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Verizon to purchase Yahoo for $4.8 billion

Lewis Wallace Jul 25, 2016
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Verizon is snagging Yahoo's core business for nearly $5 billion. Justin Sullivan/Getty Images

Verizon to purchase Yahoo for $4.8 billion

Lewis Wallace Jul 25, 2016
Verizon is snagging Yahoo's core business for nearly $5 billion. Justin Sullivan/Getty Images
HTML EMBED:
COPY

Verizon Communications has confirmed it will purchase the main core of Yahoo’s internet business for $4.8 billion, a paltry sum compared to Yahoo’s value in its heyday.

In a press release, Verizon said it will acquire the internet search engine, Yahoo Mail, instant messaging and a handful of popular websites, but will leave behind most of Yahoo’s patents as well as its shares in Alibaba and Yahoo Japan. The remaining assets will be renamed and structured as a publicly traded company.

Erik Gordon, a professor at the Ross School of Business at University of Michigan, said Yahoo used to be cool.

“Now it’s the middle-aged guy who’s bald and has a gray ponytail,” he said.

That said, it’s got a decent search engine, websites like Yahoo Finance and Yahoo Sports, and most importantly, around a billion users.

In 2015, Verizon acquired another aging behemoth, AOL, which had transformed its company from an antiquated email service to a decent tool for targeted advertising.

“It went from being the people that sent you those annoying CDs to turn you into an AOL user, into a pretty sophisticated company under its new CEO,” said Gordon, referring to AOL head Tim Armstrong.

Today’s deal will create a mashup of AOL’s ad technology with Yahoo’s users and sites in order to try to compete with Google and Facebook for digital ad revenue through better native advertising and ad targeting — in other words, Verizon wants to turn your eyeballs into profits whenever you’re staring at your smartphone.

Gordon said the competition is really good already.

“They send you ads that actually have some chance of having something to do with your life, instead of sending you ads for swimming pool cleaning robots when you live on the 50th floor of a building in Chicago,” he said.

Though many had speculated that Yahoo CEO Marissa Mayer is likely to leave the company in the transition, a blog post by Mayer suggests she hopes to stay on.

I love Yahoo, and I believe in all of you” she wrote. “It’s important to me to see Yahoo into its next chapter.”

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