Verizon to acquire beleaguered Yahoo for $4.8 billion

“Verizon Communications on Monday announced plans to acquire Yahoo for $4.8 billion in cash, ending months of uncertainty after Marissa Mayer’s battered internet giant company said it would review strategic alternatives,” Tom DiChristopher reports for CNBC.

“Marni Walden, Verizon president of product innovation and new businesses, said on CNBC’s ‘Squawk Box’ that the deal included Yahoo’s core operating business and patents.
The acquisition will help the telecom company in its efforts to build a media company, she said,” DiChristopher reports. “‘Yahoo gives us scale and that’s what’s most critical here. We go from being in the millions of audience to the billions. We want to compete and that’s the place that we need to be, so we’re very pleased with where we are today,’ Walden said.”

“The transaction is seen boosting Verizon’s AOL internet business, which the company acquired last year for $4.4 billion, by giving it access to Yahoo’s advertising technology tools, as well as other assets such as search, mail, messenger and real estate,” DiChristopher reports. “Together, AOL and Yahoo would have about 5 percent of the digital ad market. But on Monday, Walden said she expects AOL and Yahoo to break out of their combined single-digit market share. ‘We’re going to get to double digits,’ she said.”

Read more in the full article here.

“Yahoo was once the king of the Internet, a $125 billion behemoth as big in its time as Facebook or Google are today,” Brian Solomon writes for Forbes. “Now it’s being sold to Verizon for comparative chump change.”

“The transaction ends the independence of one of Silicon Valley’s most iconic pioneering companies. Yahoo’s seventh and final CEO, Marissa Mayer, will reportedly depart with severence pay worth more than $50 million,” Solomon writes. “Over the last four years, Mayer, a former Google executive, tried to right Yahoo’s ship. But her tenure was marred by confused strategy and mismanagement. Revenue peaked in 2008, the year after the iPhone came out, and traffic has continued to fall as users find their attention drawn to younger, more relevant websites and apps.”

“The one thing that kept Yahoo afloat for this long is Jerry Yang’s risky $1 billion bet on Alibaba in 2005. That bought 40% in what would become China’s ecommerce king. Yahoo sold parts of that holding over time, but its current stake is still worth more than $30 billion at today’s prices,” Solomon writes. “The sale will not include the company’s stakes in Alibaba or Yahoo Japan.”

Read more in the full article here.

MacDailyNews Take: A sad, but seemingly inevitable end. As we wrote back in January

Mayer’s been hamstrung with the STUPID deal her predecessor Carol Bartz inked with Microsoft’s Steve Ballmer (two very confused former CEOs) to use Bing as the search component of Yahoo. Yahoo needed to develop and promote its own technology. If they had their own search, Yahoo would be in a position today to make a serious play to replace Google as the default search engine on the world’s most coveted platform and reap multiple billions of dollars from such a deal. Alas, they are not and, as a result, Mayer has been forced to tinker around the edges while trying to extricate Yahoo from the straightjacket into which her predecessor shackled the company.

And, as we wrote in April: Mayer took on an impossible job and deserves credit for staying with the thing when it would have been easy to simply walk away from the mess she inherited. Marissa Mayer would be a wonderful CEO with the right company.

Mayer’s final letter To Yahoo employees:

Yahoo CEO Marissa Mayer (photo by Brigitte Lacombe)
Yahoo CEO Marissa Mayer (photo by Brigitte Lacombe)
Dear Yahoos,

Moments ago, we announced an agreement with Verizon to acquire Yahoo’s operating business. This culminates a rigorous, thorough process over many months, and yields a great outcome for the company. Today’s announcement not only brings us an important step toward separating Yahoo’s operating business from our Asian asset equity stakes, it also presents exciting opportunities to accelerate Yahoo’s transformation. Among the many entities that showed interest in Yahoo, Verizon believed most in the immense value we’ve created, and in what a combination could bring our users, our advertisers, and our partners.

This is a good moment to reflect on Yahoo’s journey to date.

Yahoo is a company that changed the world. Before Yahoo, the Internet was a government research project. Yahoo humanized and popularized the web, email, search, real-time media, and more.

What really sets Yahoo apart is the shared passion to create great products for our 1B+ users, and in doing so, transforming the world for the better. You can clearly see that spirit, that commitment, that fight in the work we’ve done together over the past few years. We set out to transform this company – and we’ve made incredible progress. We counteracted many of the tectonic shifts of declining legacy businesses, and built a Yahoo that is unequivocally stronger, nimbler, and more modern. We tripled our mobile base to over 600 million monthly users, we invested in and built Mavens from basically zero in 2011 into $1.6B of GAAP Revenue in 2015, we streamlined and modernized every aspect of our consumer products, and, with Gemini and BrightRoll, we dramatically improved our advertiser products. This only scratches the surface of what we’ve achieved… and we all know how much hard work it took to get here.

It’s because of that hard work and resilience, that Yahoo will realize amazing opportunities in its next chapter.

This sale is not only an important step in our plan to unlock shareholder value for Yahoo, it is also a great opportunity for Yahoo to build further distribution and accelerate our work in mobile, video, native advertising, and social. As one of the largest wireless and cable companies in the world, Verizon opens the door to extensive distribution opportunities. With more than 100 million wireless customers, a shared view of the importance of mobile and video ad tech, a deep content focus through AOL, Verizon brings clear synergies to the table. And with their aggressive aims to grow global audience to 2B users and $20B in revenue within the mobile-media business by 2020, Yahoo’s products and brand will be central to achieving these goals. Joining forces with AOL and Verizon will help us achieve tremendous scale on mobile. Imagine the distribution challenges we will solve, the scale we will achieve, the products we will build, and the advertisers we will reach now with Mavens – it’s incredibly compelling.

The strategic process has created a lot of uncertainty, but our incredibly loyal and dedicated employee base has stepped up to every challenge along the way. Through the first half of the year, we met our operational goals and overachieved on plan. But, further, there are things that you cannot measure, like the passion of the people behind the products. The teams here have not only built incredible products and technologies, but have built Yahoo into one of the most iconic, and universally well-liked companies in the world. One that continues to impact the lives of more than a billion people. I’m incredibly proud of everything that we’ve achieved, and I’m incredibly proud of our team. For me personally, I’m planning to stay. I love Yahoo, and I believe in all of you. It’s important to me to see Yahoo into its next chapter.

As we work to close this agreement in Q1 2017, it’s more important than ever that we come together as one global team to continue executing on our strategic plan through the remainder of the year. We have delivered the first half of the year with pride, achieving our goals. Now, it is up to us to make Yahoo’s final quarters as an independent company count.

Yahoo is a company that changed the world. Now, we will continue to, with even greater scale, in combination with Verizon and AOL.

Thanks,

Marissa

18 Comments

  1. And so Marissa Mayer’s abject failure comes to an end. EVERYTHING she tried at Yahoo was a dismal failure. Such failure in corporate American hasnt been seen since the likes of Antonio Perez stepped in and tried to save Kodak. Both were complete and total failures.

    If Monkey Boy were in charge of Yahoo, and performed the same as Mayer, MDN would have raked him over the coals ad nauseum.

    Regardless of her total failure, Mayer walks away with tens of millions of dollars.

    What a country.

      1. BS. Yahoo had all the chances in the world to be a player. But Mayer instead preferred social events and living the rock star CEO mommy lifestyle with zero focus on the job. Her parting letter shows how she thinks Yahoo deserves recognition for their efforts instead of their results, which is now the problem at Apple under weak Cook leadership. She deserves none of her ill-gotten millions for her continued mess. History will rightly include her in the list of worst leaders ever. No red ball is going to change that, MDN. If you think it would, then put Cook on a red ball and enjoy the publicity.

      2. Nonsense. Your analogy is TOTALLY flawed. The Titanic had the laws of physics against it. A creative mind and a skill administrator could have saved Yahoo. There are no laws of science that mandate that Yahoo had to go down in flames.

  2. The oped is wrong on both counts.

    1. Apple would have never switched from Yahoo to Google. 99% of the “war” between Google and Apple is between fan(boys) of both platforms. In truth, Apple has nothing against Google; they have no reason to “crush” them. Especially since if Google goes away, Microsoft simply takes their place in search, cloud and having 85% market share in mobile. Apple wants to offer their customers the best product. Google search is the best. So there is no way that Apple would have switched to Yahoo and thereby forced a third rate product on their consumers. Especially since doing so would cause more than a few iPhone customers who are neither longtime or loyal Apple fans and for whom the iPhone and iPad are their only Apple hardware and are merely seeking the best user experience to switch (or switch back) to Samsung Galaxy.

    1A. If Yahoo were capable of developing their own search product, they would have done so years ago. Instead, Yahoo’s search technology fell far behind that of, well, actual search companies like 15 years ago. So they went to Google to provide their search initially. THAT was when Yahoo’s revenue was growing because they had the best of both world’s … Google search plus their own content websites. But Microsoft came along and offered them more money as well as “synergy” between Yahoo and MSN (or whatever it was called back then) content, and Yahoo jumped.

    2. I will not say that Marissa Meyer did a “good job.” Yahoo failed when they switched from being an Internet services company into being a content company. Yahoo wanted to make money off online magazines, movies, books, TV/videos etc. In short, they wanted to be the Internet Time Warner. The problem: AOL wanted to be that too … which is why they bought Time Warner. It didn’t go so well for them, which is why they also are now owned by Verizon! And in addition, Microsoft tried and failed with this same bad business model: MSNBC, the stuff they tried to do with XBox and TV/movies etc.

    I suppose that Yahoo hired Meyer because Facebook at the time was supposed to be the next content king. The difference: Facebook had a strategy that actually worked, which was being more of a content aggregator, presenter and disseminator instead of trying to make money producing their own content and giving it away for free, as Yahoo, AOL Time Warner, Microsoft and the others did. Maybe it would have worked had it not been for YouTube … or had they bought YouTube before (then much smaller!) Google did. Maybe if they had been the one to start Netflix, Amazon Prime or Hulu. But likely those would not have been enough to save them.

    Instead, Meyer SHOULD HAVE taken Yahoo back to being an Internet and cloud services company. They should have competed with Google, Microsoft and Amazon in offering cloud products and services. They also should have offered their own suite of productivity and communications apps for consumers and enterprises. For the latter: please realize that Yahoo had their own maps, email, IM and even social products (Yahoo Groups) long before Google, and for quite some time their offerings were BETTER than Google’s. Google’s IM product never caught on and is still not heavily used to this day, and the same is true of their social network. Yahoo could have competed with Google and even Facebook in those areas but they let Yahoo Mail and Yahoo Messenger wither on the vine, without adding SMS or other real texting capability, and they never even released mobile app versions of Yahoo Messenger, Yahoo Maps or converted Yahoo Groups into a full-fledged social network for whom Yahoo Messenger would have been its client. Yahoo also had the ability to build a shopping feature to compete with Amazon that Google has been working on for years … they didn’t do it. Enterprise apps and services, including something as simple as cloud storage? Or their own browser? Nothing there either.

    I am sorry, but the notion that positioning themselves to join Apple in some fight with Google that does not even exist as far as Apple and Google are concerned is nuts. Apple doesn’t care who wins in the search wars between Google, Yahoo, Microsoft and whoever. They just want to offer the best search to offer to their users for the cheapest amount of money, or failing that whoever is willing and able to pay them the most money, as Google and Microsoft currently do to the tune of billions a year. Yahoo could have spent billions on creating a search product that still would have been inferior to Google and Microsoft, and then spent billions more to try to get iOS search revenue from Google and Microsoft and they would have still been a declining company.

    Funneling iOS search to Yahoo would not have saved Yahoo, and it would not have killed Google and Android, which is the outcome that you guys really want.

  3. Sad to see what could have been a great company shrivel and die like that.
    On a personal note, what will happen to my ****@yahoo.com email address? I’ve had the same address since 2002 and don’t want to loose it.

    1. I’m pretty sure our @yahoo.com addresses from back in the day will stay around for years to come. I’m slightly relieved that Yahoo! went to a U.S. company and not somewhere in China.

  4. Seems like MDN and other sources have been so totally obsessed with this pic of a woman sitting on a ball that there’s been no room for objective analysis whatsoever. She has said or done nothing to indicate the company was going to be turned around, not once, from the start. Yahoo died a long time ago.

    1. Well said!

      Sadly, I would have to say that MDN uses same depth of analysis to evaluate the current Apple leadership team. They are milking the brand to enrich themselves instead of pushing forth technology to make Apple the clear leader in value or performance. Of course, the iPhone will ensure they can all coast along for a few more years, but the rest of the Apple product portfolio is now a dusty overpriced embarrassment.

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