Newspaper’s around the world have officially announced Yahoo’s deal with Verizon. The bargain consisted of its internet activities’ sale to the Verizon Group. This is the end of a long series of months of suspense. For nearly $ 5 billion, Verizon put its hand on the heart of business of the former star of the 90s web news feed (Yahoo! News). It also acquired its search engine, its web-mail and advertising activities. For Verizon, the goal is to integrate these activities with AOL, also acquired last year for $ 4.4 billion. The whole operation should be completed by 2017.
What is Yahoo’s deal?
By selling its core business, Yahoo becomes an empty shell. It is only represented by its holding company with 35.5% stakes in Yahoo! Japan ($ 8.3 billion) and its 15% stake in Alibaba ($ 31.2 billion). By themselves, these investments represent more than the entire market capitalization of Yahoo ($ 37 billion), surprisingly. It will also keep its patented portfolio. Yet, that’s obviously not the most important part of the company.
Yahoo’s deal highlights some the company’s strange peculiarities and what to expect for it in the future. By keeping its most valuable assets, the company will remain listed. Still, you should expect a name change to reflect its new activities. Interestingly enough, following this announcement, its stock immediately lost more than 2% of its value on the Nasdaq. Yahoo’s deal leaves a sour taste in its investors’ mouth when one takes into consideration the fact that it turned down the offer of $45 billion by Microsoft in 2008.
The end of a web giant
Some might consider it a sad end for a company that was founded in 1995 and shaped the web as we know it. The lack of group strategy and overall vision have been fatal for Yahoo, who was a pioneer of the Internet. The company has not been able to renew its business model or been able to adapt to the changes in new consumption patterns of users. In retrospect, it was completely overwhelmed by Google and Facebook. And now, Yahoo’s deal came at a very sensitive moment in the market, which could potentially mark the beginning of a new tech bubble burst.
Yahoo taken by Verizon
The end of Yahoo’s deal was scheduled for 2015. It was met with repeated attacks by its major shareholders, including starboard Value, the most vocal of them. Arriving in 2012 at the head of Yahoo, Marissa Meyer, a former Google executive, never succeeded to convince its shareholders that the company suffered ever greater pressure. Her numerous stimulus packages and multiple acquisitions of start-ups were never able to convince them of the lack of sustainability of the business.
With Yahoo’s deal, Verizon, which will publish its results today, in the hopes of creating a new online content giant. Through this acquisition, Verizon also improved its online advertising which became the third biggest player in the United States with 5.2% market share, still far behind Google (38.7%) and Facebook (15%), but impressive, nonetheless.