Verizon buys Yahoo core business for $ 4.8 billion

Yahoo will lose its independence, and Marissa Mayer will step down

Yahoo and its portal were the entry door to the Internet for first users. Now the company's services continue to attract users - the total attendance of all services reaches several hundred million unique visitors per month.

But business leaves much to be desired - in fact, Yahoo has been losing money every day for many months. Therefore, now it was decided to sell the remaining assets. The Yahoo era ended with the signing of a contract for the sale of the company's main business and its land holdings Verizon. The transaction amount is $ 4.8 billion. After the sale of the company's shareholders, there is still a stake in Alibaba, which is now estimated at $ 41 billion. Yahoo Japan remains an independent company, plus a small number of patents.



Last year, the company's losses amounted to $ 4.4 billion. The reason is the restructuring of the company, the revaluation of some assets, including Tumblr. This resource was purchased in 2013 for $ 1 billion. Now its price has dropped several times.

Once the company was estimated at $ 125 billion - such was the capitalization of Yahoo in 2000. Many companies that emerged from Yahoo at about the same time, and in a few years turned into giants, were “blown away” after the first dotcom boom.

But Yahoo continued to grow and develop. It all started as a regular directory of sites. New sites were added to the directory manually by employees of the company. For the vast majority of users, Yahoo was the starting page on the Internet, from which the Internet itself began. Soon, services such as search, email, shopping, and news were added. These services were free for users who showed ads from Yahoo partners while surfing.

For a long time, this model worked perfectly. Advertisers really wanted to get new customers, and the money poured into Yaho's accounts like a river.


Founders of Yahoo, David Filelo and Jerry Yang, 1997

But after a few years there were competitors - Google and Facebook. These companies quickly began to quickly create new services, which led to the departure of many users and advertisers.

Google, a new company that appeared several years after Yahoo, offered users automatic search for sites on the Web. In just a couple of years, the company has become very popular, having received a large number of users. And Yahoo entered into a four-year deal with Google in 2000. The essence of the contract is the use of the search service of the Corporation of Good as a default search on its website. Later, Yahoo management tried to negotiate the purchase of Google, but it was decided to develop its own search service.

Yahoo began to position itself as a content company, while Google specialized in search.

But in the middle of 2000, Yahoo started having problems. Web portals, as they were called in the company, have ceased to play an important role for users. Began to appear social services and resources, the quintessence of which was Facebook. Google has become a world leader in search, and the company also offered a very effective advertising network to advertisers.

In 2007, Jeffrey Yang rejected Microsoft’s offer to buy Yahoo’s business for $ 44.6 billion. The offer looked very attractive, and was even higher than the company's market price. Many shareholders disagreed with Yang, and Karl Ikann, one of Yahoo’s largest shareholders, led a real war against Yang. In the end, Young had to resign as the head of the company. This post after it was occupied by several people, but they did not bring anything good from Yahoo. The cost continued to fall, losses increased.

In 2012, Marissa Mayer, previously a top manager at Google, became the head of Yahoo. She was considered a very effective leader, and many Yahoo investors took heart. Mayer immediately stated that the company needed to focus on one thing, to choose the main direction for its business. But, unfortunately, this trick was never found.



Mayer first decided to make Yahoo the Internet search leader by forming a team of 1,000 people. Then she decided to start producing original and high-quality video content. Meyer began to buy dozens of different companies that joined Yahoo. The most notable purchase was the Tumblr.

All this practically yielded no results, the company continued to lose money. True, Yahoo remained a very valuable asset - 40% of Alibaba. This asset was bought in 2005 for $ 1 billion. By 2014, Yahoo sold most of the stake in the Chinese Internet giant, but the remaining 15% was worth $ 31 billion at that time.

All other assets of the company were a melting piece of ice in the hands of Marissa Meier and she knew it. However, she no longer took any serious action to bring the company out of the crisis. Investors put pressure on her, but could not achieve anything. And in the end, the remaining assets of Yahoo, in addition to the Alibaba package, it was decided to sell. In addition to Verizon, there are no more buyers.

Verizon, the US telecommunications giant, plans to merge Yahoo’s assets with AOL, a company bought last year. AOL, by the way - this is another pioneer of the Internet sphere, this company has long been a competitor of Yahoo. According to Verizon, Yahoo services will help the company to provide better services to its customers, providing them with new services and services.

Maier will step down as head of Yahoo, receiving a cash compensation of $ 57 million. Over several years of management, according to Equilar, she received more than $ 218 million in cash and shares.

What does Mayer think?

Commenting on the deal with Verizon, she said that under her leadership the company was transformed. Mayer also says that she is as pleased as possible with her achievements as Yahoo head: “We invested in the mobile, video, native and social sectors, starting from zero in 2011 and ending with a profit of $ 1.6 billion in 2015 under GAAP (national standard accounting in the United States). During the same time, as Meyer says, the company managed to triple the number of mobile service users, receiving more than $ 1 billion in advertising revenue.

Yahoo, says the company's CEO, improved and modernized almost every product of the company, significantly improving the performance of the advertising industry.

As already mentioned, Mayer is likely to leave Yahoo after closing the deal. Although she herself says she loves the company and plans to stay. The transaction will be closed until Q1 2017.

Guide Verizon says the company has not yet decided on the role that Mayer will play after closing the deal. At the same time, Yahoo and Verizon representatives expect Meyer to remain in office while fulfilling the terms of the deal, and will ensure that everything goes smoothly.