CORNELL UNIVERSITY MEDIA RELATIONS OFFICEDec. 4, 2015
Sale of Yahoo’s Internet business would be premature
Newswise — Yahoo’s board is holding talks this week to discuss the firm’s future, with news reports alleging the company is considering selling its core Internet business. Aija Leiponen, associate professor at Cornell’s Dyson School of Applied Economics and Management, says recent acquisitions have yet to pay off and – instead of selling - Yahoo should consider waiting for returns.
Bio: www.dyson.cornell.edu/people/aija-leiponen
Leiponen says:
“The sale of these assets and businesses would be premature. It is true that revenues have been stagnant and, clearly, Yahoo can't just remain ‘Google No. 2’ in search and advertising. However, it is still a top-visited website, meaning an extremely large - and valuable - audience.
“Also, CEO Marissa Mayer has started many new businesses, and it will take some more time to see returns. Indeed, the reason their earnings have gone down is that she has invested 50 percent more in research and development. This exploration has yet to produce significant results.
“The company has also made almost 50 acquisitions. Apart from Tumblr, these were early-stage startups, some of which will likely pay off in a few years. Hence, if the problems with the leadership team do not sour the morale of the whole company - which has been a constant battle for Mayer - I think there are many reasons to give it another couple of years to see if some of these very risky, but smaller bets pay off.
“Meanwhile, it is difficult to suddenly make a significant impact on the revenues of a company with sales of $4.6 billion. Extremely few research and development projects pay off in billions within such a short time period of just two or three years.
“If I were an investor, I would wait another couple of years to see if any of the investments pay off significantly, rather than get a very poor valuation on the assets now. The core business is still profitable so they are not running out of runway.”
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