Verizon completed Yahoo takeover
This week, Yahoo Inc., the pioneer of the commercial Internet, has come a long way to the portfolio of telecommunications company Verizon Communications Inc. Many people call the takeover of a holding that owned the most visited site in the United States, the end of an era.
JD Hancock / Flickr / CC
June 13, it became known about the official closing of the transaction. Yahoo’s assets, including news, sports, financial sites and other services, will join Verizon’s portfolio as a subsidiary under the new name Oath. It will be led by former AOL media holding Tim Armstrong. Oath unites over 50 media and technology brands, including the popular online edition of the Huffington Post.
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The cost of the acquisition of Yahoo is $ 4.48 billion. This is $ 350 million less than the original amount. The reason for the change in conditions was a series of scandals that accompanied Yahoo lately.
The prerequisite for the purchase of Yahoo was AOL’s acquisition of AOL’s company in 2014 for $ 4.4 billion. Thus, the company indicated its readiness to expand media assets. Yahoo at that time also established itself as a media organization. Following the deal with AOL, Fran Shammo, chief financial officer of Verizon, in 2015, during a media conference, hinted at the company's interest in Yahoo.
“Everything that I can say now, we do not know what the Yahoo board of directors will decide. It is too early to talk about it, ”he said then. And a year later (in June 2016), Verizon announced plans to acquire Yahoo’s main Internet business for $ 4.8 billion.
At that time, until the end of the transaction, the president and CEO of Yahoo was Marissa Mayer. In July 2016, she expressed willingness to remain in office after the completion of the transaction, but now leaves the company with a “golden parachute” in the amount of $ 186 million. It was her decisions and actions that led to a drop in the Yahoo valuation over the last year.
Pictured: Marissa Mayer TechCrunch CC
The reason was the public disclosure of a number of incidents that occurred several years earlier. First, in September 2016, Yahoo representatives announced that during the hacker attack in 2014, at least 500 million users of the company's services were stolen personal information. Verizon spokesman Bob Varettoni (Bob Varettoni) made it clear that this information was an unpleasant surprise for the holding. According to Yahoo, traces of hacking were discovered only in the summer of 2016. The scale of the leak has been noted even at the level of the US Senate.
It soon became clear that the information that was opened could cause a change in the terms of the transaction. But it took a little more than two months, and in December, Yahoo had to admit to a much more serious mistake in the security system. In December 2016, it became known about the hacking of a billion accounts that occurred in 2013. These two attacks are the largest known hacking network of the same company.
Verizon was not long in coming, confirming that these events had a “significant” effect on Yahoo's business valuation, and the terms of the deal would be revised. Verizon initially asked for a $ 1 billion discount, but then the discount was reduced to $ 350 million.
Yahoo was launched in 1994 by David Filo and Jerry Yang. At its peak, the company was valued at $ 125 billion. It was the golden age of Yahoo. At that time, management even had ambitions to acquire Google, but already in 2008 Microsoft offered $ 44.6 billion for Yahoo. From the position of 2017, this offer can be considered as profitable, however, it is obvious that the company experienced a catastrophic depreciation. As a rule, it is associated with the management crisis.
At the time of negotiations with Microsoft, Jerry Yang himself stood at the helm of Yahoo. He replaced Terry Semel after serious recessions in financial reports. In its proposal, Microsoft added an additional $ 5 billion to the company's market valuation, but Young asked for another $ 5 billion. Then Steve Ballmer stopped negotiations. In the same year, amid the financial crisis, Yahoo shares fell seriously. By the end of 2008, the company was worth less than half what Microsoft was willing to pay earlier.
Pictured: Jerry Young Yahoo CC
Yahoo's earnings continued to fall under the control of Carol Bartz. The main problem was the tension between her and Jack Ma, the head of Alibaba, a significant stake in which the company owned at that time.
The former president of PayPal Scott Thompson (Scott Thompson) came to replace Bartz. His service lasted only 4 months, during which he managed to take part in scandals with falsification of his resume and even more strongly hit the financial state of Yahoo. It was he who made the fateful decision to sell a 20 percent stake in Alibaba. This deal cost Yahoo $ 54 billion. Alibaba’s stake was bought in 2005 for $ 1 billion.
After that, Marissa Mayer becomes the head of Yahoo. From its submission, the focus of the company has shifted towards the media. For this, about 50 assets were acquired, including the Tumblr social blogging platform for $ 1.1 billion. However, since 2012, there have been no positive changes in Yahoo’s profit. This is partly due to Marissa’s lack of a single development strategy. Scandals with hacker attacks that fell on the period of its work, finally reduced the value of the company.
“Closing this deal represents an important step in developing the global perspective required for our digital media company,” said Marni Walden, Verizon President of Innovative Products and New Businesses. “Verizon and Oath's combined asset portfolio: from VR to AI, from 5G to IoT [...] will create exciting new ways to attract audiences from around the world.”
She held the same line in an interview with WSJ, which was recorded between two scandals with hacker attacks.
AOL CEO Tim Armstrong last year said potential profit is not the main aspect of the merger. The main goal is to expand the presence of AOL and Yahoo in the digital advertising market. While now Facebook and Google dominate it, Yahoo and AOL are seriously lagging behind the leaders. The combination of assets will help the holding company to take about 5% of the market with a further expansion of the share.
Hacking millions of Yahoo accounts should have resulted in a serious user outflow. Given that without them, all assets are depreciated, Verizon Holding had every reason to refuse the deal. The reason why this did not happen, according to people familiar with the issue, is the result of an internal investigation. It showed that only the “minimum” number of active users refused services after the information was published. However, some of the company's services remain extremely popular, such as postal service.
Thus, Yahoo's next reputational crisis (this time fatal) has proven to be beneficial for Verizon. Media assets and the audience of the pioneer of the search market were interested in a telecommunications company and, obviously, have been in its development strategy for several years now, and the fall in price has become an additional advantage in the final takeover of Yahoo.
PS What else do we write in our blog:
JD Hancock / Flickr / CCYahoo uptake
June 13, it became known about the official closing of the transaction. Yahoo’s assets, including news, sports, financial sites and other services, will join Verizon’s portfolio as a subsidiary under the new name Oath. It will be led by former AOL media holding Tim Armstrong. Oath unites over 50 media and technology brands, including the popular online edition of the Huffington Post.
')
The cost of the acquisition of Yahoo is $ 4.48 billion. This is $ 350 million less than the original amount. The reason for the change in conditions was a series of scandals that accompanied Yahoo lately.
Yahoo's takeover history
The prerequisite for the purchase of Yahoo was AOL’s acquisition of AOL’s company in 2014 for $ 4.4 billion. Thus, the company indicated its readiness to expand media assets. Yahoo at that time also established itself as a media organization. Following the deal with AOL, Fran Shammo, chief financial officer of Verizon, in 2015, during a media conference, hinted at the company's interest in Yahoo.
“Everything that I can say now, we do not know what the Yahoo board of directors will decide. It is too early to talk about it, ”he said then. And a year later (in June 2016), Verizon announced plans to acquire Yahoo’s main Internet business for $ 4.8 billion.
At that time, until the end of the transaction, the president and CEO of Yahoo was Marissa Mayer. In July 2016, she expressed willingness to remain in office after the completion of the transaction, but now leaves the company with a “golden parachute” in the amount of $ 186 million. It was her decisions and actions that led to a drop in the Yahoo valuation over the last year.
Pictured: Marissa Mayer TechCrunch CCThe reason was the public disclosure of a number of incidents that occurred several years earlier. First, in September 2016, Yahoo representatives announced that during the hacker attack in 2014, at least 500 million users of the company's services were stolen personal information. Verizon spokesman Bob Varettoni (Bob Varettoni) made it clear that this information was an unpleasant surprise for the holding. According to Yahoo, traces of hacking were discovered only in the summer of 2016. The scale of the leak has been noted even at the level of the US Senate.
It soon became clear that the information that was opened could cause a change in the terms of the transaction. But it took a little more than two months, and in December, Yahoo had to admit to a much more serious mistake in the security system. In December 2016, it became known about the hacking of a billion accounts that occurred in 2013. These two attacks are the largest known hacking network of the same company.
Verizon was not long in coming, confirming that these events had a “significant” effect on Yahoo's business valuation, and the terms of the deal would be revised. Verizon initially asked for a $ 1 billion discount, but then the discount was reduced to $ 350 million.
Yahoo sunset reasons
Yahoo was launched in 1994 by David Filo and Jerry Yang. At its peak, the company was valued at $ 125 billion. It was the golden age of Yahoo. At that time, management even had ambitions to acquire Google, but already in 2008 Microsoft offered $ 44.6 billion for Yahoo. From the position of 2017, this offer can be considered as profitable, however, it is obvious that the company experienced a catastrophic depreciation. As a rule, it is associated with the management crisis.
At the time of negotiations with Microsoft, Jerry Yang himself stood at the helm of Yahoo. He replaced Terry Semel after serious recessions in financial reports. In its proposal, Microsoft added an additional $ 5 billion to the company's market valuation, but Young asked for another $ 5 billion. Then Steve Ballmer stopped negotiations. In the same year, amid the financial crisis, Yahoo shares fell seriously. By the end of 2008, the company was worth less than half what Microsoft was willing to pay earlier.
Pictured: Jerry Young Yahoo CCYahoo's earnings continued to fall under the control of Carol Bartz. The main problem was the tension between her and Jack Ma, the head of Alibaba, a significant stake in which the company owned at that time.
The former president of PayPal Scott Thompson (Scott Thompson) came to replace Bartz. His service lasted only 4 months, during which he managed to take part in scandals with falsification of his resume and even more strongly hit the financial state of Yahoo. It was he who made the fateful decision to sell a 20 percent stake in Alibaba. This deal cost Yahoo $ 54 billion. Alibaba’s stake was bought in 2005 for $ 1 billion.
After that, Marissa Mayer becomes the head of Yahoo. From its submission, the focus of the company has shifted towards the media. For this, about 50 assets were acquired, including the Tumblr social blogging platform for $ 1.1 billion. However, since 2012, there have been no positive changes in Yahoo’s profit. This is partly due to Marissa’s lack of a single development strategy. Scandals with hacker attacks that fell on the period of its work, finally reduced the value of the company.
Why does Verizon need Yahoo?
“Closing this deal represents an important step in developing the global perspective required for our digital media company,” said Marni Walden, Verizon President of Innovative Products and New Businesses. “Verizon and Oath's combined asset portfolio: from VR to AI, from 5G to IoT [...] will create exciting new ways to attract audiences from around the world.”
She held the same line in an interview with WSJ, which was recorded between two scandals with hacker attacks.
AOL CEO Tim Armstrong last year said potential profit is not the main aspect of the merger. The main goal is to expand the presence of AOL and Yahoo in the digital advertising market. While now Facebook and Google dominate it, Yahoo and AOL are seriously lagging behind the leaders. The combination of assets will help the holding company to take about 5% of the market with a further expansion of the share.
Hacking millions of Yahoo accounts should have resulted in a serious user outflow. Given that without them, all assets are depreciated, Verizon Holding had every reason to refuse the deal. The reason why this did not happen, according to people familiar with the issue, is the result of an internal investigation. It showed that only the “minimum” number of active users refused services after the information was published. However, some of the company's services remain extremely popular, such as postal service.
Thus, Yahoo's next reputational crisis (this time fatal) has proven to be beneficial for Verizon. Media assets and the audience of the pioneer of the search market were interested in a telecommunications company and, obviously, have been in its development strategy for several years now, and the fall in price has become an additional advantage in the final takeover of Yahoo.
PS What else do we write in our blog:
Source: https://habr.com/ru/post/330994/
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