Yahoo's Potential Price Tag Could Be Down to $2B to $3B: Report

As the next bids for Yahoo's Internet business prepare to come in, they now could fall to much less than the $4B to $8B expected earlier.

Yahoo, search engine, bidders, Verizon, Yahoo sale, Marissa Mayer

When the next round of bidding for Yahoo's Internet business comes around in June, the bid prices could be in the $2 billion to $3 billion range, which is much lower than earlier estimates of $4 billion to $8 billion, according to a May 19 report by The Wall Street Journal.

The bidding rounds for Yahoo's Internet business have been ongoing since April, with telecom company Verizon Communications still appearing to be the lead bidder in the battle for Yahoo.

The latest estimates for the company in the next round of bidding come from unnamed sources who are familiar with the proceedings, The Journal reported. In addition to Verizon, private-equity buyers are also expected to bid, some "in the low end of that range," the sources told The Journal. "As recently as April, people close to the process said Yahoo's core business would likely go for between $4 billion and $8 billion."

At the same time, "some offers could still be above the $2 billion-to-$3 billion range, other people said, and it is generally in the interest of bidders to play down their enthusiasm in an auction," the story reported. "It is also possible that not everyone will bid for all of the core business and that proposals will be structured differently."

The next round of bids for Yahoo has been set for the first week of June, though it "isn't clear whether that will be the final round or if another one will follow," the sources told the newspaper.

If the bids come in lower than the company is seeking, Yahoo could drop its planned sale and restructure itself, the report continued.

In April, Verizon was named as a very interested bidder for Yahoo, as other potential bidders, including AT&T and Comcast, dropped out of the competition, according to an earlier eWEEK story.

In February, reports indicated that Tim Armstrong, CEO of AOL, which Verizon owns, was leading Verizon's interest in exploring a possible bid for Yahoo, according to an earlier eWEEK story. Verizon's fascination with Yahoo centers on the 1 billion people who use its email, finance, sports and video services; its broad online content offerings and its heavy Web traffic. The wireless carrier, which already has about 112 million subscribers, would like to pair the businesses to grow its audience for a wide range of services that it offers.

Yahoo has been having a tough time in recent years. Earlier in February, Yahoo announced that it is cutting about 1,700 workers, or about 15 percent of its workforce of 11,000 full-time employees, as it works to scale back its operations and business units to cut costs, according to an earlier eWEEK article.

Yahoo was founded in January 1994 as Jerry Yang and David Filo's guide to the World Wide Web, and then renamed Yahoo a year later. Yahoo reported fourth-quarter 2015 revenue of $1.27 billion, compared with $1.25 billion in the year-earlier quarter. Operating earnings totaled 13 cents a share, which squared with Wall Street forecasts. However, Yahoo investors earned 30 cents per share in the fourth quarter of 2014.

In search, Yahoo has continued to struggle since Google claimed market dominance 15 years ago. Yahoo captured only 2.1 percent of the $94 billion worldwide search market in 2015, and eMarketer said it expects the company to stay flat in that category this year.

Yahoo's board launched an auction of its core business in February after it put aside plans to spin off its stake in Chinese e-commerce giant Alibaba Group Holding Ltd., according to an earlier eWEEK report. That $30 billion part of the Chinese retail giant was a deal engineered by co-founder Jerry Yang a decade ago and today serves as one of Yahoo's biggest assets. The company also owns a major stake in Yahoo Japan.

Yahoo ostensibly is being forced by activist investors who don't believe in its competitiveness anymore to sell off its main business and keep the corporate identity of Yahoo as a shell to manage the rest of its assets.

Marissa Mayer, who took the helm at Yahoo in July 2012, has made many changes at the company—from banning employees in February 2013 from working from home to shuttering the AltaVista search engine in July 2013. Mayer was hired as Yahoo's CEO and president, after an embarrassing and distracting string of three CEOs came and went in a seven-month span.

Mayer was brought in to try to put Yahoo back on track as a leading, growing and stable Internet company. She came from Google, where she was one of that company's first 20 hires in June 1999 and was the company's first female developer when it was just getting started.