Yahoo Studies Bids for Assets as Losses Mount

Yahoo Studies Bids for Assets as Losses Mount

Yahoo offered no definitive word Monday on bids for the key assets of the faded Internet star, as it reported widening losses in the past quarter.

In its quarterly earnings update, Yahoo made no comment on the results of the widely reported bidding efforts for its core Internet operations.

Chief executive Marissa Mayer said in the earnings webcast that “we have no announcement today” on the bidding, but noted that “we are deep into the process of evaluating all the proposals.”

Some media reports said the deadline for bids was Monday and that Yahoo would decide soon on its course of action.

The earnings report, which according to some analysts may be the last for Yahoo under its current structure, showed its loss in the second quarter widened to $440 million from $22 million a year earlier.

Revenue rose slightly to $1.3 billion from $1.24 billion a year earlier, the company said.

The results reflected its “lowest cost structure and headcount in a decade,” Mayer said in a statement.

“We continue to make solid progress against our 2016 plan. Through disciplined expense management and focused execution, we delivered Q2 results that met guidance across the board and in some areas exceeded it.”

Maximizing value
Mayer said that even with a bidding process ongoing, she is hoping to revive growth in key areas and cut costs, saying “it is important to maximize the value of Yahoo in any scenario.”

She said this effort involves “simplifying the business and efficiently aligning our resources.”

But Yahoo’s future is far from certain, amid intense speculation about efforts to sell its main assets.

The company has been pursuing its strategic review amid pressure from shareholders to salvage what is left of a company that was once a leader in the online space but has been overtaken by Google and Facebook.

In April, Yahoo averted a proxy battle for control of the company with a compromise Wednesday that added four new board members, including a hedge fund chief who has been critical of management.

The deal was reached with Starboard Value, which had launched a bid to replace the entire board of the Internet giant.

Yahoo has not commented on any specific bidders for the core business, but much of the speculation centres around Verizon, the telecom giant which recently acquired another faded Internet star, AOL.

Another likely bidder is Quicken Loans founder Dan Gilbert, backed by billionaire Warren Buffett.

In February, Yahoo said it was cutting 15 percent of its workforce and narrowing its focus as it explored alternatives.

Mayer has simultaneously been working to revive growth and made priorities of what she refers to as “Mavens” – mobile, video, native advertising and social media.

But according to the research firm eMarketer, Yahoo will earn just 1.5 percent of net digital ad revenues worldwide this year, down from 2.1 percent in 2015.

The company is not only losing share of the market, but is also raking in fewer ad dollars in absolute terms, according to the research firm.

BGC analyst Colin Gillis said in a research note last week that Yahoo’s core assets would be sold for relatively little.

“We expect any offer in the range of $5-plus billion should be accepted by the Yahoo board to bring the process to a close,” he said.

“Yahoo is over in our eyes.”

Tags: Apps, Internet, Marissa Mayer, Sale, Tumblr, Yahoo

Uber Racked Up Big International Losses During 2014 Expansion

Uber Racked Up Big International Losses During 2014 Expansion

The international business of Uber, the US-based ride-hailing service, lost $237 million in 2014, a big increase on a deficit of $31.9 million the previous year, as the company expanded around the globe.

The figures, the latest available, were disclosed in an official filing lodged with the Dutch Chamber of Commerce last month. Uber’s international headquarters are in Amsterdam.

Although the filing excludes the company’s US operations, it offers a rare snapshot of Uber’s overseas performance as it rolled out its service to big cities around the world often meeting resistance from established taxi services.

Company spokesman Gareth Mead said the filing had been deposited with Dutch authorities for the first time this year, and the figures reflect a “rapidly growing company investing in more people and in more cities.”

Uber’s service was available in fewer than 100 cities at the start of 2014, compared with more than 400 now, Mead added.

The privately-held company does not publish group profit and loss figures, although documents leaked last year showed it made a company-wide loss of $109 million (roughly Rs. 733 crores) in the second quarter of 2014.

The international operations encompass more than two dozen operating companies around the globe, notably in China. Losses will probably be higher in 2015, as CEO Travis Kalanick said last month the company was losing “a billion dollars a year” in China amid a price war.

The filing, deposited at the Chamber of Commerce on Feb. 3 and first reported on Wednesday by Dutch broadcaster RTL, shows Uber International CV had net turnover of $68.3 million (roughly Rs. 459 crores) in 2014. The filing did not provide a comparable sales figure for 2013.

Major factors contributing to the large loss included a $126 million (roughly Rs. 847 crores) cost of sales, $36 million (roughly Rs. 242 crores) in wages and salaries, and $129 million (roughly Rs. 868 crores) in “other operating expenses.”

The documents showed the company had 355 international employees in 2014, around 40 of them in the Netherlands.

San Francisco, California-based Uber Technologies, Inc. is frequently said to be worth $40 billion (roughly Rs. 2,69,170 crores), based on the pricing of the sale of some of its shares to private investors in 2014.

© Thomson Reuters 2016

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Tags: Apps, Uber, Uber App, Uber Taxi App

Rocket Internet Says Making Progress to Limit Losses

Rocket Internet Says Making Progress to Limit Losses

German ecommerce firm Rocket Internet said it was on track to make three of its start-ups profitable by the end of 2017, and its losses should have peaked last year when its companies burned through EUR 1 billion ($1.1 billion or roughly Rs. 7,317 crores).

Founded in Berlin by brothers Oliver, Alexander and Marc Samwer in 2007, Rocket has set up dozens of ecommerce sites, aiming to replicate the success of Amazon and Alibaba in Africa, Southeast Asia, Latin America and Russia.

But Europe’s top Internet investor has seen its share price sag since it listed in October 2014 on concerns about the scale of the losses at start-ups ranging from online fashion to food delivery, as well as delays to planned stock market listings.

The stock fell 9.8 percent by 9:48am GMT on Thursday, wiping out gains made this week after it sold a stake in the start-up making the heaviest losses – Southeast Asian online retailer Lazada Group – to Alibaba.

“Rocket has made some progress on financial reporting and transparency but there are still too many one-off opaque adjustments,” said Jefferies analyst David Reynolds, who rates the stock “hold”.

Chief Executive Oliver Samwer said several of Rocket’s companies had made major progress towards breaking even and repeated that three should be profitable by the end of 2017.

“We want to show you a strong improvement in profitability,” Samwer told a presentation for investors. “2016 will be a good year. 2017 will be very good. 2018 will be a great year.”

Samwer, a serial Internet investor who sold German online auction site Alando to eBay in 1999, said the business had strong cash reserves, including 1 billion euros at operating companies, EUR 1.8 billion at Rocket and EUR 1.6 billion raised from investors.

Revenue from Rocket’s top companies rose 69 percent in 2015 to EUR 2.4 billion. But their aggregate adjusted loss before interest, tax, depreciation and amortisation (EBITDA) was 1 billion euros, up from 600 million in 2014.

However, Rocket said the average adjusted EBITDA margin improved 6 percentage points to a negative 29.7 percent, driven by its online fashion businesses, although losses kept mounting at its food delivery and online general merchandise start-ups.

The biggest loss came at Lazada, meaning that Rocket’s exit should help it meet its promise that 2015 was a peak for losses.

Samwer said that home furnishings retailer Westwing and Russian online fashion firm Lamoda were reining in marketing and delivery costs due to scale benefits, while Delivery Hero and FoodPanda were breaking even in some countries and regions.

Rocket reported strong revenue growth at meal delivery firm HelloFresh, seen as a likely listing candidate, as well as at African online retailer Jumia, although losses rose at both.

Samwer said that a target set last September to list one of its start ups by early 2017 might have to be pushed back due to a focus on improving operations, as well as volatile markets.

© Thomson Reuters 2016

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Tags: Alibaba, Amazon, Apps, E Commerce, Internet, Rocket Internet

Practo FY15 revenue up by more than 10 times, losses widen 30%

Bengaluru: Practo Technologies Pvt. Ltd, the most funded homegrown healthcare start-up, posted a more than 10-fold increase in revenue for the year ended 31 March, while losses increased 30%, signalling the company’s intent to extend its lead over smaller rivals.

Practo’s revenue increased to Rs.29.73 crore in fiscal 2015 from Rs.2.30 crore a year earlier, while the company incurred a loss of Rs.12.85 crore until March, as againstRs.9.88 crore in the year-ago period, according to documents filed with the Registrar of Companies (RoC).

The company’s expenses grew more than three times, from Rs.12.19 crore in fiscal 2014 to Rs.42.59 crore, while revenue grew more than 10 times, which, according to industry experts imply that the company has a stable business model in place.

“Businesses thrive only if revenue grows faster than expenses. Yes, there are losses. But, if revenue grows faster than expenses, at some point in time the company has the potential to become a profitable business,” said Rutvik Doshi, director at Inventus Capital Partners, a venture capital firm.

Employee benefits, which surged three times to Rs.25.8 crore in fiscal 2015, comprised more than half of the firm’s expenses, the documents showed.

Practo did not respond to an email seeking comment.

India is home to at least 140 start-ups in the doctor-booking and practice management software segment, according to Tracxn, a company which provides data on start-ups. Practo is by far the largest in the category, with the company claiming to have about 200,000 doctors, 5,000 diagnostic centres and 8,000 hospitals on its platform.

For instance, smaller rival Qikwell Technologies Pvt. Ltd, which was bought by Practo in September, posted a loss of Rs.3.61 crore on revenue of Rs.51.29 lakh in fiscal 2015, according to RoC filings. Tiger Global Management-backed Lybrate Inc. is another well-capitalized start-up in the segment.

Practo had raised $34 million from institutional investors until March, while Qikwell had about $3 million and Lybrate raised $1.2 million by then.

Practo went on to raise another $90 million in August from leading investors such as China’s Tencent, Belgian venture capital firm Sofina, Google Capital, Altimeter Capital, Sequoia Capital and Yuri Milner, founder of Russian venture capital firm DST Global. Lybrate raised another $10 million in July.

Experts believe that losses may surge in the near future, given that Practo has invested in multiple acquisitions, besides spending on international expansion, launching more categories and brand promotion since April. It entered the beauty and wellness segment in early December by aggregating spas, salons and fitness centres.

“In the short term, I would expect the expenses to balloon. It makes sense to pump in a lot of money at this juncture and capture the adjacent markets. In a year or two, they can again accelerate and the cost will be recovered,” said Doshi.

Practo, which was founded in 2008 by Shashank N.D. and Abhinav Lal, started out as a product firm, providing practice management software for doctors on a software-as-a-service model. Called Practo Ray, the product remains the key revenue generator for Practo. The firm also earns revenue from Practo Reach, a sponsored listing service for hospitals and clinics. It does not charge doctors for listing on Practo, while searching is free for consumers.

To be sure, Practo had acquired hospital information management solution provider Insta Health Solutions for $12 million in September in an attempt to boost revenue. At the time of the acquisition, Insta Health Solutions had over 500 hospitals as clients in 15 nations across South-east Asia, West Asia and Africa using its information management software.

Its acquisition of Qikwell, which has expertise in appointment scheduling at hospitals, helped Practo penetrate deeper into the enterprise segment, especially hospitals, clinics and diagnostic centres. Additionally, Practo had acquired product outsourcing firm Genii in July and Delhi-based health and fitness solutions firm Fitho Wellness Services Pvt. Ltd in April.