Since taking the helm of Yahoo in January, CEO Carol Bartz has been consolidating management of the company’s sundry product groups, shaving excess costs (including laying off 700 more employees in the second quarter), and otherwise directing resources to support those properties that have consistently performed the best, like Yahoo Mail.
Indeed, just this morning, Yahoo unveiled a new homepage that is already receiving rave reviews for a revamped design that includes more personalized features, along with embedded widgets of third parties like Facebook and MySpace that will enable users to enjoy the Web without leaving Yahoo.
Now, peHUB has learned from multiple sources that as part of Bartz’s drive to dismantle non-core assets, Yahoo is also trying to shed both HotJobs, which Yahoo acquired for $436 million in cash and stock back in 2001, and Yahoo Small Business, which helps customers get their small businesses online by providing them with everything from domain registration to site monitoring to promotional tools.
“They’ve been approached by [major buyout firms] but they’re proactively looking to sell to a strategic investor like a Careerbuilder or Monster.com,” says one source familiar with the situation, adding that the company may be looking to avoid a future embarrassment. “If a Warburg [Pincus] or a Spectrum [Equity Investors] buys HotJobs for $300 million and resells it for $500 million in two years, that’s going to look pretty bad [for Yahoo],” says this person.
Strategy aside, Yahoo — which is attempting to sell the properties without the help of an investment bank — could use a financial boost. Newly released second-quarter earnings show Yahoo’s total revenues dropped 13 percent to $1.5 billion, despite an 8 percent rise in net income to $141 million.
For now, however, its pitch for both properties doesn’t seem to be resonating with potential acquirers. “They’ve been out there for two or three months; this isn’t a brand-new process,” says a source.
No doubt competition in the classifieds space is giving some would-be buyers pause, particularly given the raft of online recruiting alternatives that the unemployed masses are now using, including LinkedIn and Craigslist and vertical search engines like Indeed and SimplyHired.
Ostensibly to make HotJobs a more attractive acquisition target, the company last month announced results-oriented pricing, calling it a pay-per-candidate system. (The model means advertisers pay only when job candidates apply for the positions listed at their Web sites or clicks through to a recruiter’s Web site.)
In terms of Yahoo Small Business, the biggest obstacle may well be the massive amounts of traffic that Yahoo drives to the site, which is largely where the property’s value lies. “How do you deal with that after the sale?” asks one source. “You can cut a deal where Yahoo continues to send traffic at a discounted rate for some period of time, but it doesn’t address where you get traffic after Yahoo goes away.”
Asked for comment earlier today, a Yahoo spokeswoman said tonight that the company “doesn’t comment on rumors or speculations.”
