One of the nation’s biggest telecommunications companies, Verizon, has bought Yahoo’s core assets for a reported $3.83 billion. The sale includes the company’s main Internet business as well as its real estate assets. For now, Yahoo and its shareholders will still control over $40 billion in shares of the Chinese company Alibaba, as well as other tangential assets like Yahoo Japan and a portfolio of patents.
The deal with Verizon is a big step towards dismantling the tech giant, which has been struggling for years. Yahoo plans to sell off about 3,000 patents later this year in a separate auction, for an estimated $1 billion.
The Silicon Valley based company was the main hub of access in the early days of the Internet, serving millions of users daily. Between the directory for the web and services like email, news, and shopping, Yahoo became almost instantly successful. The company’s value peaked in early 2000 at the height of the dot-com boom, with a total value of more than $125 billion.
Since then, Yahoo has been plagued by management problems. Poor leadership led to the stagnation of the company’s growth and a massive talent drain within the organization. At the same time, new tech powerhouses like Google and Facebook have taken market share away from Yahoo, cutting into its profit margins and user base.
Yahoo’s current CEO, Marissa Meyer, took over in July of 2012 and brought some life back to the company through new acquisitions of start-ups and a stake in Alibaba (which went public in September 2014), but recent years have shown fairly weak returns. Meyer is reportedly not joining Verizon, but is due to receive a $57 million dollar severance payout if she is terminated as a result of the deal.
Verizon plans to combine Yahoo’s services with AOL, which it acquired last year. Using Yahoo’s content and advertising technologies, it can offer consumers better and more robust services. The combination of these two companies under Verizon’s umbrella would still comprise only 5% of the $69 billion U.S. digital ad market, currently dominated by Google and Facebook.
Read more here: “Yahoo’s Sale to Verizon Ends an Era for a Web Pioneer” (Vindu Goel & Michael Mercid, NYT)