Yahoo exploring auction of 3,000 patents as Verizon tenders $3B bid for company

Even as Yahoo considers second-round offers for its core business from a shortlist of potential buyers -- including Verizon (NYSE: VZ), which is offering $3 billion for at least part of the company -- the search engine and online advertising provider is considering putting up around 3,000 of its patents for sale in a separate auction.

Those patents include some of its original search engine technology dating all the way back to 1996, when Yahoo first made its initial public offering.

A Yahoo spokesperson confirmed to The Wall Street Journal that it is exploring the sale of patents and applications, calling it a "unique opportunity" for internet companies to get their hands on "pioneering and foundational patents related to web search and advertising," in a statement.

Yahoo had shifted 2,659 of its patents to a separate subsidiary, Excalibur IP LLC, back in April just before the deadline for its first round of bids on its core business, WSJ noted.

Meantime, Verizon's reported $3 billion bid, first noted by WSJ, is lower than initial estimates that Yahoo's core business would fetch at least $4 billion to $8 billion. The reasoning among industry watchers is that Verizon is likely not bidding for all of the company or the bulk of its most valuable patents.

The bid price excludes Yahoo's physical property and equipment, for example, according to Robert Peck, an internet equity analyst for SunTrust Robinson Humphrey as quoted by USA Today, which puts the value of Yahoo's core business at about $5.5 billion.

"If the bid price of Verizon is any indication, Yahoo is falling short in what it hopes to fetch for its assets," the USA Today article noted.  That is reportedly due, in part, to sales presentations Yahoo made in May at its Sunnyvale, California headquarters that "revealed the extent to which Yahoo's online advertising business is declining," the WSJ article said.

Regardless of the reason for the second-round bidding price, odds still favor Verizon winning the auction for Yahoo, whose advertising assets and other technology could make a nice addition to its AOL assets and boost the advertising tech that it's putting in place for its go90 online video service.

For more:
- see this WSJ article
- and this WSJ article
- see this USA Today article

Related articles:
AT&T likely won't beat Verizon in bidding for Yahoo, analyst says
UBS: Verizon's Go90 faces 'an uphill battle' against other mobile video and social apps
Report: Bids for Yahoo expected to be in the range of $2B to $3B, far below initial expectations
AOL, Yahoo and Verizon could make for powerful competitive trifecta: report
What can Yahoo's online video assets do for Verizon?

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