The day will come when the latest news about Internet pioneer Yahoo won’t rate headlines. That day hasn’t yet arrived.
The Wall Street Journal reported Tuesday that Yahoo’s board will consider selling its core Internet business, currently valued at less than nothing by investors. Wall Street instead values Yahoo at slightly less than its cash plus stakes in Chinese e-commerce company Alibaba and Yahoo Japan, a joint venture between Yahoo and Japanese company SoftBank.
It’s humiliating for any company’s main asset to be valued below zero. Although Yahoo still makes money, investors are betting that the investments CEO Marissa Mayer is making won’t pay off. Mayer has been focusing Yahoo on mobile apps and investing heavily in the company’s media properties. But nothing much is working, and Mayer has said she plans to slim down the company.
This all begs the question of why we care so much about Yahoo. That’s an easy one. At 21 years old, Yahoo is ancient by Silicon Valley’s standards. It’s also one of the first companies people of a certain age associate with the Internet. Its survival is a testament to how hard it is to kill companies with established cash flows. Properties like Yahoo Mail and Yahoo Finance still command the loyalty of users and generate meaningful revenues.
Who would buy Yahoo? Microsoft or Verizon seem highly unlikely—the former because it is successfully pivoting away from consumer businesses, the latter because it recently bought AOL. Alibaba itself could find an easy way into the U.S. market by buying Yahoo, a sizable media property. Most likely of all is a private-equity company, which can make money with an asset that isn’t growing simply by buying at the right price, reducing costs, and milking the profits.
Private-equity firms eyed Yahoo at higher valuations. They may well circle again with the price substantially lower.
BITS AND BYTES
Mark Zuckerberg greets new daughter with pledge to give away his fortune. The Facebook co-founder and his wife, Priscilla Chan, are the proud parents of a baby girl they’ve named Maxima. In a birthday letter to their child, the two promise to donate 99% of their Facebook ownership—currently worth about $45 billion—to their joint charitable foundation over their lifetime. Some of the money will no doubt go to the clean energy coalition Zuckerberg launched earlier this week with Microsoft co-founder Bill Gates. (Fortune)
Dell shops non-core assets, worth up to $10 billion. To reduce debt after its proposed buyout of EMC, Dell is seeking buyers for its management technology division Quest Software, its SonicWall security business, and its Perot services operation. Reuters reports that a trio of private-equity firms including KKR & Co., Thoma Bravo and Vista Equity Partners are interested in Quest and SonicWall. (Reuters)
Hybrid tablets lend new life to category. Sales for devices that marry design features found in touchscreen tablets and laptop computers, such as the new Microsoft Surface Book with its removable keyboard, could double in the forthcoming year. However, sales for traditional tablets are shrinking and could be off 8% this year, according to research group IDC. (Fortune)
Human resource software giants get cozier. Sometime rivals ADP and Workday are forming closer ties between their respective software platforms. The goal is to help multinational companies manage payroll processes across different regions more holistically. (Fortune)
Google faces new scrutiny over privacy. The Electronic Frontier Foundation has complained to the FTC about Google’s strategy of saving data generated by students that use its cloud education services and apps—usually on Chromebooks. Google routinely saves browsing history, search information, and bookmarks (among other things) through its synchronization features. (Wall Street Journal)
Record-setting day for patent lawsuits. There were at least 257 infringement claims filed on Tuesday, most of them by firms that own big intellectual property portfolios but don’t actually do anything with them. Pretty much any high-tech company you can name is a defendant. Congress tried to tackle patent reform earlier this year, but didn’t really get anywhere. (Fortune)
Why Facebook profiles are replacing credit scores. Getting a loan based on your credit score is so old-fashioned.
Over the past few years, a number of technology startups—including one fronted by PayPal co-founder Max Levchin—have created ways to assess credit worthiness that don’t rely on the traditional methods.
Instead of analyzing credit scores, they look at a mishmash of seemingly tangential information about applicants like their social network profiles, how often they use their cell phones, and whether they frequently send text messages.
As Fortune contributor Don Reisinger reports, these startups argue that this constellation of data can better determine a person’s credit worthiness by analyzing how they live, the decisions they make, and how they interact with others. (Fortune)
MORE FORTUNE TECH COVERAGE
Marissa Mayer may be running out of options at Yahoo by Geoff Colvin
Why 3D-printing companies should be watching this startup
by Andrew Zaleski
Dropbox tips authorities on child porn, raising issues of cloud privacy
by Jeff John Roberts
Verizon opens up its network for connected devices by Stacey Higginbotham
The first female president will be … Sheryl Sandberg? by Kristen Bellstrom
Adobe just took a big step towards ending Flash by Kif Leswing
ONE MORE THING
We don’t have a job, but we’ll hire you anyway. The battle for tech talent is so acute that companies like Facebook and Intuit are recruiting and hiring promising college graduates before they’ve actually figured out what positions they need to fill. (Wall Street Journal)