There are many questions about what will happen to Yahoo Inc. under its new owner Verizon Communications Inc. -- and whether consumers will notice the difference.
The Sunnyvale, Calif., Internet company announced Monday that Verizon will buy its core assets for $4.83 billion.
On a call with investors Monday morning, executives from both companies described the future as one in which Yahoo products would be put in front of millions of more consumers and enjoy an improved standing with advertisers.
"It puts us in a new position for advertisers, the illustrious 'must buy,'" chief executive Marissa Mayer said during a teleconference call with AOL chief executive Tim Armstrong.
Verizon acquired AOL for $4.4 billion last year. The telecommunications giant's purchases indicate 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."
"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 said. 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.
During Monday's conference call, Mayer put a positive spin on the sales 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 said she plans to stay at the helm through early next year, when the sale of Yahoo's Internet properties is expected to be completed. She did not offer any clarity on what she would do after that. Early next year, the remaining Yahoo properties -- mainly a highly valuable stake in Alibaba and Yahoo Japan -- will become a registered, publicly traded investment company under a different name, officials said.
"I love Yahoo. I'm excited to see it through its next chapter," Mayer said.
Business on 07/26/2016