Yahoo’s bankers warns bidders of revenue decline in 2016

7 Apr 2016

Internet giant Yahoo's bankers are warning potential bidders that the company's revenues are in free fall

Struggling internet portal Yahoo is understood to have disclosed to first-round bidders that its revenues for 2016 are tipped to drop 15pc and that profits could fall by 20pc.

Two reports from US-based news organisations claim that the company has revealed to potential bidders that the company’s revenue and earnings prospects for this year are not looking good.

Re/code’s Kara Swisher is understood to have seen the prospectus or “book” that bankers have given to prospective buyers and it reveals a dire situation could be unfolding and shows a company in “serious free fall.”

‘Yahoo remains one of the biggest properties on the web and it is hard to be able to buy that kind of scale easily’

The “book” estimates that revenues are expected to decline from $4.4bn in 2014 and $4.1bn in 2015 to $3.5bn in 2016.

EBITDA is expected to drop from $1.4bn in 2014 and just below $1bn in 2015 to $750m in 2016.

Swisher said that the numbers in the book make confusing reading and that CEO Marissa Mayer is making a big pitch around its Index voice search product for mobile.

Either way, bidders she has spoken to are likely to make some kind of bid because Yahoo is still too big an internet property to ignore.

“While some are scared by the numbers, everyone I spoke to plans to make a bid of some sort, largely because even as financially precarious as it has become, Yahoo remains one of the biggest properties on the web and it is hard to be able to buy that kind of scale easily.”

The New York Times, meanwhile, reported that it has spoken to two people close to the bidding who have also seen confidential data that has been shared with bidders and they tip a more conservative decline.

It reports that Yahoo is projecting revenue of $4.4bn this year.

Yahoo started looking for a buyer for its core business in February and has set an initial deadline for initial bids for Monday 11 April.

The company expects to lose about 1,000 employees in 2016, from 10,500 in 2015 to 9,000 by the end of this year.

Yahoo image via Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years