Yahoo to sell core Internet biz to Verizon for $4.8 bn

Yahoo CEO Marissa Mayer
Yahoo said Verizon Communications, the largest US wireless communications service provider, is set to acquire its core internet business for about $4.8 billion.

The deal will allow Verizon to get Yahoo’s online assets including search, mail and instant messaging, along with its ad technology and land holdings.

The deal will mean an end to the struggle to survive for Yahoo, which was valued at over $125 billion at its peak in January 2000 when the dot com bubble was nearing its end.

Following the sale, the company will be left with about $41 billion it invested in the Chinese e-commerce company Alibaba as well as Yahoo Japan.

Verizon makes most of its money from mobile phone connections while Yahoo generated more than twice as much revenue from search and display ads on desktop computers than it did from its so-called MAVENs businesses (Mobile, Video, Native and Social).

If we look closely, Yahoo Mail struggles while its Messenger is almost nowhere. The only known Yahoo business today is photo-sharing website Flickr and the slowly growing microblogging and social networking website Tumblr.

Verizon’s acquisition of Yahoo follows its acquisition of AOL which has properties like The Huffington Post, Techcrunch and Engadget, among others.

“The Yahoo acquisition will lead Verizon to spruce up its operations post-AOL acquisition but now more into the profitable digital ad space. Verizon will surely monetize the whole operations sooner to get the best out of this deal,” Vishal Tripathi, Research Director at global market consultancy firm Gartner, told IANS.

“Verizon has got Tumblr, Yahoo Sports, Yahoo News and so on with this. The deal may prove to be a good one for Verizon in the long run,” he added.

Marissa Mayer, who was appointed Yahoo CEO in 2012, struggled hard to try to position Yahoo as a “mobile” company.

The acquisition provides more evidence that it sees online content and advertising as a primary way to increase growth, according to Quartz.

It is expected that by combining various tools from AOL, Yahoo, and its own operations, Verizon might be able to mount a credible challenge to Google and Facebook — its two dominant competitors.

Verizon may also leverage millions of viewers of Yahoo’s News, Sports and Finance to complement its own popular properties like TechCrunch and Huffington Post.

Earlier in June this year, executives from the micro-blogging website Twitter met Yahoo CEO Marissa Mayer to discuss merger possibilities.

However, according to the New York Post, Twitter appeared mainly interested in taking information out of Yahoo and it bowed out of the bidding process soon. Twitter CEO Dorsey did not show up for the Yahoo meeting.

Trying to revive it’s ailing business, Yahoo, which was found in 1994, also held talks with Facebook in March this year about an advertising partnership to allow the social networking site to sell ads on Tumblr.