Yahoo! A Guide to the World Wide Web in search, messenger and a roller coaster stock ride

Yahoo, which started at Stanford University in January 1994, has been sold off to Verizon Wireless in a $4.8 billion deal. A look at the company history.

By: Tech Desk | Published: July 26, 2016 1:02 pm
Verizon Wireless has acquired Yahoo Inc for .83 billion in cash which is seen as big push by telecom giant Verizon Wireless has acquired Yahoo Inc for .83 billion in cash which is seen as big push by telecom giant

Yahoo, which started at Stanford University in January 1994, has been sold off to Verizon Wireless in a $4.8 billion deal. The company, which was once pegged at $125 billion lost all the value lately, was unable to capitalise in the digital world which it pioneered in many ways and keep pace with new rivals like Google, Facebook.

While Verizon may have bought Yahoo on a relative bargain, one can’t write off the fact that Yahoo initiated a lot of things across the globe including Search, Messenger and most importantly email. But that could not prevent Yahoo from reaching its all-time low after the dot-com bubble burst in 2001.

Yahoo was started in January 1994 by founder Jerry Yang and David Filo, both graduate students at Stanford University. Initially called “Jerry and David’s Guide to the World Wide Web”, it was conceived as a directory to other websites organised as a hierarchy rather than searchable index of pages. The Guide was renamed Yahoo in April 1994 and started diversifying into a web portal.

After seeing immense potential for web business, ‘yahoo.com’ domain was officially created on January 18, 1995 and the company was formally incorporated on March 2, 1995. Yahoo went public on April 12, 1996. During 1997 and 1999 was when the web portal saw its most growth, acquiring companies like Four 11’s Rocketmail (March 1997) which would later become Yahoo Mail. Yahoo also paid $4.8 billion and $5.7 billion each for companies like Geocities and Broadcast.com in 1998.

On March 8, 1998, Yahoo announced Yahoo Pager, and later renamed it as Yahoo Messenger. Yahoo Messenger was the first real platform for real-time communication that allowed options to send images and real-time updates.

Yahoo Mail  was the third-largest web email service till December 2011, according to Comscore with close to 280 million users. The company deserves credit for making email popular among regular users, although it would later lose momentum to Gmail.

Yahoo saw its biggest boom during the dot-com bubble of 2000-2001. Its stock doubled in price, and hit all time high in the Japan. It was more or less a fairy tale ride for company in the web business. In mid-2000, Yahoo saw Google’s potential as the default search engine and tapped it to power searches made on yahoo.com.

In post dot-com era, Yahoo lost significant ground in terms of its market share. The company hit an all-time low on September 26, 2001. Yahoo then made partnerships with AOL, Verizon and even BT Openworld.

Yahoo’s biggest competition came from Google, which expanded beyond search with mail and messaging services. After launch of Google Talk, Yahoo saw tremendous pressure and merged its messenger service with MSN messenger and even increased its storage limit.

In the wake of Web 2.0, Yahoo kept acquiring services with Flickr being the most prominent one. Yahoo acquired Flickr on March 20, 2005 before setting up its own incubator future Yahoo technologies.

Yahoo’s history is rich with acquisitions, tech products and a fairy tale ride in the stock market. The most recent acquisition attempt was by Microsoft which has pursued discussions through 2005, 2006 and 2007. After unsuccessful attempts at merger, Microsoft attempted to takeover Yahoo’s business for $44.6 billion in cash and stock in 2008.

Yahoo decided to steer clear of the takeover bid and termed it as undervaluing Yahoo brand. Microsoft’s takeover bid was pioneered by then CEO Steve Ballmer, but the Redmond based company withdrew its offer on May 3, 2008.

Yahoo then saw two CEOs with Carol Bartz leading the company from 2009 to 2011 and Scott Thompson doing a cameo in 2012. Under Scott Thompson, Yahoo went through significant layoffs and the company decided to cut almost 14 per cent of its workforce.

In an effort to salvage its dwindling business, Yahoo brought former Google executive Marissa Mayer onboard as CEO and President in July 2012. Marissa Mayer brought significant changes to Yahoo’s ad business and made Tumblr her first big acquisition. While Marissa Mayer was primarily brought in to save Yahoo from losing out to other Web 2.0 companies, she ended up failing in her endeavour. Yahoo eventually sold itself to Verizon for a paltry amount of $4.83 billion, which sounds like a bargain for any large-scale enterprise.

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