As Yahoo! Inc. Stock not found YHOO prepares for what could be its last earnings release after the closing bell Monday, most of Wall Street is actually focused on the long-awaited sale of the company to one or more buyers.
On the day Yahoo! reports Q2 earnings, the company also said it expected to receive final bids from companies interested in buying it’s core businesses – advertising, search and content.
Who Will Buy?
Will results of the sale expected before the end of July, attention is focused on 4 primary potential bidders – AT&T Inc. (NYSE:TC), Verizon Communications Inc. (NYSE:VZC), a consortium of Warren Buffett’s Berkshire Hathaway (NYSE:BRK-BC) and others and private investment firm, TPG.
The winning bidder(s) would get the afore-mentioned core businesses plus the company’s patents, real estate and certain other assets. This would leave Yahoo’s 15% stake in Chinese e-commerce giant Alibaba and its 36% stake in Yahoo Japan.
Will A Surprise Buyer Emerge?
Over the past few months more than one maven of Wall Street has suggested that Alibaba Group Holding Ltd. (NYSE:BABAD) could surprise everyone by making a bid. Most recently Forbes repeated chatter that bids could range from $3 billion to $6 billion while acknowledging the extent of those potential offers and important details are simply not known.
Forbes pointed out that Yahoo’s core businesses going up for bid pale in comparison to the company’s stakes in Alibaba and Yahoo Japan. Forbes noted that selling those investments would be complicated and filled with legal and tax ramifications for Yahoo shareholders.
All this led to the suggestion that Yahoo management might want to consider talking with Alibaba founder, Jack Ma, about buying the company.
Why Would Anyone Buy Yahoo?
Verizon’s interest in Yahoo! points to why the company holds an attraction.
It all has to do with Yahoo’s media business, something that could help the telecommunications giant grow even larger.
According to Gartner vice president Andrew Frank, "Yahoo is still an ongoing operation that generates traffic. They still have that huge asset in their mail system. I think they still generate enough revenue to make it work, considering a media basis."
Essentially, Yahoo remains a highly trafficked destination for news, sports, finance and lifestyle. Mobile, video, native and social platforms all grew 45% year-over-year to $1.6 billion in 2015.
While much of the company’s financial picture is bleak, Reuters said the Web business is worth “several billion.”
What About The Numbers?
Meanwhile, when the company reports Monday afternoon, Zacks analysts said they expected EPS of $0.02, down 33% from $0.03 a year ago. Both Zacks and TipRanks have a Buy rating on the stock.
The stock closed Friday at $37.72 per share. The WooTrader performance weighted mean price target of 22 analysts is $40.95.