Verizon to buy Yahoo at $5 billion: Here are the top things to knowhttps://indianexpress.com/article/technology/tech-news-technology/verizon-to-buy-yahoo-at-5-billion-here-are-the-top-things-to-know-2934159/

Verizon to buy Yahoo at $5 billion: Here are the top things to know

Verizon is expected to buy out Yahoo for a deal valued at $5 billion. Here's a quick look at recent events around Yahoo.

Yahoo, Verizon-Yahoo, Verizon buys out Yahoo, Yahoo Verizon deal, Verizon buys Yahoo, Marissa Mayer, Yahoo CEO, Yahoo sold
Verizon is expected to buy out Yahoo for a deal valued at .8 billion, according to reports. A look at the events leading to this sale. (Source: AP)

Verizon is expected to buy out Yahoo for a deal valued at $5 billion. According to reports, Verizon and Yahoo’s deal will be announced today before markets open in the US, which should be in the evening according to IST. For Yahoo, the sale of its websites, email services, etc after the company lost momentum and ad dollars to Google and Facebook.

Yahoo had hired former Google executive Marissa Mayer as its CEO four years back, who has been unable to turn the company around. So what is the Yahoo-Verizon deal all about? Here’s a quick look at the top points one should note, including how Yahoo did in its latest results.

Yahoo will sell most of its internet business which includes YahooMail, Yahoo New, Yahoo Finance, and Sports websites. The Yahoo advertising tools will also be sold off under the deal, according to reports. Yahoo after the sale won’t be an operating company, and will instead function as a stake-holding company with a 35.5 per cent stake in Yahoo Japan and 15 per cent interest in China’s e-commerce company Alibaba Group Holding Ltd.

The stake in Yahoo Japan and China’s Alibaba are what give Yahoo it’s current market capitalisation $37 billion. The deal will also likely mark the end of Marissa Mayer’s four-year reign as Yahoo CEO Marissa Mayer, where she failed to make a turn around for the company.

Advertising

When Mayer had first joined Yahoo, she had put the emphasis on mobile as a strategy for the company and introduced new measures like ‘no work from home policy.’ Under Mayer, Yahoo bought over Tumblr the popular blogging platform for $1 billion, an acquisition it later indicated had not been profitable. Yahoo also acquired a news aggregation app called Summly for $30 million, which didn’t bear much results for the company in the news space.

Yahoo’s latest results

Yahoo’s results for April-June quarter, which were announced on July 18 showed that the company’s revenue fell 19 percent from 2015, while its loss widened to $440 million.

Yahoo also reported it was writing down $482 million in charges related to the declining value of Tumblr. In 2013, Yahoo had paid $1.1 billion for the blogging service. This latest mark-down for Tumblr came after an earlier write-down of $230 million.  In the earnings call, CEO Marissa Mayer had told investors the company is carefully evaluating bids for sale.

Also read: Verizon reportedly agrees to buy Yahoo for $5 billion

According to Associated Press, Yahoo’s net revenue — after subtracting ad commissions — fell from slightly from more than $1 billion a year ago to $842 million in the latest quarter, which marks as the steepest decline yet under Mayer.

Reports had indicated that Verizon Communications and AT&T Inc were the top possible buyers for Yahoo’s services. Analysts estimated Yahoo will fetch $4 billion to $8 billion for its services.

Yahoo, Verizon-Yahoo, Verizon buys out Yahoo, Yahoo Verizon deal, Verizon buys Yahoo, Marissa Mayer, Yahoo CEO, Yahoo sold
(Source: AP )

Marissa Mayer severance package

Yahoo CEO Marissa Mayer might not have helped with the company’s turnaround, but she will get a $55 million severance package if she loses her job after the sale.

This was revealed in a regulatory by Yahoo in May this year, which gives details of cash, stock awards and other benefits that Mayer would get should she be forced out as CEO within a year after a sale.

Mayer received a compensation package valued at nearly $36 million last year under the SEC’s accounting rules. Yahoo’s board maintained in its filing that it was only worth about $14 million as of April 1.

Read more: Verizon emerges as front-runner in Yahoo auction: Report

Yahoo’s new products shut down

In March this year, Yahoo announced it was shutting down products like Yahoo Games, Yahoo LiveText, its regional media properties, in efforts to streamline the business.

Yahoo Games site and publishing channel was discontinued from May 13, 2016. Yahoo Livetext, which launched in 2015, was a real-time video texting app. The app would let users send videos without sound, and the company claimed that it was a faster form of video communication that relied on body language.

Advertising

In an increasingly competitive world of mobile messaging, the app failed to take off and was shut down within a year. Yahoo also shut down its regional, genre-specific media properties.

With inputs from Reuters and Associated Press