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Verizon continues to be interested in potentially acquiring Yahoo for the 1 billion people who use its email, finance, sports and video services; its broad online content offerings and its heavy Web traffic. The mobile carrier upped its pursuit by recently enlisting the help of the CEO of its AOL unit to research its strategy, according to a report.
Tim Armstrong, CEO of AOL, which Verizon owns, has been given “a leading role” in exploring a possible bid for Yahoo, according to a Feb. 8 story by Bloomberg that is based on reports from an unnamed source who is familiar with the matter.
Verizon “hasn’t hired bankers to conduct an offer and there have been no formal talks, according to the person, who asked not to be identified because Verizon’s plans haven’t been made public,” the story reported. “Still, as Yahoo sorts out its strategy, Armstrong is taking a lead in preliminary discussions, the person said.”
The wireless carrier, which already has about 112 million subscribers, wants to potentially combine Yahoo into its corporate umbrella to drive growth for its go90 streaming video service, the article reported. Yahoo’s Web traffic and its exclusive content “is just what Verizon needs to secure a foothold in video advertising against YouTube and Facebook serving a mobile phone-addicted generation,” the article continued.
Armstrong has known Yahoo CEO and President Marissa Mayer for many years, according to the report. Both Armstrong and Mayer were executives at Google before leaving to join Verizon and Yahoo. Armstrong even talked with Mayer previously about a possible Verizon acquisition or partial purchase back in 2014 at a media conference in Sun Valley, Idaho, another source told Bloomberg. “This was a year before Verizon acquired AOL and when Armstrong was exploring a deal to combine the two former Web portal giants.”
Armstrong “serves as a talent scout and deal maker” at Verizon today, helping the company develop its mobile video business to compete with Google and Facebook, the story reported.
Yahoo has been having a tough time in recent years. Earlier in February, Yahoo announced that it is cutting about 1,700 workers, or about 15 percent of its workforce of 11,000 full-time employees, as it works to scale back its operations and business units to cut costs, according to an earlier eWEEK article. Yahoo was founded in January 1994 as Jerry Yang and David Filo’s guide to the World Wide Web, and then renamed Yahoo a year later. Yahoo reported fourth-quarter 2015 revenue of $1.27 billion, an uptick from $1.25 billion in the year-earlier quarter. Operating earnings totaled 13 cents a share, which squared with Wall Street forecasts. However, Yahoo investors earned 30 cents per share in the fourth quarter of 2014.
In search, Yahoo has continued to struggle since Google claimed market dominance 15 years ago. Yahoo captured only 2.1 percent of the $94 billion worldwide search market in 2015, and eMarketer said it expects the company to stay flat in that category this year.
The company ostensibly is being forced by activist investors who don’t believe in the competitiveness of Yahoo anymore to sell off its main business and keep the corporate identity of Yahoo as a shell to manage the rest of its assets—which consist mostly of its $30 billion stake in Chinese online retail sales site Alibaba.
Mayer, who took the helm at Yahoo back in July 2012, has made many changes at the company—from banning employees in February 2013 from working from home to shuttering the AltaVista search engine in July 2013.
Mayer was brought in as CEO and president to try to put Yahoo back on track as a leading, growing and stable Internet company. She hailed from Google, where she was one of that company’s first 20 hires in June 1999 and was the company’s first female developer when it was just getting started.
Mayer was hired by Yahoo after an embarrassing and distracting string of three CEOs came and went in a seven-month span.