HomeIndustryYahoo! Is Being Acquired By Verizon For $4.8 Billion

Yahoo! Is Being Acquired By Verizon For $4.8 Billion

It’s odd to see one of your favourite companies be acquired by a company that wasn’t even born when the former existed. That’s what is purportedly happening to Yahoo. That’s right, the domain of your original E-mail address is under new management. It’s being acquired, possibly, by Verizon in a $4.83 billion deal. Marissa Mayer, the CEO of Yahoo is probably going to be walking away with a $57 million severance package according to the New York Times. She leaves Yahoo! after an unsuccessful stint where she spent four years trying to dig the company out of a bottomless pit. She’ll also be taking stock worth $218 million.

Marissa Mayer, CEO of Yahoo!
Marissa Mayer, CEO of Yahoo!

After the sale, the execs at Yahoo! will be left with $41 billion in investments in the Chinese e-commerce website, Alibaba. Since 2005, Yahoo! has heavily invested in the business. It bought 40% of Alibaba in 2005 for $1 billion but sold most of it afterwards. In 2014, when the site went public, they owned $31 billion worth of shares or 15%.bt-ak028_yahoo_9u_20160722180906.jpg

Yahoo!’s been asking for this for a long time. They were once the kings of search, a Google before Google. The business was founded in 1994 by two Stanford grad students, David Filo and Jerry Yang, in a trailer. And it quickly free to become a multi billion dollar company.

David Filo and Jerry Yang, founders of Yahoo!
David Filo and Jerry Yang, founders of Yahoo!

Their mail service was used by millions and for many it was their first email address. But they got sloppy. Yahoo! Mail became infuriatingly slow and unresponsive despite the many updates. So users migrated to Gmail. People forgot about Yahoo! Search (now powered by Bing) and just used Google. Marissa Mayer updated Yahoo! Weather, Messenger and Mail, acquired Brightroll for $640 million but to no avail.yahoo__for_mobile__your_favorite_yahoo__services__on_your_phone_-2

Yahoo! even tried commissioning original content. They hired TV anchor Katie Couric and began digital magazines and even acquired the social network, Tumblr for $1.1 billion but nothing worked. It might have been ‘hip’, but it was never ‘all that’. In February 2016, Yahoo! officially announced that it was looking for acquisition offers and potential buyers like AT&T and an equity group led by TPG. Yahoo! finally decided on Verizon. What was once a $125 billion Internet company is now being acquired by a cellular carrier for less than one-twenty fifth the price. Oh how the mighty have fallen. The sale doesn’t include Yahoo!’s patents which it has decided to sell individually or its cash.

Verizon’s Strategy

Verizon had already purchased AOL last year for $4.4 billion. This also gave it ownership of the Huffington Post, TechCrunch and Engadget. Verizon intends to pair Yahoo! with AOL to face off against Google and Facebook, the tips of the food chain in social networking.  While Verizon has managed to become one of the largest cellular service providers in the world, it has little to no experience in mass content creation. So if it tends to bring these two former titans together, they’ll need a plan to take in alot of interest. Google and Facebook currently account for over $69 billion of ad revenue in the U.S. while Yahoo! accounts for just over 3.4%. But that doesn’t mean that Yahoo! is dead. Its mail service is used by 225 million people and it has a global audience of a billion people (600 million on mobile). It’s just a matter of the right idea at the right time. Your move Verizon.



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