In 2002, the American Dialect Society chose ‘google’ (verb) as the year’s most useful word, and the internet changed forever.
Media and technology corporation Yahoo! – then the leading online news and e-mails portal – failed to respond. As search engines, social media, and smartphones emerged, users began to embrace more focused, dedicated services. Google expanded into word processing, mobile phone firmware, and released popular internet browser Chrome. Other companies, like e-commerce giant Amazon, moved into the Video on Demand sector, and experimented with ways to expedite the packaging and delivery process.
Meanwhile, Yahoo’s portal remained the same, growing outdated, too complex, and ultimately irrelevant.
The repercussions were not felt for some time – and Yahoo currently remains the third most visited website in the world – but in 2011 the company’s revenue dropped to its lowest point in six years. It was a prophecy of impending doom.
The last half-decade has been filled with layoffs, the loss of major contracts, and poor acquisitions. Revenue has stagnated, leading to CEO Marissa Meyer announcing that the company would be selling its $4 to $8 billion USD online portfolio in February 2016.
Initial interest was low. Rumours that 40 parties were keen to make offers were quickly quelled, with a source telling Fortune the auction process had “been a f-king joke”.
With bidding now in the second round, reports announced late last week that none other than investor Warren Buffett is involved in the auction.
Buffett is said to be financing a consortium that includes Dan Gilbert, founder of Quicken Loans. Though the auction is private, other interested parties include Daily Mail and General Trust, and telecom company Verizon, with the latter considered to be the frontrunner.
It’s a rather unprecedented move for the third richest person in the world, who established his nearly $67 billion USD empire on purchasing undervalued companies, as it marks one of his few forays into the digital media sector.
In fact, it now appears that Buffett’s interest may be more closely linked to his friendship with Gilbert than the company’s value. “I’m an enormous admirer of Dan and what he has accomplished in Quicken Loans. Yahoo is not the type of thing I’d ever be an equity partner in. I don’t know the business and wouldn’t know how to evaluate it, but if Dan needed financing, with proper terms and protections, we would be a possible financing help,” he told CNBC.
According to sources, Gilbert may be focused on the acquisition of Yahoo Finance, but is it reason enough to purchase a network that has struggled for profitability despite its popularity? If this is simply a matter of Buffett backing an opportunity, his name will surely inspire investors, but the consortium will need a foolproof strategy to turn business around.
“(The next owner must) create a distinction in consumers’ minds about why they love Yahoo still,” former Yahoo president and CFO Susan Decker (who is now on the board of Buffet’s Berkshire Hathaway) declared to Fortune.
Considering how long it has been since users were declaring their love for the company, it seems a pretty tall ask for the successful buyer.