Mergers and acquisitions are common occurrences in the web hosting industry but rarely do the numbers involved reach those being tossed around in the media this week in relation to Yahoo‘s attempt to sell its small business hosting service. With unnamed sources saying that the company is looking for between $350 million to $500 million, a sale under these circumstances would represent one of the largest in the history of the niche.
Yahoo has hit several snags in its business model over the past few years, leading to what some are calling a mass sell-off of holdings over the past six months. Last year saw a $47 billion acquisition deal with Microsoft fail, dropping the former’s market value by more than $20 billion. Riding hot on the heels of the dissolution of an advertisement revenue-sharing deal with Google in 2008 and Yahoo’s failed partnership with AOL, the fall-through of the Microsoft deal lead to the resignation of Yahoo co-founder Jerry Yang as he relinquished the seat to technology executive Carol Bartz.
The laundry-list of troubles facing the company has lead to the selling off of all of its assets that are not core to the Yahoo brand, including the $150 million sale last week of its stake in Chinese e-commerce company Alibaba. This latest offering of Yahoo Small Business, the huge web hosting branch of Yahoo’s holdings, has apparently drawn tremendous interest given the company’s motivation as a seller but industry insiders report that some interested buyers see the valuation as far too high; specific details of the holdings and clientele currently owned by Yahoo Small Business is not public information and so even insiders are left to speculation. Yahoo has also made its intention to sell online job classified site HotJobs and email and calendar groupware application Zimbra public, accepting offers along with the Small Business hosting services for the past six months.
One thing remains clear: no matter what aspects of its business Yahoo sells, the web giant apparently plans to continue its foray into internet search technology. A recent deal struck with Microsoft sees Yahoo’s search powered by technology from the makers of Bing and their purchase last month of Arabic search portal Maktoob shows a continued effort to remain relevant around the world – maybe just not where hosting is concerned.
