Yahoo has been financially struggling for quite a long period of time, having gone through a tiring period of the bidding process from other companies and numerous layoffs. After all, it has finally become known that Verizon purchased Yahoo for $4.5 billion paid in cash. Apart from Yahoo, Verizon also owns a popular American portal AOL, and experts think that Yahoo will be a good supplement to that business. Namely, Verizon purchased Yahoo’s mobile, search, content, and advertising activities.
Lowell McAdam, CEO and chairman of Verizon, said in a statement that the company “acquired AOL in order to strengthen the strategy of providing the services of cross-screen connection for advertisers, creators and consumers. Our acquisition of Yahoo will help Verizon become the world’s leading mobile media company, and we can expect that our revenues from the digital advertising will go up.”
Even though Verizon purchased Yahoo and a large part of its divisions, Yahoo Japan and the company’s stake in Alibaba, one of the world’s largest b2b retailers, haven’t been a part of the deal. According to the evaluations of the experts, Yahoo’s stake in those companies is worth dozen billions of dollars alone. For instance, Yahoo owned 15% of Alibaba, which is currently more than $31.2 billion worth. The estimates about the value of the 34% percent in Yahoo Japan are equal to $8.3 billion on the average. Another thing that wasn’t matter of the deal as well is the Yahoo’s portfolio of patents, which is estimated to be worth $1 billion. The headquarters of the company, however, located in Sunnyvale, California, are a part of the deal.
After Verizon purchased Yahoo, the company will have to be integrated into one company with AOL, also owned by Verizon
According to the numerous reports, Marni Walden, the President of the Product Innovation and New Businesses company and Verizon EVP, is entrusted to lead the process of Yahoo’s integration into AOL. Marissa Mayer, the former President and CEO of Yahoo, wrote that the company “managed to separate the American and Asian businesses effectively, as this appears to be an important step to bring more value to our shareholders. Yahoo has changed the world, and we are going to continue doing so while being part of AOL and Verizon.”
The former Yahoo President also noted that such an opportunity (the takeover by Verizon) opens up new ways of development in the world of mobile traffic and allows to generate larger flows of revenues from the mobile advertising. Even though Verizon said that, after acquiring AOL last year, it aimed to boost its ad and media business, it seems obvious now that the telecommunications giant is striving to diversify its assets.
Many experts of the IT industry already predict that Verizon may want to compete with such giants like Facebook and Google in the market of mobile advertising. The experts also point to two serious issues Verizon may face. The first issue is the problem of Yahoo’s integration into AOL, as the number of its employees (8,800) exceeds the number of the AOL employees (6,800). The other problem that Verizon will face in the near future is the necessity of bringing Yahoo back to the profit-bringing zone.