Following Yahoo!’s (YHOO) earnings conference call this evening, during which CEO Marissa Mayer spoke with analysts and offered additional commentary about the ongoing review of “strategic alternatives“, the Street is just starting starting to publish their thoughts on the matter. On an adjusted basis, earnings were 8 cents a share, down from 15 cents a share a year earlier and higher than analysts’ estimates of 7 cents.
The company said its revenue fell 11.3% to $1.09 billion in the first quarter, the first decline after four quarters of growth in a row.
So far, Yahoo! has reportedly attracted the interest of the parent company of the UK’s Daily Mail, Verizon Communications, AT&T, Google’s parent body Alphabet, Time and Microsoft – but Verizon is now the front-runner and is expected to advance to the second round of bidding, according to Reuters. Analysts expect revenue of $1.08 billion, down 12% from a year earlier.
Yahoo shares rose 1.4% to $36.84 in after-hours trade following the release.
Yahoo chief executive Marissa Mayer said the company has “made substantial progress toward potential strategic alternatives” while working to trim costs and drive growth.
Estimates on the value of Yahoo’s Internet operations have ranged from $4 billion to $10 billion.
Verizon, owner of Yahoo rival AOL, is expected to be the top bidder and the most likely company to eventually buy Yahoo.
Once considered a top tech company, Yahoo has failed to hold on to its commanding position in the market. Its size makes it a candidate for a Reverse Morris Trust with Yahoo: a tax-free transaction in which YP would merge with a spun-off subsidiary of Yahoo’s core business, the person said.
Shedding Yahoo’s Asian holdings and giving the company’s turnaround plan time to succeed may give Yahoo the boost it needs to compete for the future. In the first quarter, those businesses brought in 38% of Yahoo’s overall sales.
Activist investor Starboard Value launched a proxy fight in March to remove Yahoo’s entire board of directors. Its pre-earnings consensus analyst target was $38.82.
Industry tracker eMarketer forecast that digital ad revenue this year at Yahoo will fall almost 14 percent to $2.83 billion while money raked in by Silicon Valley rivals Google and Facebook will rise.
In Tuesday interview on CNBC, Starboard CEO Jeffrey Smith said he is trying to negotiate a settlement that would give his hedge fund several seats on Yahoo’s board ahead of the annual meeting.
Although she disputed rumors that Yahoo is dragging its feet on the sales process, calling them “external noise”, Mayer declined to go into more detail during the earnings call. “There’s a lot of pressure right now on Yahoo’s management and board”.
Yahoo reiterated that it continues to engage with potential buyers on the sale of its core business.