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Yahoo! Sold to Verizon

July 25 2016

US telecoms giant Verizon Communications Inc. has agreed to purchase the core web assets of Yahoo!, for around $4.8bn. Stakes in two other businesses worth around $40bn between them are not included in the deal.

Yahoo! Sold to VerizonFollowing the cash sale Yahoo! will retain a stake in Chinese eCommerce giant Alibaba Group Holding Ltd., worth around $31bn, and one in Yahoo Japan Corp., valued at around $9bn. This remaining company will change its name following the sale, which includes its real estate but excludes some of its intellectual property.

Yahoo! was the creation of Stanford University students Jerry Yang and David Filo, launched in 1995 when the WorldWideWeb was in its infancy. It started as a directory rather than a search engine, with a baffling array of overlapping categories to make any MR coder wince, but a correspondingly vast number of entries - and by 1998 was recognized as the most popular starting page for web users worldwide. Its share price hit an all-time high of $118.75 on January 3rd 2000, but less than twenty-one months later after the dotcom bubble burst had slumped to a low of $8.11 (September 26th 2001). To an extent the rise of Google mirrored the decline of its older rival - from as early as 2000 searches of Yahoo's directory used Google's search engine, although Google only surpassed Yahoo in overall sales in 2005.

Microsoft's unsolicited bid for Yahoo! in February 2008 was rejected as undervaluing the company - three years later its market capitalisation was around half this, and it went through a number of CEOs in the succeeding years in a search for a competitive angle. Much of its effort over the last ten years has gone into development of its content, which continues to draw huge audiences to Yahoo! properties - around half a billion visitors a month, with another half billion users added if email and other services are taken into account. Marissa Mayer, who earlier had been the twentieth employee at Google, has been Yahoo! CEO since July 16th 2012, and has said she is 'planning to stay' with the company at present.

Yahoo's digital ad market share has continued to drop - it is projected to win around 1.5% of global spend this year, down from 2.1% last year according to eMarketer - compared with Google's forecast 30.9% and Facebook's 12%. Yahoo! reported a loss of $4.36bn in 2015.

Verizon is the largest wireless carrier in the USA and already owns AOL, with which Yahoo! will now be integrated. AOL Inc. CEO Tim Armstrong said in a statement: 'We have enormous respect for what Yahoo has accomplished: this transaction is about unleashing Yahoo's full potential, building upon our collective synergies, and strengthening and accelerating that growth. Combining Verizon, AOL and Yahoo will create a new powerful competitive rival in mobile media, and an open, scaled alternative offering for advertisers and publishers'.

The deal is subject to customary closing conditions, approval by Yahoo! shareholders, and regulatory approvals, and is expected to close in the first quarter of 2017.

Verizon, which reports second quarter results tomorrow, has a home page at www.verizon.com .

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas, 2024- by Nick Thomas, unless otherwise stated.

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