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Once a household name, Yahoo has gradually faded from the spotlight as competitors like Google and Facebook surged ahead. Some Yahoo products, including Flickr and Tumblr, remain in use today, though many users may not realize those services originated with Yahoo.
The long-anticipated sale of Yahoo’s core operating business was confirmed when the company’s board approved a deal to sell those operations to Verizon for $4.8 billion.
Marissa Mayer, Yahoo’s CEO at the time, commented: “Yahoo is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL. The sale of our operating business, which effectively separates our Asian asset equity stakes, is an important step in our plan to unlock shareholder value for Yahoo. This transaction also sets up a great opportunity for Yahoo to build further distribution and accelerate our work in mobile, video, native advertising and social.”
Following the sale, Yahoo retained approximately $41 billion in investments, including stakes in Alibaba and Yahoo Japan, along with a portfolio of patents. At its peak, the company had a market value approaching $125 billion, but it lost much of that standing as newer internet giants captured market share.
“Yahoo and AOL popularised the Internet, email, search and real-time media. It’s poetic to be joining forces with AOL and Verizon as we enter our next chapter focused on achieving scale on mobile. We have a terrific, loyal, experienced and quality team, and I couldn’t be prouder of our achievements to date, including building our new lines of business to $1.6 billion in GAAP revenue in 2015. I’m excited to extend our momentum through this transaction,” Mayer added.
Mayer, who joined Yahoo in July 2012 after a long tenure at Google, had been expected to steer Yahoo toward renewed relevance, but the company ultimately endured a string of strategic setbacks. A former senior Yahoo executive described watching the decline as painful: “I don’t feel vindicated. I just feel sad to watch something that had so much potential in a death spiral.”
Verizon sees strategic value in Yahoo’s assets to expand its digital advertising and media capabilities following its acquisition of AOL the previous year for $4.4 billion. The integration gives Verizon access to Yahoo advertising technologies such as BrightRoll and Flurry, along with Yahoo’s search, mail, and messaging services, enhancing the capabilities of the Verizon-operated AOL business.
Lowell McAdam, Verizon’s Chairman and CEO, said: “Just over a year ago we acquired AOL to enhance our strategy of providing a cross-screen connection for consumers, creators and advertisers. The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising.”
Under the agreement, Yahoo’s operations will be integrated with AOL and placed under Marni Walden, Executive Vice President and President of Product Innovation and New Businesses at Verizon. The transaction is subject to customary closing conditions, shareholder approval, and regulatory sign-offs, and was expected to close in the first quarter of 2017. Until the deal closes, Yahoo planned to continue operating independently, maintaining and improving services for users, advertisers, developers, and partners.
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