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Category: Information and Communication / Internet Culture / Social Media / Takeovers

How Yahoo went from $130 billion internet giant to a $5 billion bargain

Tuesday, 26 Jul 2016 13:26:41

A screen still of the Yahoo search engine, taken on September 24, 2010. (ABC News)

One of the internet's early pioneers, Yahoo, was taken over by US telecommunications giant Verizon yesterday in a deal worth $US4.8 billion ($6.4 billion).

It's been called the "saddest $5 billion deal in tech history". Ouch.

Wait. Yahoo was still a thing?

Sure was. A big thing in fact.

Aside from being the email, search and news portal that you know it as, Yahoo also owned Tumblr and Flickr.

As recently as 2008, Microsoft made a $US44.6 billion ($60 billion) offer to by the internet giant, but was rejected at the for undervaluing the business.

Don't forget, Yahoo was a titan of the early internet age.

In January of 2000, Yahoo reached its peak value of $130 billion.

It still boasts more than a billion users.

Remember AOL? It's a part of this whole deal

Holy 90s nostalgia trip Batman.

External Link: Yeah, we tried to forget the 90s too Robin.

Two of the biggest players of the early internet age will be 'integrated' as result of Verizon purchase.

One of the biggest providers of dial-up internet in the 90s, until 2015 AOL had seen some tough times (much like Yahoo).

That's when Verizon stepped in and bought the company for $US 4.4 billion ($5.3 billion).

I'm one of those billion Yahoo users. Can I still search through Yahoo and access my email?

Until early 2017 when this deal is expected to finalise, a definitive yes.

After that, presumably so.

It'll be up to Verizon what happens to Yahoo's services after that.

Here's what AOL's CEO Tim Armstrong had to say about the future of Yahoo:

This transaction is about unleashing Yahoo's full potential, building upon our collective synergies, and strengthening and accelerating that growth

So why is this deal so 'sad'?

In 2001, Yahoo could have bought Google for $3 billion. In 2006, it offered Facebook $1 billion and didn't up the offer when it was knocked back.

Today, Google is worth a reported $498 billion. Facebook about $350 billion.

Those misses, and a failure to adapt to new technology as the internet evolved are largely behind Yahoo's fall from the top.

Here's a longer explanation:

What went wrong with Yahoo Video: What went wrong with Yahoo (The Business)

TL;DR: It signals the end of a company that was at the forefront of making the internet the ubiquitous thing it is today.

Kind of like downfall of Kodak.

So, what did Verizon buy?

Pretty much everything Yahoo owns, except:

  • Yahoo's stake in Chinese e-commerce giant Alibaba
  • A 35 per cent stake in Yahoo Japan
  • Some Yahoo patents

Is Verizon building an internet museum? Why buy Yahoo?

A billion users is nothing to sneeze at.

Tumblr and Flickr have small but passionate user bases.

But it's clear Verizon, a telecommunications giant in the US, had made the purchase to help grow its digital advertising revenues.

Here's what the key players had to say:

Yahoo CEO Marissa Mayer:

This transaction also sets up a great opportunity for Yahoo to build further distribution and accelerate our work in mobile, video, native advertising and social.

Verizon Chairman and CEO Lowell McAdam:

The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising

AOL CEO Tim Armstrong:

Combining Verizon, AOL and Yahoo will create a new powerful competitive rival in mobile media, and an open, scaled alternative offering for advertisers and publishers

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