Yahoo! Small Business on the Block

Yahoo! appears to be shedding assets fast and furiously. Zimbra, for which the company paid a cool $350 million, is reportedly now for sale. And, according to Reuters, Yahoo! is also going to shed its small business unit:

Yahoo Inc hopes to get up to $500 million for a unit that hosts websites for small companies, after putting it on the market for several months, two people familiar with the matter said.

Yahoo has received interest from corporate buyers and private equity firms, one of the sources familiar with the situation said. It is unclear if any party has made an offer.

But some potential corporate buyers who have looked at the asset in recent months have decided not to bid because they think the price is too high, a second source said.

HotJobs is also for sale. The sale rumors surfaced first in July (see my SEL post).

Let’s assume by virtue of its persistence that this report is correct and Yahoo! Small Business is for sale. It would represent a carving out of what was once a very strategic asset:

Picture 109

At one point several years ago, I was told by Rich Riley (then head of Y SMB and now head of Yahoo!’s European operation) that Yahoo! was the biggest SMB webhosting firm in the US. This should have been a gateway into online marketing for SMBs. But Yahoo! failed to create the simplified products necessary to capitalize on the opportunity. Yahoo! Small Business could really have been a jewel within the organization.

As recently as a little over a month ago, on the Yahoo! Q2 earnings call, CEO Carol Bartz discussed the importance of local and SMB advertising. She said that thes segments were increasingly important to Yahoo! and she announced a new deal with AT&T (to sell display ads on Yahoo to SMBs). She added that between AT&T’s yellow pages sales force and the company’s newspaper consortium partners Yahoo effectively had “13,000 sales reps” in local markets around the US.

Here’s the verbatim Bartz quote from the earnings call transcript:

We also know that local relevance of both content and advertising is increasingly important to our users and capturing more of the local ad market is a big focus to us. To this end, we have announced today that we have expanded our relationship with AT&T to include the reselling of Yahoo! display ad inventory by AT&T’s advertising sales force. Grouped with our strategic newspaper consortium partnership we now have a local sales force 13,000 reps strong. These relationships extend our reach into the fast growing local online advertiser segment.

So most of this goes out the window post-sale in all probability. It’s also the case that Yahoo! webhosting could have been extended to the the SMB advertisers of newspaper publishers who are part of the Yahoo! consortium.

In Yahoo!’s still not approved deal with Microsoft, all the self-service paid search business goes through Microsoft adCenter, while the “premium” (read: brands) search business will be handled by Yahoo!

There’s something sad in all of this for me, having seen the opportunity for what seems like a very long time and the organization’s inability to really seize it.

12 Responses to “Yahoo! Small Business on the Block”

  1. The Relationship Between Business and Politics | Fish in A Crowd Says:

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  2. The God of Small Things: A Novel | UmeBook Says:

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  3. John Says:

    I don’t think Yahoo was ever the largest SMB hosting firm in the US. They’ve been in the top five on occasion, but they haven’t kept pace with the rest of industry. Currently, Yahoo is dwarfed by a factor of 3 to 1 by both GoDaddy and Network Solutions in every measurable way: revenue, domains registered, number of hosting accounts, number of unique customers, etc…

    Yahoo certainly SHOULD be the largest – and they certainly COULD have dominated the industry, if they had only focused on it. Such is the story of everything that Yahoo has ever been involved in.

  4. Greg Sterling Says:

    That’s what what was represented to me a few years ago. Agree: could have, should have . . .

  5. Voice Broadcasting Services Says:

    I’ve been hearing a lot about Yahoo slimming down on their different entities. I wonder if they plan on adding to the site or at least beefing up advertising to offset the cuts they are making.

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  7. nancy @ princetoncryo LLC Says:

    And what about those whose sites are hosted on Yahoo’s network? Will they face any problems due to that?

  8. Greg Sterling Says:

    It’s speculative at this point. But I’m sure if there’s a sale Yahoo will ensure a smooth transition.

  9. Ranvijay Says:

    Yahoo small business is the worst web hosting services ever been developed so far. For the last 15 days the Yahoo small businesss server is down and we are not able to edit or midify our content pages.

    When we contact the CSE they even don’t rever back as well.

    We would alert people don’t get any services from yahoo on the name of cheap domain names and reasonable web hosting

    Reasons:

    1. The server specification doesn’t meet the existing requirements of any websites you will hope like e-commerce sites, forum based sites, social networking sites, and other sites that require MySql and PHP versions more than 5.0.0.

    2. The backup power is worst in the competitive market.

    3. The customer support step back when you are in problem.

    4. While registration of domain the packages includes (domain name , web hosting, site builder tools, web designing guidance for beginners and relaible customer support) leaving the two earliers they doesn’t worth trust of a single penny even.

    Problems you will face.

    1. once the server would down. The Googlebot would not be able to index your newly files. Even you yourself would not be able to edit/modify /add any files. The uploading servers are also down.

    last but not the least I would personally request to don’t believe in these sugar coated words of Yahoo small business services and spread the word so that people can be aware of It.

  10. Yahoo Sells “Non-Core” Asset HotJobs For $225 Million Says:

    […] terms (based on an SEC filing), including a non-compete between the two companies. The related, potential sale of Yahoo Small Business has reportedly been called […]

  11. Jeff Says:

    I think the problem with many of the web companies founded in the 90’s is that they tried to take on too much. They wanted to have their hand in everything — and with that they got a little too greedy. Now that they are starting to realize that they aren’t the only major player in town, they’re starting to shed assets that should have never been part of their portfolio to begin with. It’s almost as if many of these companies had an identity crisis — which I believe is exactly what Facebook is facing now (no pun intended), with regards to the Twitterification of the service.

  12. Yahoo Sells “Non-Core” Asset HotJobs For $225 Million | GetMeSEO.com Says:

    […] terms (based on an SEC filing), including a non-compete between the two companies. The related, potential sale of Yahoo Small Business has reportedly been called […]

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