Yahoo seems to be going out with a whimper, reporting earnings today that again missed analysts' expectations and highlighting the challenge that would await any buyer of the company.
Its revenues declined 19 per cent in the latest quarter compared to the same period a year ago, excluding commissions Yahoo pays to its partners. But despite those struggles, the internet company is expected to draw significant bids from a host of deep-pocketed players including Verizon, AT&T and an investment group that is comprised of private equity firms and is backed by Warren Buffett. Those bids were reportedly due today.
Some analysts project a sale could be done by the end of the month, unless bids are low enough that Yahoo decides not to sell.
Yahoo was not forthcoming about details on the potential sale during the earnings call. Embattled chief executive Marissa Mayer said that, "While we have no announcement today, I can say we are deep into the process."
She added that Yahoo will "update our shareholders as soon as is prudent".
If a sale happens within the next few weeks, then today's lackluster earnings report will be the last for the prominent company.
Shares of the company slid by about 1 per cent when the report came out before rebounding.
Analysts expected that Yahoo would see trouble in a key area that the firm calls "MaVeNS," an acronym meaning mobile, video, native, and social revenue. The area grew 26 per cent as compared to the same period last year.
In 2015, second quarter growth in this area was 60 per cent. Since arriving to take Yahoo's top spot in 2012, Mayer has struggled to turn around Yahoo's flagging revenues by focusing on this area despite efforts to revive its fortunes.
While we have no announcement today, I can say we are deep into the process.
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Yahoo's numbers failed to buck that trend. The firm missed analyst expectations for profits, reporting earnings of US9c per share - instead of the US10c analysts predicted - on US$1.31 billion in revenue. Total revenue was up 5 per cent from the previous year and beat analyst forecasts of US$1.08 billion.
Other numbers delivered more bad news. Search revenue was down 24 per cent from the same time last year. Revenue from display ads was also down to US$470 million for the quarter, a 7 per cent drop.
The earnings numbers certainly don't augment the perception of Mayer's time at Yahoo. The former Google executive came into Yahoo with much fanfare, as many believed she could save the storied company first founded by Jerry Yang and Dave Filo in 1995.
Her appointment, which made her one of the most prominent female executives in the US was celebrated and debated, particularly after a pregnant Mayer announced she'd take almost no maternity leave.
But she had her work cut out for her. Mayer came into Yahoo at a time when the firm had been through a string of chief executives with drastically different visions of what the company should be.
The company had ping-ponged between being a technology firm, a media company or an advertising business. Yet Mayer still chose to pursue aspects of all of these, leading critics to say she was unfocused.
Yahoo is over in our eyes.
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Big acquisitions that didn't pay off, such as a US$1 billion purchase of Tumblr, added to the criticism. So did decisions such as the hiring of anchor Katie Couric. Despite drawing millions of eyeballs, Yahoo properties couldn't turn that into profit.
Mayer ended up fighting with shareholders who called for the firm to put its core business up for sale, spinning out the heart of the company from its valuable holdings in the Chinese firm Alibaba. Ultimately, the board capitulated and said in December that it would entertain outside bids.
While today's results may not make Yahoo seem like a good acquisition target, parts of Yahoo are attractive to different bidders. Verizon, still relatively fresh off its acquisition of AOL, could use Yahoo's assets to further its own ambitions to become an online video and digital content company.
Rival AT&T is said to be interested in Yahoo's advertising tech, which could also complement its own DirecTV acquisition. Still others may be attracted by Yahoo's patents, data or other assets.
When the board first said it was open to bids, Mayer said she would still keep Yahoo on her track. At a shareholders meeting last month, Mayer said that she was "heartened" by bids for the company's core assets, taking as a sign that the firm was doing the right thing.
Today, Mayer again said that the company was staying the course: "With the lowest cost structure and headcount in a decade, we continue to make solid progress against our 2016 plan."
Yet she may be one of the only ones still thinking of Yahoo as an independent business. Analyst notes ahead of Yahoo's earnings were largely focused on what the company's value would be to a potential buyer, rather than on the state of its own business moving forward.
Yahoo should accept any bid of at least US$5 billion, said Colin Gillis, an analyst for BGC Partners. He added that Yahoo should consider anything above US$7 billion a "positive development".
"Yahoo is over in our eyes," he said.