Yahoo to Have Giant Patent Garage Sale

Yahoo has notified potential buyers that it plans to auction off about 3,000 patents and will be accepting bids until mid-June, The Wall Street Journal reported Tuesday.

The intellectual property for sale includes patents for its original search technology. Yahoo has hired Black Stone IP to run the auction, according to the WSJ.

Up for Grabs

The patents “cover strategic areas such as search, e-commerce and online advertising,” said Andreas Scherer, managing partner at Salto Partners.

It’s “very much like selling the crown jewels. It’s safe to assume that the days of Yahoo as a standalone business are numbered,” he told the E-Commerce Times. “Naturally, companies such as Alphabet and Microsoft will take a close look at this merchandise.”

Following is a sampling of the patents on offer:

• Content-based billing
• A computerized advertising offer exchange
• A method and system for serving ads
• Techniques for increasing the recall and recognition rate for Internet display ads
• A Sell through rate evaluation framework for pricing inventory profiles in advertising systems

How Much Are Those Patents in the Window?

The patents are expected to fetch about US$1 billion.

EnvisionIP’s Patentvue this spring assessed Yahoo’s patent portfolio as strong but overvalued at the $3-$4 billion figure bandied about at the time. Whether the latest $1 billion estimated value of Yahoo’s 3,000 patents on offer is more realistic is not clear — EnvisionIP had identified only 2,000 U.S. patents in Yahoo’s portfolio as active and in force.

Yahoo “hasn’t generally kept up with the evolution of browsers or social media,” observed Mike Jude, a program manager at Stratecast/Frost & Sullivan.

“It has a nifty approach to social media — one that’s integrated with online services — but doesn’t have the means to capitalize on that,” he told the E-Commerce Times. “Any buyer will need to consider the investments needed to bring Yahoo up to speed and will discount their bids accordingly.”

Who Will Buy?

Although Yahoo was among the earliest search engines, “it hasn’t invested in advanced search technologies the way its competitors have,” said Jude.

The search patents may not have much competitive value, he suggested, but they “might be useful as a foundational technology base for anyone acquiring a company interested in constructing a unique search capability.”

That might include telephony companies, because “having search technology that doesn’t depend on Google or Microsoft built into a communication service could have a very high appeal to consumers,” Jude pointed out.

Mayer’s Cunning Game Plan

If the value of Yahoo’s patents has declined, that’s not the only bad news for Yahoo this week.

Verizon is expected to offer less for Yahoo’s Web business than previously thought — $3 billion, rather than the $4-$8 billion ranged predicted earlier this year — according to the latest reports.

“Verizon has probably deduced that there are fewer bidders and that since they made their first round bid, Yahoo’s traffic numbers, which anyone can track, have continued to decline,” noted Barry Randall, chief investment officer at Crabtree Asset Management.

Yahoo CEO Marissa Meyer “is managing this process cannily, by deferring everything to the committee assigned to weigh the various bids,” he told the E-Commerce Times.

“That way, she gets credit for the rise in stock price since she took over while keeping her fingerprints off of any decision to bust up the company,” Randall explained. “She gets plausible deniability straight out of the Richard Nixon playbook.”