By bringing Yahoo into the fold, Verizon not only cements its position as one of the biggest communications companies globally, but it now can go toe-to-toe with Google and Facebook when it comes to users and also for ad dollars.
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“Combining Verizon, AOL and Yahoo will create a new powerful competitive rival in mobile media, and an open, scaled alternative offering for advertisers and publishers”, said Armstrong.
The fate of Yahoo’s chief executive, Marissa Mayer, who came under sharp shareholder criticism for failing to arrest the company’s long downward spiral during her four-year tenure, is unclear. “It’s important to me to see Yahoo into its next chapter”, she wrote. “Yahoo humanised and popularised the Web, e-mail, search, real-time media, and more”, she said.
If she is terminated, she will be due severance of about $57 million. Yahoo’s decline, which began with the rise of Google as the preferred search engine for web surfers and advertisers, was hastened in the past decade by management missteps and a failure to keep up with users’ changing habits.
Will Yahoo’s billion monthly users and content such as sports and finance be enough to make Verizon a contender in a digital advertising cage fight with Google and Facebook?
“The Yahoo brand still holds a lot of consumer affinity” and could help Verizon overcome the lukewarm feelings that many subscribers have toward their wireless service providers, said Forrester Research analyst Shar VanBoskirk.
But neither Mayer’s message nor the Verizon press release revealed what was in store for many of Yahoo’s units, including Aabaco, Tumblr, and Flickr.
With the $4.8 billion acquisition of Yahoo, Ms. Walden is part of the way to achieving her mandate. It quickly became the main entrance to a new and entangling world, but ultimately fail to survive Google’s monopoly and never fully entered the social media and mobile devices industries.
According to eMarketer, Google and Facebook have more than half the projected $69 billion US digital advertising market.
Yahoo posted a loss of $440 million on revenue of a little over $1.3 billion in the second quarter of this year.
Neither company said much about the brand’s future once the $4.83 billion deal closes early next year.
Of all of Yahoo’s suitors during a drawn-out, five-month bidding process, Verizon had the most compelling vision for the company, Mayer said on the call.
“They are about as far on the spectrum as any two companies can be”, said Roger Kay of Endpoint Technologies Associates.
Walden says Yahoo would be integrated with AOL. “There is a significant opportunity to capture small and midsize email customers from Yahoo in the wake of the Verizon acquisition”, he said.
Under pressure from activist investor Starboard Value LP, Yahoo launched an auction of its core business in February after shelving plans to spin off its stake in Alibaba.
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Like many other major broadband providers, Verizon wants to be more than a “dumb pipe” that just provides internet access, Columbia Business School professor Rita McGrath said.
