Verizon Acquires Yahoo!: Pays Peanuts For The Internet Major Worth $128 Billion Once

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After months of speculations, negotiations, and rounds of meetings, finally Yahoo! is sold. According to WSJ, citing person familiar with the matter, Verizon acquires Yahoo! for $4.8 billion. The board of Yahoo! has also accepted the terms and conditions of the Verizon offer, ending the much-talked auction process for the Internet major that rocked the market once.

Verizon Acquires Yahoo!: The Deal

While the deal might have brought a sigh of relief for many, it is a remarkable fall of Yahoo!, which was valued at $128 billion once. The exact terms and conditions are yet to be known, though, the deal includes Yahoo’s core internet business along with some real estate. However, the patents are not a part of the deal.

This is the second major acquisition in the tech industry in the last two months. In a sudden move last month Microsoft had acquired LinkedIn. The rumours mills, however, were already buzzing the internet about Verizon-Yahoo! deal for some time.

What Was Yahoo! Put Under Hammer

If you are following the topic at least for the last few months on Dazeinfo, then you must know the answer to this billion dollar question. It was none other than Yahoo’s current CEO, Marissa Mayer, failed to turn the tides for Yahoo! and finally bowed to the mounting pressure from stakeholders and the board.

The much-hyped MaVeNs strategy, designed and defined by Marissa Mayer to bring back the golden era of Yahoo! failed measurably. Just a few months back we did a detailed analysis of why and how Marissa Mayer’s MaVeNs strategy became nothing but a disaster for Yahoo!. The ex-Googler joined Yahoo! by replacing its interim CEO, Ross Levinsohn, in July 2012. Under the leadership of Mayer, Yahoo! had shown the signs of gaining its lost ground during the early days of Mayer in control. Soon, Mayer started struggling amid the reports of having differences on strategies with its senior executives.

For the last few quarters Yahoo! has been bleeding badly, putting Marissa Mayer under immense pressure to control overheads of the company. She was also asked to create a respectable exit route for stakeholders, and of course, for herself as well. In Q2 2016, Yahoo!’s revenue dropped by 20% from a prior year. Even the acquisitions made by Yahoo! in the recent time were not bearing any fruits, the biggest disappointment came in the form of Tumblr, acquired by Yahoo! in 2013. The company had to write down the valuation of Tumblr by nearly 65%, from $1.1 billion, the amount Yahoo! paid to acquired Tumblr.

What’s In It For Verizon?

Let me say it, Yahoo! is still a beast and it is still worth every penny Verizon Communication is paying to get hold of it. Verizon, the largest telecom & networking company in the US, serves to 145 million internet users and after acquiring Yahoo! the company can easily extend its advertising base by 200 million more visitors. To strengthen its core business and grip the Internet Verizon acquired AOL in 2015. However, amid to the growing competition from Google and Facebook, Verizon has been strengthening its presence in the mobile advertising space. With access to the personal information of millions of users Yahoo! has, control over multiple platforms likes Tumblr, Flickr, and ability to ride on the back of analytics tools like Flurry and BrightRoll, Verizon has a better chance to compete in digital space dominated by two internet giants.

Yahoo! Will Still Be Led by ex-Googler

No, we are not talking about Marissa Mayer, the ex-Googler. And, to be honest, it would be too early to analyze the possible fate of Marissa Mayer under the umbrella of Verizon. But, and interestingly, Yahoo! will be led by another former Googler: Tim Armstrong, who was the CEO of AOL, acquired by Verizon last year. While Marissa Mayer could receive a severance package worth about $57 million, Armstrong is expected to lead the combined Internet companies consisting of AOL and Yahoo! at Verizon. At this time, it looks feasible and makes sense as Armstrong can successfully club content and advertising business to feed both the organizations under him.

All said and done, the acquisition of Yahoo by Verizon also triggers a debate on following topics:

  • Can Verizon revive Yahoo! to its lost glory?
  • The real reason Why Verizon bought Yahoo!?
  • The impact of the development of the Internet Industry!
  • Has the board of Yahoo! made an intelligent move by selling off the Internet major?

Keep following Dazeinfo, soon we will be back after analyzing the above, and many other questions that may be swivelling in your mind by now!


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