It is being reported around the web that telecom giant Verizon has announced plans to acquire content company Yahoo for $4.83 billion in cash.
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The price Verizon is paying for Yahoo’s internet assets is a small percentage of its market capitalization of over $125 billion during the peak of the dot-com boom, reflecting how badly the company has fallen out of favor.
Yahoo, based in Sunnyvale, California, is parting with its email service and still-popular websites devoted to news, finance and sports in addition to its advertising tools under pressure from shareholders fed up with a steep downturn in the company’s revenue during the past eight years.
– For online advertising, Yahoo is only expected to take 1.5 percent of the worldwide digital advertising market this year, down from 2.1 percent in 2015, according to eMarketer.
In June, Barclays said Verizon could save up to US$500 million a year in costs by buying Yahoo’s Internet business, as it would no longer have to shell out for traffic and other expenses.
Little will be left of Yahoo, it seems, apart from a 35.5 percent stake in Yahoo Japan and 15 percent of Chinese e-commerce company Alibaba, worth US$41 billion. Yahoo declined to comment on potential scenarios on Monday.
But according to Verizon executive and new Yahoo boss Marni Walden, the leadership chart is still being hashed out, and Mayer’s role – whatever it might be, if anything at all – is unclear.
She said Yahoo! and AOL had popularised the Internet, email, search and real-time media, adding, “It’s poetic to be joining forces with AOL and Verizon as we enter our next chapter focused on achieving scale on mobile”. Yahoo attempted to buy both companies while in their infancy. We’ve seen companies like Facebook (FB – Analyst Report) and Alphabet (GOOGL – Analyst Report) succeed with targeted advertising because they do a very good job learning about their users’ online tendencies.
As people began to flock to the internet with the advent of graphical web browsers in the 1990s, Yahoo was king.
May: Verizon is front runner in bidding for Yahoo.
Indeed, Mayer – whose four-year tenure atop Yahoo has been blasted by critics as a failure – is now expected to remain chief executive just until early 2017, when the mega-merger is expected to close. Yahoo’s market value consisted nearly entirely of its Asian investments.
Monday morning saw the biggest headline in tech this summer, as Yahoo has confirmed that it is selling its “core business” to Verizon.
The timeline below shows some of the 22-year-old company’s highs and lows, acquisitions, and other noteworthy events.
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Some analysts said Verizon is likely to keep the Yahoo brand, which is recognized globally and used by about a billion people. The acquisition will help Verizon to become the third major player in the $187 billion digital advertising space well behind market leaders Google and Facebook.
