The nation’s largest wireless carrier paid $4.4 billion for AOL a year ago.
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Yahoo chief Marissa Mayer said the company, that changed the world, will continue to do so through this combination with Verizon and AOL.
The sale to Verizon drew nostalgic responses from Wall Street investors, including RBC Capital, which characterized the deal as an “ignominious end for Yahoo, which used to be the Facebook or Google of the internet circa 1999”. Ars said she seems likely to leave (especially with a $57 million severance waiting in the wings) although she said she loves Yahoo and “plan[s] to stay”.
The sale of our operating business, which effectively separates our Asian asset equity stakes, is an important step in our plan to unlock shareholder value for Yahoo.
Armstrong explained that Google’s power is based on its search capabilities and Facebook is the leader in social media.
The new entity which will remain after the deal is going to be a publicly traded investment firm which will be comprised of two major assets – a 15 per cent stake in Chinese online marketplace Alibaba valued at $32 billion and a 35.5 per cent stake in Yahoo Japan valued at about $8 billion. In 2008, for example, Microsoft was willing to pay more than $45 billion for Yahoo, an offer that was rebuffed by cofounder Jerry Yang.
Yahoo also still has a patent portfolio that it intends to sell, and about $7.7 billion in cash. It proved that internet companies could indeed be profitable as other dot-com startups burned through millions of dollars.
But shareholders suing Yahoo officers and directors in a class action already underway in San Francisco federal court claim the company should have registered as an investment adviser no later than 2013 – and that its failure to do so prohibits Yahoo from selling its Internet assets.
Verizon will generally issue cash-settled Verizon RSUs for Yahoo RSUs that are outstanding at the close.
The name change is a strong indication that Verizon intends to retain the Yahoo brand on many services, an idea that Mayer told the AP came up in the preliminary discussions leading up to the deal.
Technology companies will dominate quarterly earnings news this week, including results from Apple, Amazon, Google and Facebook.
Although the new Verizon would be No. 3 in the $60 billion USA market for digital advertising, “one shouldn’t delude themselves into thinking that it’s a close third place”, MoffettNathanson analyst Craig Moffett said.
The status of Mayer’s future with the company is unclear at this time.
With Verizon’s buy-in, the company gets over 1 billion active monthly users, about 600 million of whom are mobile users.
“Joining forces with AOL and Verizon will help us achieve tremendous scale on mobile”. Marni Walden, head of product innovation and new business at Verizon, will head the combined internet unit and said no decisions had yet been made on the management team.
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Though Yahoo is ending its 22 years as an independent company, the company will continue to live on at Verizon.
