ANALYST’S TAKE: “After a mixed European session, USA markets were dramatically thrown off course by the capitulation in energy stocks overnight”, said Angus Nicholson of IG in a report.
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The No. 1 U.S. wireless operator is betting that it can take data on more than 200 million unique monthly visitors to Yahoo sites, many of them on mobile devices, and combine it with data on 150 million or so unique monthly AOL users and data on its own user base of over 100 million wireless subscribers to offer a more targeted service for advertisers.
Verizon is expected to combine the business with the internet firm AOL, which it bought a year ago for $US4.4 billion ($5.9 billion).
The move is a big one for Verizon, as it already holds AOL’s portfolio that includes The Huffington Post. But for Verizon, the deal is about more than just nostalgia.
Jackson also criticized Yahoo for having too many employees, for overpaying Chief Executive Melissa Mayer, and even for the free food it provides to staffers.
A cash-rich split would come with challenges, as Yahoo Japan would need to trade some operating asset that it does not want with Yahoo as part of the deal, Willens said.
Mayer arrived in 2012 from Google seeking to revitalize Yahoo, which at its peak had a market value of over $100 billion. “What’s exciting about the Verizon transaction is that it brings us back to growth sooner”, she said. “We set out to create a stronger, more modern, version of Yahoo and that’s very much happened”, she said. Armstrong tried unsuccessfully to persuade Mayer to combine the two companies when they both still independent. “Maybe tailor that sub-brand with names toward products, like Yahoo Mail, Finance and Sports”. “Yahoo humanised and popularised the Web, e-mail, search, real-time media, and more”, she said. He believes Verizon’s strength is in building a “house of brands”.
“Let’s call it a new beginning for Yahoo”, said Forrester Research analyst Shar VanBoskirk.
Under Armstrong, AOL has beefed up its advertising technology with a string of acquisitions, and launched the mobile video service go90.
And Verizon isn’t concealing its plan.
Walden says Yahoo would be integrated with AOL.
Investors will be hoping for a quick sale of these stakes, but Yahoo has been looking for years without success for a way to make money from the investments without incurring a huge tax bill. When it gets folded into Verizon’s portfolio, the telecommunications company will have access to online behavioral data on those consumers.
As anticipated, the long drawn out auction process for beleaguered Internet company Yahoo has been finalised after it accepted a US$4.8 billion offer from Verizon.
A key objective in Yahoo’s (YHOO) sale to Verizon (VZ) for $4.8 billion is to separate the core web business from two other valuable assets: Yahoo’s 15% stake in Chinese retailing giant Alibaba (BABA), worth $32 billion, and its 36% stake in Yahoo Japan, worth about $8 billion. It wasn’t long ago that Yahoo was once worth around $US125 billion ($167 billion), and had an offer from Microsoft to buy its business for almost $US45 billion ($60 billion).
“Until completion of any change of control of Yahoo, Inc, which Seven West Media understands may take six to nine months in the nature of large and complex transactions, it is business as usual at Yahoo7 here in Australia and New Zealand”.
The deal is likely to end the four-year reign of Yahoo CEO Marissa Mayer, a former Google executive who flopped in her attempts to turn around the Sunnyvale, California, company.
“As we embark on this new partnership and work towards an expected close in the 4th quarter of 2016 or early 2017, we remain committed to delivering the highest possible value”.
Marissa Mayer, CEO of Yahoo, said in a statement: “Yahoo is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL”.
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After the sale Yahoo will be left with cash, investments in Alibaba and Yahoo Japan, and some patents.
