Will Yahoo! (YHOO) Go The Groupon (GRPN) Way With Its Japan Unit?
Yahoo! Inc. (NASDAQ:YHOO) has called in advisors to explore options for its stake in Yahoo Japan, its joint venture with Softbank. It is not currently clear what the company might choose to do with the stake, but the management stated that they are looking for the largest value possible in any transaction. Yahoo owns 35.5% interest in the joint venture, valued at about $9 billion. The company also generates $250 million in annual revenue from the joint venture.
The move to sell its stake in Yahoo Japan is expected to expand Yahoo! Inc. (NASDAQ:YHOO)’s efficiency drive to the international market. The company has been closing offices and adjusting certain operations to save money as CEO, Marissa Mayer, struggles to turn around the company. About 17 Yahoo offices have been shuttered and layoffs completed since Mayer joined the company nearly three years ago.
It is currently unclear whether Yahoo will seek to offload its entire stake in Yahoo Japan or simply part with a portion of it. Groupon Inc (NASDAQ:GRPN) decided to sell a majority stake in its Korean asset, known as Ticket Monster, a move that Yahoo could emulate. Groupon’s move came a year after acquiring the Korean deals site from LivingSocial. Mayer stated that when the decision comes to be made on the matter of Yahoo Japan, it will be a careful move.
From CEO, Mayer to CFO, Ken Goldman, the theme regarding the Yahoo Japan transaction is about maximizing the value of the stake in the joint venture.
$250 million revenue stream
Yahoo! Inc. (NASDAQ:YHOO) generates about $250 million in annual revenue courtesy of its stake in Yahoo Japan. The management declined to state what would happen to that revenue stream if the company chooses to offload the asset. Instead, Goldman noted that the company will work with financial experts to hopefully extract the most value from whatever transaction they choose to do with Yahoo Japan.
Mayer considers international expansion
Mayer has focused on acquisitions and layoffs to remake Yahoo, mostly investing in the U.S. However, she is ready for international expansion in select markets, such as Taiwan and Hong Kong. The company will consider taking its assets, like Flurry, Tumblr and Brightroll, into those international markets in search of new revenue and profits.
First quarter financial highlight
Yahoo! Inc. (NASDAQ:YHOO) posted adjusted EPS of $0.15 and generated net revenue of $1.04 billion in the first quarter of 2015. The results missed expectations and also fell short of the same quarter a year earlier.
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