It’s tough being a portal these days, and particularly if you’re under the thumb of analysts who have lost faith in the business model of portals. The latest battering for the Yahoo strategy comes from Goldman Sachs, but their verdict has implications far beyond Yahoo. Here’s what they said and why it matters…
Yahoo! shares fell again this week after Goldman Sachs analyst Heath Terry said it was a perpetually misguided business which would have difficulty competing against more innovative market rivals.
Yahoo! did not comment after Terry said: “The segment of management driving the company is intent on trying to revive Yahoo! as a company, regardless of the cost to shareholders.”
After the “sell” recommendation, he added: “Yahoo! simply faces too many competitive and structural headwinds to believe any kind of meaningful turnaround is possible.”
After a flurry of deal rumours in recent months, which have included private equity titans Blackstone, KKR and Silver Lake, in addition to tech giants like Microsoft and Google, two tracks have emerged as most-likely if a deal were to happen.
Presently the strongest Yahoo! interest comes from firms like Silver Lake or THL Partners who are looking into taking a minority 20% stake in the company, or a divestiture of Yahoo!’s Asian assets to its regional partners Chinese ecommerce giant Alibaba and Japan’s Softbank.
Meanwhile, activist investor Third Point voiced its opposition to Yahoo! pursuing the sale of a minority stake to a private equity house, instead calling for the board to consider selling the entire company. CEO Daniel Loeb said: “As significant shareholders with our own fiduciary duties to investors to uphold, we cannot stand by silently if such reports are accurate and Yahoo!, a company in no need of cash, plans to engage in a sweetheart deal.”
