Yahoo launches $4 billion fire sale

THE troubled tech giant Yahoo is cleaning out the closet with a massive fire sale of more than $4 billion worth of stuff.

Yahoo launches $4 billion fire sale

YAHOO Inc is exploring the sale of $US1 billion ($1.37 billion) to $US3 billion ($4.08 billion) in patents, property and other “non-core assets”, its chief financial officer says.

Yahoo CFO Ken Goldman told the crowd at the Morgan Stanley Technology, Media and Telecom Conference on Thursday that a committee created to explore alternatives to the company’s plan to spin off its core business is looking at quick sales of assets.

Mr Goldman said patents, land, property and “non-core units or businesses” are all on the table for potential sale, and the company has sold or licensed more than $US600 million ($815 million) in patents over the past three years.

Last month, the troubled tech giant announced it was sacking around 1700 employees, or about 15 per cent of its workforce, and was exploring “strategic alternatives” that could result in the sale of all of the company’s internet operations.

Yahoo chief executive Marissa Mayer has come under increasing pressure from shareholders to step down. Yahoo’s most outspoken shareholder, SpringOwl Asset Management, has called for a management clean-out.

“We would like to see a higher stock price, and we think Marissa and her current management team have become a hindrance to that,” SpringOwl managing director Eric Jackson said last month.

Earlier this week, the New York Post reported Yahoo had received nearly 40 expressions of interest from prospective bidders for its internet business including Verizon, AT&T, Time Inc. and “every private equity firm you can think of”, according to one source.

The company is trying to execute a ‘reverse spin-off’.

Insiders said some investors remained concerned about the auction process. While Yahoo has hired Goldman Sachs, JP Morgan and PJT Partners for the job, sources said Ms Mayer has tapped veteran tech banker Frank Quattrone to explore sale options as well.

In particular, some sources say Mr Quattrone appears to be trying to sell Yahoo and Ms Mayer as a package deal.

“There’s Quattrone trying to find buyers that would want her to be the manager,” according to one source. “There’s some conflict in that.”

The source added that Ms Mayer is “trying to softly arrange it so she continues to run [Yahoo] after it gets sold.”

The strategy, according to the source, is win Mayer’s job security at Yahoo “by having bankers very nicely mention that when they think about bidding, they think about her.”

It comes as Yahoo revealed that Tumblr, the Brooklyn-based blogging site founded by David Karp that it bought in 2013 for $US1 billion ($1.37 billion), has lost more than 20 per cent of its value since the purchase.

The $US230 million ($312 million) writedown in Tumblr’s “goodwill” — or non-tangible assets such as brand reputation and intellectual property — was disclosed in Yahoo’s annual 10-K report on Monday.

Tumblr, which has been slammed by market-share losses, slowing revenue growth and weak cash flow, additionally remains vulnerable to losing “some portion or all” of its remaining non-tangible value, according to the filing.

That goodwill was originally valued at $US750 million ($1.02 billion) when Ms Mayer bought the site, according to the filing. Tumblr was represented by Quattrone in the deal.

Originally published as Yahoo launches $4 billion fire sale