Yahoo's unimpressive quarterly revenue forecast disappointed Wall Street and indicated that the internet giant is finding it hard to compete with Facebook and Google.
Investors have put pressure on Yahoo, the one-time Internet leader, and its Chief Executive Carol Bartz to take measures to revive stock price and boost growth, amid reports that private equity companies are considering the purchase of the 20 billion dollar company.
Speaking of Bartz, analyst Yun Kim at Gleacher & Co said, "She was already on the hotseat. I don't think she's off the hotseat. The results have not shown any kind of real improvements".
Bartz defended the progress Yahoo has made on her watch during a conversation with analysts on Tuesday, citing the two-fold increase in its third-quarter operating margins to around 12% and improvement's made to Yahoo's technology.
"We're working to reverse years of decelerating growth," stated Bartz, who was appointed last year and has since fired employees and discontinued a number of Web business.
Bartz declined to comment on private equity reports. Yahoo shares have risen more than 6% since talks last week that some private equity companies, which include Silver Lake Partners, were considering a buyout of Yahoo- probably in partnership with News Corp. or AOL Inc.
"It would make sense if they did something with AOL because the business is at the point where it's a game of scale", according to Brian Pitz, an analyst at UBS.
Sources say that the buyout will largely depend on Yahoo selling off its 40% share in Alibaba Group. This will significantly reduce the company's present market value of about 20 billion dollar, making a buyout deal more likely.
