Yahoo Sold to Verizon
If you haven’t heard yet Yahoo has been sold to Verizon for $4.83 billion. Next steps are to have shareholders and regulators approve the purchase which will then close early 2017. The deal includes the search engine, mail services, social network Tumblr and photo sharing Flickr. There is still a $40 billion value of remaining Yahoo investments that need to be sorted out. The remaining investments include a 15% stake in Alibaba worth $32 billion and 35% stake in Yahoo Japan worth $8 billion. For those of you that don’t remember, Yahoo was worth $125 billion in 2000 during the dot.com boom. Take a look at the company market cap timeline.
What Happened To Yahoo?
The answer lies in the company’s inability to adapt to new technology/culture based on social media and mobile devices after 2000. They have been struggling for over a decade to find a winning strategy against rival companies. Yahoo’s failure provided opportunity and competitive advantage to Facebook and Google. Last year alone Yahoo had a loss in revenue of $4.4 billion. I do believe that Yahoo CEO Marissa Meyer did try her best but ultimately failed to turn the company around. She made a series of investments that did not turn out to be the best for the company.
The website has always seemed very cluttered with information compared to rival companies. The search engine has never worked nearly as effective as Google’s. The news is filled with senseless top stories (anything with the word Kardashian) and advertisements. The email system has always been slower than other email platforms with a loaded interface. I guess most of us thought Yahoo was great until we started using Google and compared the two. Google has such a minimalistic look that makes everything else look cluttered and slow. This is what I’m talking about.
Let us not forget the fact that in 2001 Yahoo could have bought Google for just $3 billion now worth $498 billion. They also offered $1 billion to buy Facebook in 2006 but the offer was not increased when it was turned down. Facebook is now worth $350 billion. In 2008, Microsoft offered to buy Yahoo for $44 Billion but it was turned down. This deal is just a fraction of what Yahoo was worth at one point. All these misses contributed to the downfall of the internet titan Yahoo. If everything goes well Verizon will now own two fallen titans, AOL and Yahoo. Only time will tell where this former internet pioneer will end up.