Daily Mail mulls possible bid for Yahoo

For a company that many on Wall Street had written off years ago, Yahoo (YHOO) is getting lots of attention right now as potential buyers appear to jockey for position ahead of a reported April 18 sale deadline.

The Daily Mail, a British tabloid, is the latest in a who's who of telecom, Internet and media companies which the financial press has reported may be interested in all or parts of Yahoo. This list reportedly includes Verizon Communications (VZ), CBSNews.com corporate parent CBS Corp. (CBS), Barry Diller's InterActiveCorp (IAC) and magazine publisher Time (TIME). Officials from these companies either declined to comment for this story or couldn't be reached.

Whether these expressions of interest will ultimately lead to bids is hard to say. In the case of the Daily Mail, the publisher has spoken with a half-dozen or so potential private equity partners including General Atlantic L.L.C. about a Yahoo bid, according to the Wall Street Journal. A spokeswoman for General Atlantic declined to comment, and the publisher hasn't decided yet what it will do.

"Discussions are at a very early stage, and there is no certainty that any transaction will take place," writes Sean Walsh, a spokesman for the DailyMail.com. "We have no further comment at this time."

Though Wall Street analysts and activist investors have argued for years that Yahoo has been mismanaged, the Sunnyvale, California, company has plenty of positive things going for it. As Brett Harriss, an analyst with Gabelli & Co., noted the company has $6 billion in cash, owns a 15 percent stake in Alibaba worth about $35 billion, along with 35 percent interest in Yahoo Japan worth about $10 billion. That doesn't include Yahoo's other valuable assets such as real estate and patents.

According to Harriss, Japan's SoftBank may be interested in buying Yahoo because it is the U.S. company's partner in Yahoo Japan with a 40 percent interest. Softbank, which also controls Sprint (S), also owns a 34.4 percent stake in Alibaba. The Chinese e-commerce giant is another possible Yahoo buyer, he said. Officials with SoftBank and Alibaba didn't respond to requests for comment.

"You could buy the whole company today for about $34 billion, and there already is $45 billion in value," he said, referring to Yahoo in an interview. "The value of their core business is kind of up for grabs."

Indeed, Yahoo expects revenue excluding fees paid to partners will fall 14 percent this year to $3.5 billion. Critics have accused the company of dragging its feet on the sale process. Activists are also seeking the ouster of CEO Marissa Mayer. The company didn't respond to a request for comment for this story.

"I agree with the criticism of this management team," Harriss said. "If Yahoo was so far gone that she couldn't have done any better, that she should have sold the company two years ago."

Even so, it is still one of the most recognized brands on the web. Its properties attract more than 204 million monthly unique visitors, trailing only Google and Facebook (FB), according to comScore. Its properties such as Yahoo Sports and Yahoo Finance remain hugely popular, as do features such as fantasy sports.

Verizon Communications CEO Lowell McAdam has said he would like to buy Yahoo and merge it with AOL, which his company acquired for $4.4 billion last year. According to Bloomberg News, Verizon plans to make a "first-round bid" for Yahoo's web properties and is willing to buy Yahoo's stake in Yahoo Japan "to help sweeten the offer." A spokesperson for Verizon, the largest wireless company, declined to comment. Reports, including from Re/Code, have dubbed Verizon the front-runner for Yahoo.

As for other potential bidders such as Google, the picture is murky. Bloomberg has reported that the search engine giant is considering bidding for Yahoo's core operations, though other media outlets such as Re/Code and the Journal have said the Mountain View, California-based company's initial interest has cooled and that it was unlikely to make a bid. Google didn't respond to an email seeking comment for this story.

"Facebook probably has to look at them," Harriss said. "(Yahoo's) traffic is valuable, especially to somebody like Facebook which is good at monetizing web traffic."

Facebook didn't respond to a request for comment for this story. Bloomberg has reported that AT&T and Comcast (CMCSA) have decided to take a pass on Yahoo. Re/Code, however, says AT&T is lukewarm on Yahoo. AT&T, for its part, has declined to comment on either report. Philadelphia-based Comcast didn't respond to a request for comment.

  • Jonathan Berr On Twitter»

    Jonathan Berr is an award-winning journalist and podcaster based in New Jersey whose main focus is on business and economic issues.