Partners
1.6K members online now
1.6K members online now
Community space to get to know one another, talk about marketing and advertising strategy
Guide Me
star_border
Reply

Verizon Will Buy Yahoo For $4.8 Billion

Badged Google Partner
# 1
Badged Google Partner

What do you guys think of the merger?

 Verizon announced Monday that it will acquire Yahoo’s core web business in a $4.8 billion deal, thus ending Yahoo’s run of more than two decades as one of the first true independent web giants to emerge from Silicon Valley.

 

The deal ends years of transformation and retrenchment that have characterized Yahoo, once the homepage for the web, as it has tried to win advertising dollars, users, and employees from Google and Facebook, which now dominate the industry. In 2008 Microsoft offered almost $45 billion for the company.

 

The deal also marks the failure of Yahoo’s chief executive officer, former Googler Marissa Mayer, to turn Yahoo from a sleepy homepage with a massive, loyal (but not growing) audience of desktop users into a thriving incubator of slickly designed and massively popular mobile products.

 

Mayer took the reins in 2012. The New York Times calculated that, including possible severance payments, Mayer is due to receive more than $200 million in compensation for her time at the helm of Yahoo. Mayer said in a note to employees that she is “planning to stay,” she also described the union with AOL under the aegis of Verizon as “poetic” in a statement.

 

The parts of Yahoo being acquired by Verizon will be integrated with AOL, which was bought by Verizon last year in a similar deal and is run by another former Google executive, Tim Armstrong. The companies said they expect the deal to close early next year.

 

“Among the many entities that showed interest in Yahoo, Verizon believed most in the immense value we’ve created, and in what a combination could bring our users, our advertisers, and our partners,” Mayer said in a message to employees posted on Tumblr. “Yahoo is a company that changed the world. Before Yahoo, the Internet was a government research project. Yahoo humanized and popularized the web, email, search, real-time media, and more.”

What remains of Yahoo are large stakes in Yahoo Japan and the Chinese e-commerce giant Alibaba, which are worth on paper about $33 billion, while the company’s cash, other securities, and real estate are worth about $9 billion. The company’s total value, according to the stock market at the close of trading on Friday, was $38 billion. Verizon said that all of this, along with some patents, would remain with Yahoo shareholders as its own publicly traded company.

The core business that Verizon is buying is still able to generate cash and attract a huge number of eyeballs, but has been unable to grow. In its latest quarterly results, announced last week, the company’s revenue minus the costs of acquiring traffic was $841 million, down from just over $1 billion in the second quarter of last year, a trend that Mayer’s more-than-50 acquisitions — including the $1 billion purchase of Tumblr — and search deals with Microsoft and Mozilla were not able to reverse. The companies said Yahoo has 1 billion monthly active users across all its business and about 600 million mobile users.

 

Combined with AOL’s advertising software and businesses and websites like theHuffington Post and TechCrunch, Verizon has assembled a truly massive web media operation that it hopes to be able to serve up to its internet and mobile users on every possible platform. “The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising,” Verizon CEO Lowell McAdam said in a statement.

 

From Mayer’s perspective, her tenure has been about turning Yahoo in a company that rolls out mobile, social, and video products to its massive user base; for Wall Street, however, it’s been about what the company will do with its 384 million shares of Alibaba, which have long far outpaced the value of its core business.

The first plan, announced early last year, was to spin off the stake in Alibaba, along with a small part of Yahoo’s business, into an independent company called Aabaco that would be owned by Yahoo’s shareholders. This plan, which required the Internal Revenue Service to sign off on it to avoid taxation, ran aground when tax authorities indicated that they would look askance at deals like it, which were previously commonplace for companies splitting themselves up.

Starboard Value, a hedge fund that had successfully pushed for large changes at the restaurant chain Darden, had a different plan: spin off the Alibaba stake and merge with AOL, creating a content and advertising colossus. When AOL instead agreed to sell itself off to Verizon that May, that avenue was closed off and Starboard later proposed in late 2015 that Yahoo sell its core search and advertising business, thus ending its run as an independent web company. Only in February did Yahoo agree with the hedge fund, starting the process that ended with today’s announcement.

Here is the Tumblr post of the message Marissa Mayer sent to Yahoo employees about the deal:

Today is a big day for Yahoo! This is the email that I sent to Yahoos around the world today. Given the interest around our journey to this point, I wanted to share more about today’s announcement. –Marissa

Dear Yahoos,

Moments ago, we announced an agreement with Verizon to acquire Yahoo’s operating business. This culminates a rigorous, thorough process over many months, and yields a great outcome for the company. Today’s announcement not only brings us an important step toward separating Yahoo’s operating business from our Asian asset equity stakes, it also presents exciting opportunities to accelerate Yahoo’s transformation. Among the many entities that showed interest in Yahoo, Verizon believed most in the immense value we’ve created, and in what a combination could bring our users, our advertisers, and our partners.

This is a good moment to reflect on Yahoo’s journey to date.

 

Yahoo is a company that changed the world. Before Yahoo, the Internet was a government research project. Yahoo humanized and popularized the web, email, search, real-time media, and more.

What really sets Yahoo apart is the shared passion to create great products for our 1B+ users, and in doing so, transforming the world for the better. You can clearly see that spirit, that commitment, that fight in the work we’ve done together over the past few years. We set out to transform this company – and we’ve made incredible progress. We counteracted many of the tectonic shifts of declining legacy businesses, and built a Yahoo that is unequivocally stronger, nimbler, and more modern. We tripled our mobile base to over 600 million monthly users, we invested in and built Mavens from basically zero in 2011 into $1.6B of GAAP Revenue in 2015, we streamlined and modernized every aspect of our consumer products, and, with Gemini and BrightRoll, we dramatically improved our advertiser products. This only scratches the surface of what we’ve achieved… and we all know how much hard work it took to get here.

It’s because of that hard work and resilience, that Yahoo will realize amazing opportunities in its next chapter.

 

This sale is not only an important step in our plan to unlock shareholder value for Yahoo, it is also a great opportunity for Yahoo to build further distribution and accelerate our work in mobile, video, native advertising, and social. As one of the largest wireless and cable companies in the world, Verizon opens the door to extensive distribution opportunities. With more than 100 million wireless customers, a shared view of the importance of mobile and video ad tech, a deep content focus through AOL, Verizon brings clear synergies to the table. And with their aggressive aims to grow global audience to 2B users and $20B in revenue within the mobile-media business by 2020, Yahoo’s products and brand will be central to achieving these goals. Joining forces with AOL and Verizon will help us achieve tremendous scale on mobile. Imagine the distribution challenges we will solve, the scale we will achieve, the products we will build, and the advertisers we will reach now with Mavens – it’s incredibly compelling.

 

The strategic process has created a lot of uncertainty, but our incredibly loyal and dedicated employee base has stepped up to every challenge along the way. Through the first half of the year, we met our operational goals and overachieved on plan. But, further, there are things that you cannot measure, like the passion of the people behind the products. The teams here have not only built incredible products and technologies, but have built Yahoo into one of the most iconic, and universally well-liked companies in the world. One that continues to impact the lives of more than a billion people. I’m incredibly proud of everything that we’ve achieved, and I’m incredibly proud of our team. For me personally, I’m planning to stay. I love Yahoo, and I believe in all of you. It’s important to me to see Yahoo into its next chapter.

 

As we work to close this agreement in Q1 2017, it’s more important than ever that we come together as one global team to continue executing on our strategic plan through the remainder of the year. We have delivered the first half of the year with pride, achieving our goals. Now, it is up to us to make Yahoo’s final quarters as an independent company count.

 

Yahoo is a company that changed the world. Now, we will continue to, with even greater scale, in combination with Verizon and AOL.

Thanks,

Marissa

 

 

2 Expert replyverified_user

Re: Verizon Will Buy Yahoo For $4.8 Billion

Follower ✭ ✭ ✭
# 2
Follower ✭ ✭ ✭
I have no idea why they think it is going to work for them...

Re: Verizon Will Buy Yahoo For $4.8 Billion

Explorer ✭ ✭ ☆
# 3
Explorer ✭ ✭ ☆
According the Mashable, the sale of Yahoo includes Tumblr and because of this development "ads will start appearing on Thursday, and Tumblr users must opt out of having the ads displayed."
http://mashable.com/2016/07/27/tumblr-advertising-money/#bWzfXLZ9xOqx

Re: Verizon Will Buy Yahoo For $4.8 Billion

Top Contributor
# 4
Top Contributor
Idk, Yahoo is a disaster of epic proportions (I've had Yahoo account since 1998 and still do). Verizon is just a notch above - a slow moving pre-historic animal not evolving with times as of yet. AOL... Do people actually use AOL actually? I thought they closed for good or something.. I am sure there are some niche otherwise hard to reach population pockets there, but they are def not worth billions that the deal is talking about.

Julia Muller,
AdWords Top Contributor | Community Profile | Twitter | Philly Marketing Labs
Was my response helpful? If yes, please mark it as the ‘Best Answer.’ Learn how here.

Re: Verizon Will Buy Yahoo For $4.8 Billion

Explorer ✭ ✭ ☆
# 5
Explorer ✭ ✭ ☆
AOL today is very different than the old internet service provider, but yes people still have the email. Now they own TechCrunch and are more focused on advertising sales through various distribution channels. To be fair, what Verizon lacks in customer service, it makes up for with infrastructure. Between their fiber optic networks, wireless, and internet exchange points they make up a large portion of how everything is connected here in the USA.

Interesting background information: https://en.wikipedia.org/wiki/Internet_exchange_point

Re: Verizon Will Buy Yahoo For $4.8 Billion

Top Contributor
# 6
Top Contributor
I agree that Yahoo missed the boat when it came to evolving with the changing Internet just like aol and Myspace. Of course the dinos still try to make comebacks. This summer Rhapsody in the US has become Napster...
http://us.napster.com/

I guess that is kind of like why Hollywood makes so many remakes and remakes of remakes. They figure it worked the first time so why couldn't it work again? To me it just shows a lack or new and original ideas both in Hollywood and on the web. After all, what market is Rhapsody hoping to appeal to by changing its name to Napster? Nobody who didn't live through or grow up in the 90's really knows about Napster other than it was some old music service like Pirate Bay. So if they are hoping to be all edgy and trendy with the kids I think they missed the boat. Of course if they want to strike some nostalgia in 30 somethings then maybe it was a good idea.