However, the clue for the future of Yahoo, founded in 1995 by Jerry Yang and David Filo, two computer graduate students at Stanford University on the US west coast, was in a news release from Verizon, headquartered in New York City on the east coast.
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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.
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”.
The acquisition, expected to close in early 2017, pending shareholder and regulatory approval will exclude Yahoo’s cash, certain patent holdings, as well as its share in China’s Alibaba Group and stake in Yahoo Japan. It plans to change its name and become a publicly traded investment company. Private-equity firm TPG, telecom rival AT&T Inc., Vector Capital and a consortium led by Quicken Loans Inc. founder Dan Gilbert also submitted final bids for Yahoo, according to a person familiar with the matter.
The deal comes about two years after Starboard began campaigning for changes at Yahoo.
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. It’s possible the companies will reveal their intentions sooner, but they might need some time as a single company to figure things out.
In an interview, Mayer said, “I plan to stay”. “It’s a tough road but it would not surprise me that advertisers would love for an alternative if nothing else but to. keep pricing in check”.
The publication said investors seemed positive about the deal, with one congratulating Mayer directly and other extending congratulations to the entire Yahoo management team for putting together the deal.
AOL CEO Tim Armstrong told CNN’s Poppy Harlow that he and Mayer are focusing first on getting “the strategy right, and then the structure and the roles right”. “The press has tried to make it a little more of drama camp, but we come from similar backgrounds”.
Mayer also tried to frame the deal in a positive light on the call. “The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising”.
Verizon needs to handle Yahoo with care if it wants the deal to work, analysts said.
Armstrong explained that Google’s power is based on its search capabilities and Facebook is the leader in social media.
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 was synonymous with the Internet itself in the late ’90s.
But Verizon will still have more to do.
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Investors were less than thrilled. Shares of Yahoo were down almost 4% Monday afternoon.
