Don’t Understand Why Verizon Would Buy Yahoo? All Is Explained Here

Telco Verizon has purchased the beleaguered Yahoo for a reported $US4.83 billion. But what’s it all mean? Here, B&T’s tech expert and editor of Which-50.com Andrew Birmingham casts his keen eye over the events…

By all reports, Yahoo’s 21 year moment in the sun will end — acquired by Verizon. Time to cancel yourTumblr account if you value your privacy.

According to reports in Bloomberg, Reuters, the New York Times and sundry others, Verizon will buy the bit of Yahoo that means Yahoo to most people for $US 4.8 billion. That’s pretty cheap, measured against Yahoo’s vast potential — and probably fair when tested against its execution. “Chump change,” Gizmodo called it.

And that’s probably reasonable too, given it’s only the core Internet assets and land holdings that are changing hands. Only a chump would buy them.

Yahoo’s shareholders are sticking jealously with the best bits of the company — including tens of billions of dollars worth of Alibaba shares, the Japanese operation, and a small patent farm.

Marissa Mayer, who joined the company in a blaze of glory in 2012, was never really able to deliver against the huge expectations, although the $US117 million she trousered in salary and stock during her tenure has probably softened the blow.

And it’s a little unfair on Mayer to compare the company’s peak valuation of $US125 billion to the pennies Verizon is paying now — as many are doing — since it is not a like-for-like comparison. But still, when you tip the Alibaba shares and Japan back in, it is a huge decline.

Let’s not be too harsh. The $US4.8 billion is actually much better than you might imagine when compared to the smoking ruin that Mayer inherited. As was reported in 2014: “A sum of the parts analysis recently valued the business at less than its remaining holding in Alibaba — in other words it valued the core business at less than zero.” Just two years later, Mayer has managed to flog that sick puppy for almost five mighty B-notes.

According to a Bloomberg report, “The transaction stands to finally seal the fate of web pioneer Yahoo after months of speculation and pressure from investors including Starboard Value LP. The deal will add the company and its millions of daily users to Verizon’s growing stable of media properties and is also likely to end the reign of Yahoo Chief Executive Officer Marissa Mayer, who tried and failed to re-invent Yahoo as an independent company.”

Locally, there are probably implications for Kerry Stokes’s Seven West Media — which has a partnership with the company — in the medium term. That deal was first cut in 2006 and it’s the last of its kind now that Nine and Microsoft have parted company as joint venture partners.

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