- REUTERS/Elijah Nouvelage
Yahoo is expecting to see another 15% decline in revenues, with its earnings dropping by over 20%, according to a report by Re/code’s Kara Swisher.
The report, citing a sale “book” that was handed out to potential Yahoo buyers, says that the company’s revenue – excluding the cost to acquire traffic – is expected to be $3.5 billion in 2016, a 15% drop from the $4.1 billion it saw in 2015 and nearly $1 billion less than the $4.4 billion it recorded in 2014.
Earnings before depreciation, taxes, and amortization, an important metric to track profitability, is forecast to drop to $750 million in 2016, from $952 million the previous year, according to Re/code.
The report said that a big part of the loss is because of some of the fees that will cancel out from its Asian assets this year. Yahoo used to make hundreds of millions of dollars from its partnership with Alibaba and Yahoo Japan.
On top of that, Yahoo’s traffic-acquisition cost, the fee paid out to partners for helping draw more users to Yahoo’s search, continues to soar, climbing to over $1 billion this year, according to the report. TAC was close to $220 million just two years ago, it said.
Swisher says that some of the potential buyers who received the sales “book” are frustrated because it makes it extremely difficult to track exactly which parts of Yahoo are making money or not. Plus, Yahoo CEO Marissa Mayer’s now trying to sell her vision for a new voice-activated search technology, similar to Apple’s Siri or Amazon’s Alexa, which is confusing given the high cost it typically takes to build such technology.
Yahoo is currently in the process of trying to sell its core internet business. According to The Wall Street Journal, Yahoo asked potential buyers to make their bids by April 11. Some of the most frequently mentioned potential buyers are big communications companies like Verizon and AT&T, and private-equity firms like TPG and KKR.