The real reason that Yahoo! is being bought
*Update on Monday, July 25: Verizon purchased Yahoo! for $4.8 billion.
USA Today ran with a report on Saturday that the U.S.-based telecom Verizon is narrowing in on a deal to acquire the once great internet giant, Yahoo!.
According to the report citing the New York Times, the deal is expected to close this week, with the devastating price tag of $5 billion. If proven true, it would be the final nail in the coffin for the former Google competitor. While other corporates like AT&T were said to have been scoping out Yahoo! with hopes of scooping it up, it would seem that Verizon may have beaten them to the punch.
Should this deal go through — as many expect that it will seeing the dire straits the company has fallen into — it will be Verizon’s second time picking up the pieces of a former tech empire, having bought AOL just over a year ago for a reported $4.4 billion. While odd that a telecom would look to buy up email and search companies long after they were vanquished by Google, the real value shows itself after taking a wider angle view of the kinds of brands that AOL and Yahoo! hold under their belt.
For some time now, AOL has been running primarily a large collection of media sites like TechCrunch and the Huffington Post, but also plenty of smaller sites and their own homepage is still the first stop for many folks, and all these pages produce some very decent ad revenues on their own.
Having run a successful email and search empire, in more recent years they have become more of a holding company, owning potentially valuable technology patents that came with their long list of acquisitions from companies like Tumblr and others. Yahoo! Finance is still one of the go to pages for business news, and the company also owns plenty of other smaller news sites that while on their own may not equal much, combined bring together a very healthy earning potential. Never doubt the public interest in decent sports and money news.
It will be interesting to see what, if any, kinds of changes will come to pass should the deal come through. After AOL was bought, Google’s search engine there was reportedly replaced with Microsoft’s Bing. Since Yahoo! has its own capacity, there remains a question as to whether Verizon will want to replicate this model here.
What the future holds
The last few months have been good to Yahoo!, with their stock rising consistently and currently sitting at $39.38. Whether this was brought on by projections for the company or simply the fact that they owned a chunk of the wildly successful Alibaba, it is hard to tell. While there is no word at this point as to the fate of Yahoo!’s stake in the Chinese e-commerce firm, it is fair to say that it likely played some role in boosting the company’s desirability.
When Marissa Mayer joined the company in 2012, taking over as CEO, expectations were low. Not due in particular to any of Mayer’s own attributes, but there was no clear direction for the company that had lost the war to Google and was searching for a new path. With any luck for her, when the history is written on this deal, it will show that she led them to make a graceful exit that ensured the survival of its employees and the brands they built.