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Yahoo paints grim financial picture as deadline for bids nears

 
CEO Marissa Mayer and other Yahoo executives have been closemouthed about the costs and realistic growth prospects of various parts of the business. [New York Times] 
CEO Marissa Mayer and other Yahoo executives have been closemouthed about the costs and realistic growth prospects of various parts of the business. [New York Times] 
Published April 7, 2016

SAN FRANCISCO — As Yahoo asks potential bidders to submit first-round offers for its core business next week, it is also warning them about a troubling decline in revenue and profit while obscuring the costs and cash flow of various business units.

Yahoo is projecting revenue of $4.4 billion this year, down from $5 billion last year, according to two people close to the bidding who have seen the confidential data the company has shared with potential bidders.

Even that revenue is coming at a cost, with Yahoo expecting to pay other sites about $1 billion this year for sending traffic to its advertising services.

The company's cash flow is also declining. Yahoo has reaffirmed to bidders its February projection that adjusted earnings before interest, taxes, depreciation and amortization would be about $750 million this year, down from $952 million in 2015.

Perhaps more important to potential bidders is that Yahoo executives, including CEO Marissa Mayer, are offering little detail about the costs and realistic growth prospects of various parts of its business.

The financial projections being shared with bidders were first reported by the technology news site Recode.

In addition to its home page, Yahoo operates sites dedicated to news, sports, finance and other topics. The company also owns the Tumblr social network.

Bidders who get a meeting with management hear the same upbeat story of growth coming sometime in the future that Mayer has been repeating to Yahoo's stockholders. When pressed on the strengths and weaknesses of specific businesses and projects, however, Yahoo executives have been closemouthed.

Starboard Value, an activist hedge fund that is seeking to replace Yahoo's entire board of directors at the next shareholders' meeting this summer, has repeatedly accused the company of running a halfhearted sales process. That sentiment has been echoed by some potential bidders.