The corporate world is like a vast ocean infested with killer sharks which devour smaller entities that take the plunge. It is the world where the cut-throat competition is so fierce that it is survival of the fittest, dog eats dog, all out war, no holds barred to get to the top.
It is a world of acquisitions and mergers, where the army of lawyers representing each side try to get the best deal with their shrewd and cunning negotiation skills before the final deal is penned not to forget their huge fees in the bargain.
Speaking of deals and takeovers, the most sensational news of the week, this week has been the buyout of Yahoo the Net giant by Verizon wireless communications at a staggering price of 4.83 billion dollars.
Verizon to acquire Yahoo’s operating business – yahoo: Today is a big day for Yahoo! This is the email… https://t.co/Lepxlr44AQ
— marissamayer (@marissamayer) July 25, 2016
Yahoo Inc, also known simply as Yahoo, is a treasure trove, the Fort Knox of information technology with headquarters in Sunnyvale California. It is globally known for disseminating information through its web portal, search engine, Yahoo search and related services which include Yahoo mail, Yahoo news, Yahoo finance and other services and its social media website.
Yahoo is one of the most widely read news websites of the world extremely popular in the United States and with over 7 billion views per month, being the fourth most visited website globally, It is seen worldwide in 30 languages.
So the question arises, why has Yahoo shortchanged itself, once known as the king of Internet a $125 billion behemoth which in its time was as big as facebook and google are today.
Simply put, it is being said that Yahoo could not keep up with the times, despite being ahead letting each wave technology in search , social and mobile pass by. It could or rather did not adapt to the times.
Yahoo also has equity stakes in Alibaba in China and Yahoo Japan which it is retaining.
The current CEO of Yahoo is Marissa Mayer who tried her best to turn the company around and at present it is uncertain that the Verizon will retain or she will leave the company with an agreed severance pay of 50 million dollars.
The sale of the company was in the offing since quite some time and interested buyers included Warren Buffet, the billionaire owner of WalMart and the Daily Mail but talks were so prolonged that the deal fell through.
In Febuarary, 2008, Bill Gates’s Microsoft bid for a takeover of Yahoo at ten times, the current price that is 45 billion dollars was rejected by the company. How do fortunes fluctuate?
A 21-year history as an independent company comes to a close. Yahoo will now be integrated with Verizon-owned AOL under Marni Walden, an executive vice president at the telecom company.
Mayer’s future in Yahoo is uncertain and her failure to energise and revitalize the company goes against her. There has been no comment from the company who will take charge once the deal is completed.
Although she has expressed her desire to continue with Yahoo, Mayer who joined as CEO four years ago is quite unlikely to be retained in the post and may be offered an alternate post.
AOL CEO, Tim Armstrong, has said that presently that he and Mayer were are focusing first on getting “the strategy right, and then the structure and the roles right.
Verizon has an eye on the future to become a global titan in Digital Media. It is interested in buying Google and Facebook in its future ventures.
Not confined to being mere sellers of telephones and wireless services Verizon has set its sights on becoming a formidable media company.
Verizon will essentially end up being one of the largest portfolios of consumer brands in the world for digital.”
Verizon by acquiring Yahoo, are scaling up to be a major competitor in mobile media, according to Verizon CEO Lowell McAdam. Their target is to focus on mobile content which will attract young phone addicted consumers who can turn into long term customers. It seems that the digital wars are on with every major player in the market set to capture a large portion of the digital world.
Assuaging the fear of investors, McAdam specifically pointed to the popularity of Yahoo’s mobile services, including sports, finance, and email.
“We just made an exponential leap in capabilities here,” said McAdam. He noted that people are using their phones more than ever before (Verizon sees the same amount of traffic on its networks in an hour now as it did in a week a decade ago) and that the company has an opportunity to monetize that volume as much as possible.
Verizon’s transformation has been in the works for years, but its investments have ramped up heavily in the past two years.
Verizon bought America Online AOL for 4.5 billion, the same year it launched its own mobile video service Go90. And earlier this year, Verizon partnered with Hearst to invest in video-driven and millennial-focused media companies, Complex Media and AwesomenessTV.
Mayer, like Armstrong, previously worked at Google (GOOG) before taking over the top spot at Yahoo in 2012. She invested heavily in improving Yahoo’s mobile products, expanding its audience through the acquisition of Tumblr and doubling down on premium media content. She brought in TV journalist Katie Couric as Yahoo’s “global anchor.”
Yahoo over its 21 year run of the digital market made some acquisitions 10 of which are as follows:
An Internet video streaming services which it bought for 5.7 billion dollars in 1999. (more than the buyout worth of Yahoo in 2016).
- Geo Cities
A website creating a company for 3.6 billion dollars in 1998. Search Engines Company for 1.63 billion in 2003.
Bought in 2013 for 1.1 billion dollars
- Right Media
Online advertising Company in 2007 for 680 million dollars.
Paris-based company in 2004 for 579 million
For 439 million dollars in 2002.
In 200 for 432 million dollars
Software maker in 2007 for 350 million.
Bought in 2011 for 270 million It develops software for advertisers to better target customers online.
These companies initially were highly profitable in the initial stages but with time and dwindling sales they were either closed or sold off.
Advertising is the core revenue generator and sadly Mayer despite her best efforts could not control the slide in revenue. However, shares of Yahoo have plummeted and investors are not happy which is not a good omen.
What about the employees at Yahoo and how have they taken to the buyout. At this point feelings are ambivalent. Yahoo brought on some media stars on its team like Katie Couric, Joe Zee, and David Pogue to boost its sales.
The exodus has already started and Bobbi Brown The Editor-in-Chief of Yahoo beauty has already left. The beauty entrepreneur and make-up artist joined the site as editor-in-chief in April 2014 but, in a shake-up of the company, she is now leaving her position.
Beauty’s senior beauty editor Joanna Douglass and several other staffers in the beauty division have also left.
One redeeming feature for Verizon from buying Yahoo is that it has become the owner of a prime real estate in Silicon Valley. One expert valued Yahoo’s Sunnyvale, Calif., campus at about $500 million.
When the deal closes, the New York telecom giant will become one of the largest office landlords in the nation’s technology hub thanks to the roughly 1 million-square-foot campus Yahoo owns in Sunnyvale, Calif. — a desirable position amid the current tech boom.
This is a virtual goldmine and its present land value is estimated to be upwards of 500miliion dollars.
The deal of the sale will not be finalized before Jan 2017, however, Verizon is optimistic that it will turn the company around.
Pros and cons will be weighed heavily and many yahoo employees will be shown the door or leave voluntarily.
As for Marissa Mayer, She will presently be part of the team under the new bosses but the market speculation is that things do not bode well for her too,
The future may be in digital technology but it is essential to evaluate, assess, analyse the risk factors when expanding one’s base, Yahoo it seems did not do its homework properly and rushed to frantically expand and become a leading player in the Industry.
Many experts are already of the opinion that Verizon’s latest acquisition will not deliver as expected as the market has become very very competitive.
When the ship sinks everyone jumps ship and it is left for the Captain to sink or swim.
How the tall and mighty have fallen. Will Yahoo resurge back into the behemoth it once was or is this the death knell of the biggest digital player in the industry. Time alone will tell.