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LeEco Purchases Yahoo's Santa Clara Real Estate for $250M

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With its core business and patents already up for sale, what good does it do to hold on to an undeveloped site? Probably that’s why Yahoo! Inc. just sold its Santa Clara, CA-based real estate property to Chinese technology company LeEco.

LeEco has reportedly acquired the 48.6 acre development site for $250 million. Yahoo is said to have bought this property back in 2006 for $106 million. The pre-tax profit from the current sale therefore stands at $144 million.

Yahoo had planned to build a massive R&D site but failed to achieve its vision. The site was approved for building up to 3 million square feet across 13 buildings but stayed undeveloped for the last 10 years.

Under the prevailing circumstances, where Yahoo itself is up for sale, the property sale will surely help the company with liquidity.

The once-leading Internet giant has been struggling with its core businesses -- namely mail service, online sports, financial and general news sections and its vital online advertising technology, which includes the video advertising platform, BrightRoll.

It has been losing its digital advertising foothold to competitors like Facebook, Inc. and Twitter, Inc. .

 

Currently the company is looking to sell itself to the highest bidder after CEO Marissa Mayer’s unsuccessful turnaround efforts and mounting pressure from investors.

After two rounds of bidding, the third and final round is expected to be finished by mid-July. Verizon Communications Inc. (VZ - Free Report) and AT&T Inc. T are likely the leading bidders in the third round.

The company has also put about 3000 patents, related to its original search technology, e-commerce and online advertising, up for sale as well.

So much for Yahoo. Now let’s see what LeEco is in for.

It appears that LeEco has the same plan for the site as Yahoo had. We think that the acquisition will help LeEco boost its R&D operations, especially when it is looking to launch a video streaming service and a smartphone in the U.S. later this year.

The company offers a wide range of products that include mobile phones, smartphones, tablets, smart home devices, Internet TV and Internet-linked electric cars.

Currently, Yahoo is a Zacks Rank #3 (Hold) stock.

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