is in preliminary talks with other investors to launch a bid for Yahoo, the Wall Street Journal reported Monday, confirming a previous WSJ report out Sunday. Buying Yahoo’s media operations could help the Daily Mail establish a stronger presence in the U.S., where it launched a website in 2012, the WSJ  said. “Given the success of DailyMail.com and Elite Daily, we have been in discussions with a number of parties who are potential bidders,” the WSJ said it was told by a spokesperson for DailyMail.com. Discussions are said to be at a very early stage. A bid by the Daily Mail could occur through a private equity partner acquiring all of Yahoo’s U.S. operation, according to the WSJ. After that, the Daily Mail would take over Yahoo’s news and media units, which include Yahoo Finance, Yahoo Sports and Yahoo News, the report said. It’s also possible a private equity firm would acquire Yahoo and merge its media and news properties into a new company that would include the Daily Mail’s online properties, the report said. The Daily Mail has spoken with six private equity firms in regards to a bid, including General Atlantic, the WSJ said, citing an unnamed source familiar with the matter. The Daily Mail & General Trust PLC is just one of an estimated 40 groups that have expressed interest in buying Yahoo. Yahoo sent a letter to possible buyers last month, asking them to submit bids. Some buyers might be interested in all or part of Yahoo’s core Web business, while others might want Yahoo’s stakes in China e-commerce giant Alibaba Group ( BABA ) or Yahoo Japan. Yahoo pushed back the deadline for bids to April 18 from April 11, according to media reports. Verizon Communications ( VZ ) is said to be planning to bid for Yahoo’s Web business and its holdings in Yahoo Japan, according to Bloomberg. Google, the main division of Alphabet ( GOOGL ), reportedly is considering a bid for Yahoo’s core business. Time ( TIME ); Japan’s SoftBank ( SFTBY ), the majority owner of Yahoo Japan; and several private equity firms also are kicking the tires, reports Bloomberg. Yahoo has also held meetings with IAC/InterActiveCorp. ( IAC ) and CBS Corp. ( CBS ), the WSJ said. One-time potential suitors including AT&T ( T ) and Comcast ( CMCSA ) have decided against bidding, Bloomberg reported.  Microsoft ( MSFT ), which failed with a hostile bid for Yahoo in 2008, also won’t bid, according to Bloomberg. Re/Code said last week that documents Yahoo provided to potential bidders predict the Web portal’s 2016 revenue will drop by close to 15% and its earnings by more than 20%. Yahoo has recently implemented layoffs and begun the process of selling itself and spinning off its hefty stake in Alibaba, and it is also in the midst of a proxy fight seeking to oust its entire board. Yahoo stock was up more than 1% in midday trading in the stock market today , near 36.50. Yahoo stock touched an eight-month high of 37.50 last week.

Yahoo Extends Bidding Deadline, But Will Google And Verizon Bite?

Yahoo ( YHOO ) has pushed back the deadline for bids on the company by one week, to April 18 rather than this coming Monday, according to media reports. “We’ll see who bids — and, more to the point, who gets passed through to the next round. It’s a little like the ‘Hunger Games,’ except you get to live and then have to overhaul the Silicon Valley Internet giant,” Re/Code wrote  Friday. Verizon Communications ( VZ ) is said to be planning to make a  first-round bid for Yahoo’s Web business and is also planning to bid for the company’s holdings in Yahoo Japan to help sweeten its offer, Bloomberg said. Google, the main division of Alphabet ( GOOGL ), is also reportedly considering a bid for Yahoo’s core business. One-time potential suitors including AT&T ( ATT ) and Comcast ( CMCSA ) have decided against bidding, the Bloomberg report said.  Microsoft ( MSFT ), which failed with a hostile bid for Yahoo in 2008, also won’t bid, according to the report. Time ( TIME ); Japan’s SoftBank ( SFTBY ), the majority owner of Yahoo Japan; and several private equity firms also are kicking the tires, reports Bloomberg. Verizon and its subsidiary AOL are working with at least three financial advisers on its bid, the report said. Re/Code said earlier this week that documents Yahoo provided to potential bidders predict the Web portal’s 2016 revenue will drop by close to 15% and its earnings by more than 20%. Yahoo’s inability to fully embrace the transition to mobile has meant that “usage and monetisation are moving to areas where Yahoo is unable to follow,” wrote Edison Investment Research analyst Richard Windsor in a research note Friday. Windsor said that Yahoo has been “buying traffic in order to prop up the popularity of its online properties. Effectively, Yahoo is masking the declines in its revenue by buying revenue-generating traffic from other websites and services. This means that the revenue genuinely generated by Yahoo’s properties will fall by 14% this year to $3.6 billion.” Yahoo has not commented on the reports. Analysts polled by Thomson Reuters expect EPS ex items to fall 10% this year, to 53 cents, with revenue falling 9% to $4.52 billion. Yahoo has recently implemented layoffs and begun the process of selling itself and spinning off its hefty stake in China e-commerce giant Alibaba Group ( BABA ). It’s also in the midst of a proxy fight initiated by activist investor Starboard Value seeking to oust Yahoo’s entire board and CEO Marissa Mayer. Yahoo’s revenue growth has stalled for nearly a decade as ad dollars continue to slip away to rivals, including Facebook ( FB ), Netflix ( NFLX ), Google and others, as well as high-profile startups Snapchat and Pinterest. Yahoo stock was down more than 1% in midday trading in the stock market today , near 36. Verizon stock was up a fraction.