What Verizon, Yahoo Shareholders, Users Get From $4.83B Deal

 
 
By Don Reisinger  |  Posted 2016-07-26
 
 
 
 
 
 
 
 
 
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    1 - What Verizon, Yahoo Shareholders, Users Get From $4.83B Deal
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    What Verizon, Yahoo Shareholders, Users Get From $4.83B Deal

    We look at what Verizon and Yahoo shareholders will get from the deal and how it will affect users, some of whom have been loyal Yahoo users for two decades.
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    2 - Here's What Verizon Gets for Its Money
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    Here's What Verizon Gets for Its Money

    In its $4.83 billion deal with Yahoo, Verizon gets quite a bit. The company will be able to add all of Yahoo's core assets, including its popular media brands, Tumblr, Yahoo Finance and search. More importantly, it also gets all of Yahoo's advertising technology, including Brightroll and Gemini.
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    3 - Here Is What's Left of Yahoo
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    Here Is What's Left of Yahoo

    The nearly $5 billion deal doesn't include what are arguably Yahoo's most important assets: ownership in Yahoo Japan and Alibaba. In fact, the companies say that after the deal closes, a new firm will be formed that will hold stakes in Alibaba and Yahoo Japan, now worth much more than $30 billion. It's unclear what Yahoo will do with these assets as shareholders await opportunities to cash in.
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    4 - Verizon Plans to Combine Its Yahoo Assets With AOL
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    Verizon Plans to Combine Its Yahoo Assets With AOL

    Verizon says that it plans to merge its Yahoo properties with AOL. Marni Walden, executive vice president and president of the Product Innovation and New Businesses division at Verizon, will lead the combined firm. Walden's charge will be to combine the two companies' assets, find "synergies" wherever possible and ultimately build out a more profitable advertising business, according to the companies.
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    5 - Why Verizon Wants Media Companies
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    Why Verizon Wants Media Companies

    Many are wondering why Verizon, a broadband telecommunications and cellular network company, would have so much interest in Internet media companies. According to its CEO Lowell McAdam, Verizon has been engaging in a strategy since it acquired AOL a year ago to connect "consumers, creators and advertisers." Most importantly, he wants to create another revenue stream for Verizon outside communications. With AOL and Yahoo, Verizon can serve content to devices and sell advertising across its network, all while providing communications services to more than 100 million people around the United States and abroad.
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    6 - Verizon Sees Great Value in Yahoo Content, Web Services
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    Verizon Sees Great Value in Yahoo Content, Web Services

    Content appears to be another important factor to Verizon. While advertising ultimately drives the revenue, Verizon was quick to note that at AOL it kept popular brands, including the Huffington Post, so it could drive more users to its services. It plans to do the same at Yahoo, which according to the company, has 1 billion monthly active users across all its services, including Tumblr. Content ultimately drives advertising revenue, and Verizon knows it.
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    7 - This Is What Yahoo Shareholders Wanted
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    This Is What Yahoo Shareholders Wanted

    Yahoo shareholders might not be getting much for the assets the company just sold, but it's actually what some of its biggest shareholders wanted. Those shareholders, including private equity firm Starboard Value, have said that Yahoo's core business was practically worthless in terms of its earnings potential and growth prospects. Furthermore, Yahoo needed to find a way to unlock the value in Alibaba and Yahoo Japan holdings. By selling off the core business to Verizon, Yahoo is now free to do that and potentially reap the billions in cash it has locked up in its ownership of Yahoo Japan and Alibaba.
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    8 - How Does Mayer Fit Into the Picture?
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    How Does Mayer Fit Into the Picture?

    While Yahoo CEO Marissa Mayer says she wants to see the acquisition through, it appears likely that Verizon will fire her once the deal is closed. Verizon, after all, has said she won't head Yahoo once it's folded into Verizon's business, and Yahoo's most outspoken board members are not all that fond of her. Look for Mayer to make use of her golden parachute soon after the deal is fully closed.
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    9 - There's the Mozilla Payoff Question
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    There's the Mozilla Payoff Question

    Oddly, Mozilla's Firefox browser plays into this equation. According to several reports, when Yahoo inked its deal with Mozilla to become the default search engine on Firefox, the companies included a clause that would allow Mozilla to back out if Yahoo was sold. Once Yahoo is officially sold, Mozilla reserves the right to walk away from Verizon and still get about $1 billion over the next three years. If Mozilla opts to stay with Verizon, it'll get $375 million per year for as long as their contract lasts.
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    10 - Substantial Yahoo Layoffs Are Likely
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    Substantial Yahoo Layoffs Are Likely

    While neither Verizon nor Yahoo has said what its plans are for current employees, their prospects are insecure to say the least. AOL's Tim Armstrong, who helped make the deal with Yahoo, said that he sees several "synergies" between the companies that could benefit Verizon. In corporate speak, synergies can often mean layoffs. Expect some serious Yahoo layoffs and other cost-cutting measures as Verizon integrates the Yahoo properties into AOL.
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    11 - What the Deal Means for Competitors
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    What the Deal Means for Competitors

    With Yahoo under its roof, Verizon could become a much stronger competitor to the likes of Google, Facebook and other major Internet advertisers. Verizon will have well over a billion people hitting its sites each day the company will offer the combined advertising platforms of AOL and Yahoo. It will be able to offer those content and advertising platforms to what is effectively a captive audience of users on its wireless networks. Combine that with Yahoo Mail and some of its content talent, and the company could become a much stronger force in the Internet and mobile advertising worlds.
 

Verizon's $4.83 billion cash acquisition of internet giant Yahoo will make the telecommunications company one of the biggest owners of web content and advertising assets in the world. The companies confirmed the deal on July 25, saying that they expect the deal to close in early 2017. Upon closing, the newly acquired Yahoo properties are expected to be combined with another Verizon property, AOL, which itself was one of the original giants of the internet's early days. It wasn't long ago that Yahoo, founded in 1994, was one of the web's most popular search engines, a major advertising platform and the default home page for millions of internet users around the world. Yahoo, which once received an unsolicited offer from Microsoft for $44.6 billion, is now a shadow of its former self that sold for less than $5 billion today. Looking ahead, Verizon will have to see what it can do to get the most value out of its Yahoo assets by retaining as many of its diminished following of users and look to the future in hopes of remaining relevant. This slide show discusses what Verizon and Yahoo shareholders are getting from the deal and how it will affect users, some of whom have been loyal Yahoo users for 20 years.

 
 
 
 
 
 
 
 
 
 
 

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