In individual company news, Yahoo fell $1.06, or 2.7 percent, to $38.32 after the company announced that Verizon would buy Yahoo’s advertising, media and email businesses for $4.83 billion, ending a five-month auction.
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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”.
“This is a huge win for Verizon, AOL and Yahoo – but more importantly, it’s a win for consumers, clients and creators who are at the heart of everything we do”.
It will be a long, drawn-out walk to the exit for Yahoo Chief Executive Marissa Mayer, sources said – despite her talk on Monday that she was”planning to stay” at the Web portal.
In an email, Equilar spokesperson Dan Marcec broke the numbers down this way: Mayer has earned $114.7 million in “realised pay” during her tenure as CEO between 2012 and 2015.
Most of that money, however, has been flowing toward Google and Facebook, two companies that eclipsed Yahoo during its slide from an online sensation, once valued at $130 billion, to a dysfunctional also-ran.
The scenario many investors are now rooting for is Yahoo Japan and Alibaba buying back these stakes from Yahoo in some way that saves on taxes.
Neither company said much about the brand’s future once the $4.83 billion deal closes early next year. That might be valuable to the advertiser, and Verizon could charge more.
Yahoo has hired a succession of CEOs to engineer a comeback, but finally gave up after the high hopes that accompanied Mayer’s arrival fizzled out.
Although the new Verizon would be No. 3 in the $60 billion US market for digital advertising, “one shouldn’t delude themselves into thinking that it’s a close third place”, said MoffettNathanson analyst Craig Moffett.
Yahoo’s core products: Yahoo’s core products will continue to exist under Verizon’s ownership. The enthusiastic name has been synonymous with the internet’s rise in the 1990s, but now that the internet has matured, it’s not clear whether Yahoo as a brand name will survive.
Yahoo has lost the war against itself. It proved that internet companies could indeed be profitable as other dot-com startups burned through millions of dollars.
Over the years, several search engines have lost business.
“It’s the eyeballs that generate the advertising, you have to get to that viewership to get the advertisers to advertise, and that’s the model that we have to follow”, said Verizon CFO Francis Shammo at an investment conference in May in response to a question about Yahoo’s appeal.
Verizon, based in Basking Ridge, New Jersey, is buying Yahoo’s online operations and its real estate. Verizon already profits from the data plans that connect more than 100 million people using those devices to the internet; with AOL and Yahoo’s services, Verizon is now looking to control more of the advertising on phones, rather than surrendering it to Google and Facebook.
She added that the agreement is “an exceptional outcome for Yahoo shareholders” and that Verizon was chosen because it “believed in our vision the most”.
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Other players said to be lining up for Yahoo were fellow communications player AT&T and an investment group that is comprised of private equity firms and is backed by Warren Buffett. Its ownership stake in those two companies is worth $40 billion, but expect it to trade at a slight discount given the complexity in cashing out its value.
