“It puts us in a new position for advertisers, the illustrious ‘must buy,’" chief executive Marissa Mayer said on a call with AOL chief executive Tim Armstrong.
Verizon acquired AOL for $4.4 billion last year. The telecommunications giant’s buying spree indicates that it wants to move beyond its core business of providing Internet and wireless infrastructure and compete directly with Google for premium advertisers, said Rita McGrath, a professor at Columbia Business School.
Of all of Yahoo’s suitors during a drawn-out five-month bidding process, Verizon had the most compelling vision for the company, Mayer said on the call. With more than 100 million wireless customers, a focus on mobile and video advertising, and AOL’s ownership of media brands such as Techcrunch and the Huffington Post, the two had many “clear synergies.”
Yahoo’s $4.83 billion price tag includes the entirety of Yahoo’s operating businesses - Yahoo email, sports, news, and finance, and other apps - and separates Yahoo’s significant holdings in Chinese e-commerce giant Alibaba, in Yahoo Japan, and the company’s patent portfolio.
“This transaction is about unleashing Yahoo’s full potential, building upon our collective synergies, and strengthening and accelerating that growth,” Armstrong said. “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.”
Mayer has previously rejected comparisons between Yahoo and AOL and rebuffed an acquisition offer from Armstrong. But Armstrong could have a good skill set for Yahoo, McGrath said. Yahoo has 600 million monthly active users, making its properties among the most visited on the Internet, but the long-ailing Web giant fell far behind Google in converting those eyeballs into revenue. Armstrong, McGrath said, has done a good job of keeping AOL relevant and marrying content and advertising goals.
Yahoo under AOL could actually look much the same as it does now, McGrath added. The media side, with notable journalists such as Katie Couric, could complement the Huffington Post and other AOL media properties. Under the Verizon umbrella, Yahoo could focus on maintaining audiences under less pressure from Wall Street.
On the call, Mayer put a positive spin on what’s arguably been an agonizing process. She thanked employees for working “day and night” and touted her accomplishments, including tripling the number of consumers using Yahoo products on mobile devices, earning $1 billion in revenue from those mobile products in 2015, up from “basically zero” in 2011, and improved advertising technology.
She plans to stay at the helm through early next year, when the sale of Yahoo's Internet properties is expected to be completed. At that time, the remaining parts of Yahoo will become a registered, publicly traded investment company, with a different name, officials said, though they didn’t offer more details.
“I love Yahoo. I’m excited to see it through its next chapter,” Mayer said.
Staff writer Hayley Tsukayama contributed to this report.