Verizon acquires Yahoo for $4.8 Billion – Is it worth?

by Chaitanya Vankadaru 1

Verizon bought Yahoo

Verizon agrees to acquire internet company Yahoo for $4.8 Billion. Yahoo’s acquisition by Verizon came as a shock to folks in the tech. Yahoo is virtually dead. After several discussions, debates and meetings over and over; after months of offers, bids and huge speculation, the conventional concord is that Verizon will be the new owner of Yahoo.  However, there is no formal announcement still by either of the companies. But, according to reliable sources, this deal is done by Verizon with Yahoo considering future growth scope with an embedded risk-factor for a moderate deal worth of $4.8 Billion.

Verizon bought Yahoo
Verizon bought Yahoo for $4.8 billion

A few days ago, the reports deliberately said that Verizon is going to take over Yahoo for a $5 Billion Deal. However, it seems to be that there were some negotiations for scaling down the deal value. Whatever maybe happened, but, the interesting thing is that Verizon took a great risk by buying Yahoo after all. This is not only our view. Many financial analysts, business people felt the same.

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For instance, let us see Yahoo’s growth rate in past 10 years.

Yahoo vs Google upto 2006
Yahoo vs Google up-to 2006
Yahoo vs Google till 2013
Yahoo vs Google till 2013

Here, We’re considering Google as best rival of Yahoo, because up-to 2008/2009, there are no other big companies to challenge Yahoo, except Google. So, the stats were based on Yahoo vs Google.

But, when Marissa Mayer became Yahoo’s CEO. the trouble have started. Yahoo started to lose it’s potential over Search Engine and Media Advertising. They mostly focused on Content based things then. Later, companies like Facebook took a huge leap over Yahoo and made it too weak.

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Marissa-Mayer-Yahoo
Marissa-Mayer-Yahoo

Slowly, when it started degrading, Marissa Mayer bought the shares of Alibaba.Com. But, later Yahoo had to sell them, due to insufficient funds of various reasons. And employees of Yahoo also started Jumping into other big companies for salaries, growth and respect. Yahoo remained the same over the past 5 years in profit and growth aspects. So, they finally want to sell their company core assets to any big giant company for a good deal. And then came the Verizon offering $4.8 Billion after many negotiations.

Verizon done quite impressive business over this decade. It’s biggest profitable acquisition is AOL. After that, it evolved into a media company fueled by technology.

Verizon's Media
Verizon’s Media

Put aside all negative reactions of Verizon’s acquisition of Yahoo. Check it out from Verizon’s View.

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Verizon made a nice plan to buy Yahoo a long time ago. Because, AOL+Verizon+Yahoo = Biggest Ever Marketing Giant with the best vertical integration ever. That’s why Verizon took such a huge risk of acquiring Yahoo. However, according to our intuition, Verizon is clever so far. Which means there is a potential threat to Google and Facebook, if Verizon start to execute their clean and crisp.

AOL+Verizon+Yahoo
AOL+Verizon+Yahoo

Google gets about 89% of its revenue from advertising and marketing only. Facebook’s  case is also similar in this aspect. So, Verizon indirectly warning Google, Facebook and other big advertisement/marketing based companies.

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