Yahoo loses its independence in $4.8bn purchase

Verizon Communications agreed to buy Yahoo’s web assets for $4.83bn (€4.39bn), ending the company’s two-decade run as an independent business that took it from Stanford University startup at the dawn of the internet age to also-ran behind nimbler online rivals such as Google and Facebook.

Verizon will pay cash in a deal that includes Yahoo real estate, but excludes some intellectual property, which will be sold separately. 

Yahoo will be left with its stakes in Alibaba and Yahoo Japan, with a combined market value of about $40bn.

The telecommunications company will add Yahoo web services that still draw one billion monthly users, including mail, news and sports content and financial tools, gaining share in the $187bn digital advertising market — though it will nevertheless be a distant third behind Google and Facebook.

Verizon, the largest US wireless carrier, also gets smaller but faster-growing assets including mobile applications and advertising technology for video and handheld devices.

The deal amounts to an admission that Yahoo has lost much of its relevance as modern internet use shifts toward mobile, social networking and messaging. 

The “portal,” officially formed in 1995 by Stanford students Jerry Yang and David Filo, was once indispensable, serving as the on-ramp to the online world for millions of consumers just discovering the internet. 

Yahoo’s decline, which began with the rise of Google as the preferred search engine for web surfers and advertisers, was hastened in the past decade by management missteps.

Yahoo CEO Marissa Mayer had no choice but to put the company’s core up for sale earlier this year. 

Now, Verizon must find a way to turn around a business that, even after strategy shifts and job cuts, remains bloated with costs and held back by a fragmented product lineup.

The deal also ends the turnaround efforts of Ms Mayer, whose appointment in 2012 was lauded by Wall Street and Silicon Valley. 

Ms Mayer was hailed as a potential saviour for a foundering company in management disarray. 

“I’m planning to stay,” Ms Mayer said in a web post.

Bloomberg


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