After years of crisis, Yahoo has been sold through an auction won by Verizon Communications, the largest U.S. wireless communications service provider, for 4.8 billion dollars - a high price to pay for a company that Wall Street considers unnecessary, but that in its peak time, January 2000, was worth $125 billion.
According to sources close to the company, the board of directors of Yahoo would accept the sale of its core online operations, which include the search engine, the e-mail service, the platform for images Flickr, the blog Tumblr, and real estate assets. Yahoo patents will be sold separately.
Yahoo's share of 15% of Alibaba - the main portal of Chinese eCommerce, which is estimated at 41 billion, will remain in the portfolio as well as the 35% stake in Yahoo Japan that is worth about 9 billion dollars.
Yahoo, founded in 1994 by David Filo and Jerry Yang, was one of the very first company to appear on the web and was created as a link repository that was able to keep track of personal interests on the Internet. It later expanded by offering free services including search, email, shopping and news, through the support of advertising within its pages. The model has worked for years, generating new users every day.
However, with the rise of companies like Google, which managed to take over as a search engine, and Facebook, which gradually replaced web portals, the Sunnyvale company lost advertising revenue and search traffic, unable to find a winning strategy in web research, in social media, in video and so on. Also, Yahoo did not manage to launch successful new services and acquisitions, Tumbrl for one, which did not turned out to be pivotal. Even Marissa Mayer, the first female engineer hired by Google, now managing director at Yahoo since 2012, was unable to succeed in rehabilitating the company. According to sources, it is unlikely that she would have a role after the sale, but her contract stipulates a severance pay of more than $50 million.
In the digital advertising business, Verizon faces two dominant competitors: Google and Facebook. The goal of the acquisition is to combine Yahoo features, advertising, online search and e-mail, with those of AOL - acquired in 2015 - in order to create the 'third pole' of digital advertising, behind Google and Facebook. This year, the US market of digital advertising is expected to be worth 69 billion dollars: Google will control a share of nearly 40%, Facebook 15%, while Verizon along with AOL controls a 1.8% share, but with Yahoo’s acquisition, the share will rise to 5.2%.
Source: The New York Times