Yet Another Historically Officious Offer (YAHOO)

Yet Another Historically Officious Offer (YAHOO)?

On July 25th, 2016 Verizon bought the core Yahoo business for $4.84 billion dollars (5% of its worth in 2001). With this acquisition, the ambitious company (and historically significant one – they evolved from Bell System) took a major step in breaking the monopoly of Google and Facebook in digital marketing (annual revenue of $30 billion and $8 billion respectively from the US market alone). In alignment to its last year acquisition of AOL, Verizon expects to become a digital media powerhouse, by combining the properties of AOL (The Huffington Post, TechCrunch etc.) and the services, global reach and customer base of Yahoo. While Verizon seems to be doing things right, making it across Facebook and Google might be much tougher than what it is perceived by outsiders. Microsoft made a similar move to enter the cell phone market by acquiring Nokia, which turned out to be a disaster. What is similar in both cases is the fact that a part of top management remains same (Rajeev Suri was the CEO of Nokia-Siemens Networks who was promoted to Nokia’s CEO post, while Marissa Mayer plans to retain the CEO position after the acquisition). The question here to be asked is will it be structurally possible to reshape such a deeply recognized and struggling brand, under its old leadership, albeit under a new brand? Not to forget the fact that Google and Facebook are way ahead in the category, spreading their wings in everything from Internet of Things to Biotech (Facebook’s Whatsapp is proving to be a nightmare for cell phone service providers, including Verizon Wireless). Perhaps, acquiring a company in its growth stage would have been a better option for Verizon (like Linkedin’s acquisition by Microsoft), rather than acquiring one in its (prolonged) death stage and inheriting its woes. Only time will tell.

As far as Yahoo is concerned, its troubles started right after the dot com burst with falling share prices, frequently changing leadership (6 CEOs in 15 years), shoddy investments and big brain drains. It is a mild astonishment for most that the company was not sold already. Yahoo will go down in history as a classic example of amazing products, ineffectual management.