SAN FRANCISCO — The news of the day was about Yahoo's latest quarterly earnings, but inquiring minds were riveted on bidding for the company's core Internet business.
Yahoo CEO Marissa Mayer on Tuesday didn't tell curious analysts and the media much, making it clear she wouldn't detail the initial bids for the embattled company or how Yahoo's business trajectory beyond this year impacts that process.
But if first quarter results are any indication, the future isn't bright.
Yahoo reported $859 million in adjusted revenue, down 17% from $1.04 billion in 2015 , and compared to $1.09 billion in 2014. Yahoo’s search business tumbled 15% to $820 million in gross sales, and it swung to a net loss. (Adjusted for various costs, Yahoo's revenue and earnings per share of 8 cents slightly beat analyst estimates.)
It could have been worse: Intel announced a staggering 12,000 job cuts, or 11% of its workforce, at the same time Yahoo announced its results Tuesday. The chip maker's woes underscore what is happening (and not happening) at Yahoo, which is also making big cuts to its workforce this year.
Both companies lacked urgency in tackling new technology — mobile for Yahoo, cloud computing for Intel — and each is paying the price for being tardy. Facebook, by comparison, successfully pivoted to the mobile market, and Amazon is sitting on a sales juggernaut with its cloud computing division.
Mayer didn't provide many answers in a conference call following the earnings news on Tuesday. She said the Yahoo board, management team and herself have “made strategic alternatives” a priority and are moving “expeditiously.” This includes daily calls between Yahoo management and the board committee looking at strategic alternatives.
She did not, however, provide future financial numbers because it might compromise the process, she said.
Yahoo has been loathe to discuss its financial forecast beyond 2016, and it is especially tight-lipped on crucial strategies, such as its mobile search project, called Project Index, that would create a tool similar to Apple's Siri and Microsoft's Cortana, according to a recent report in the New York Times.
Absent firm future financial figures, potential suitors don't have an accurate view of how the embattled company intends to navigate a steep drop in ad revenue worldwide and a 15% workforce reduction.
Fear of a shaky future may have persuaded some interested buyers to sit out the bidding process, which had attracted interest from a strange quilt of buyers, from Verizon to the Daily Mail's parent. Alibaba and Time, Inc., both potential suitors, didn't submit bids, according to two people not authorized to speak on behalf of the company.
Of course, Yahoo does hold appeal despite its well-documented problems.
The Silicon Valley company draws 1 billion monthly visitors to its galaxy of sites. Plus it owns property and patents. The latter could be worth $3 billion alone, estimates SunTrust Robinson Humphrey Internet equity analyst Robert Peck.
Verizon, considered the front-runner in the Yahoo sales sweepstakes, remains the favorite. The company might combine the online assets of Yahoo and AOL, which Verizon acquired for $4.4 billion, says Greg Sterling, vice president of strategy at Local Search Association, a marketing trade association.
"People have this attitude that Yahoo is a faded company," Sterling says. "It still has a reach, brand and audience on the Internet surpassed only by Google and Facebook."
Indeed, a report on digital audiences across mobile and desktop devices by market researcher comScore illustrates that Yahoo, along with Facebook and Google, remains an essential platform for millions of Americans to view content, search and communicate.
This has not gone unnoticed by even Yahoo's staunchest critics. Starboard Value CEO Jeffrey Smith said his hedge fund’s drive to gain up to nine Yahoo board seats is to “get the best possible price” for the company’s core business and stakes in Alibaba and Yahoo Japan.
“The nice thing about this asset is it’s a sought-after asset, one of the most recognized brands in the world, a billion unique users, unbelievable properties,” Smith told CNBC on Tuesday. "If you look at the fundamentals, someone could easily pay $3 billion, $4 billion, $5 billion, $8 billion or $10 billion-plus for this asset if they cared enough for it. It depends on what they would do with it."
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