Verizon agreed to buy Yahoo’s core internet business for $4.83bn (£3.62bn) in cash on Monday, marking the final chapter in the struggling fortunes of the fading web pioneer.
Marissa Mayer, Yahoo’s chief executive officer, has faced a barrage of criticism over her tenure.
She hit out at “gender-charged” reporting in an interview with the Financial Times after the sale. “I’ve tried to be gender-blind and believe tech is a gender-neutral zone but do think there has been gender-charged reporting,” she said.
“We all see the things that only plague women leaders, like articles that focus on their appearance, like Hillary Clinton sporting a new pantsuit.
I think all women are aware of that, but I had hoped in 2015 and 2016 that I would see fewer articles like that. It’s a shame.” Verizon, the US’s largest telecommunications company by subscribers, will combine Yahoo with another fallen giant of the first internet age, AOL, which it bought last year for $4.4bn. After the deal, expected to be complete in 2017, Yahoo will be left as a holding company for its valuable stakes in web businesses in China and Japan.
Yahoo has a 15% stake in the Chinese e-commerce company Alibaba and a 35.5% interest in Yahoo Japan. “The sale of our operating business, which effectively separates our Asian asset equity stakes, is an important step in our plan to unlock shareholder value for Yahoo,” Mayer said in a statement on Monday.
Founded in a Stanford University dorm room in 1994 by Jerry Yang and David Filo as “Jerry and David’s Guide To The World Wide Web”, Yahoo grew rapidly through the 1990s to become one of the pre-eminent internet companies of its generation.
Offering email, news, shopping and search, Yahoo went public in 1996, with its share price soaring 154% on day one. In January 2000, Yahoo was valued at $125bn.
But the company failed to keep pace with the changing tech landscape as Google came to dominate search and Facebook social media. Microsoft launched a $44.6bn hostile bid for Yahoo in 2008.
On Monday, the company was valued at $37bn while Google’s parent company, Alphabet, was valued at $518bn and Facebook at $349bn. The new generation of tech companies have also outstripped Yahoo.
Mayer’s company may still have more than one billion active monthly users but Verizon’s price is less than a quarter of Snapchat’s current valuation. Yahoo will continue as an independent company until the deal receives shareholder and regulatory approval, the companies said.
The sale is an ignominious end to Mayer’s plans to turn Yahoo around. Mayer, a highly rated Google executive, joined Yahoo in July 2012.
Before her arrival the company was in disarray and had had four CEOs in three years. Mayer promised a “renewed focus on product innovation to drive user experience and advertising revenue”.
But shareholders lost faith in her after a wild spending spree in which she tried to build Yahoo’s content business by adding the blog site Tumblr, for $1.1bn, and signed deals with TV news anchor Katie Couric and the National Football League that failed to pay off.
In a Tumblr blogpost, Mayer said she planned to stay at Yahoo, but Verizon’s Marni Walden, who will head the combined company, told CNBC the new leadership team had yet to be determined. Should Mayer be forced out, she is in for a payoff of $137m.
Yahoo’s boss has already taken home $78m since she was installed as CEO, according to the stock analytics firm MSCI. Based on the terms of the company’s most recent proxy statement, she will take home another $59m if she’s dismissed from the company after a buyout. Some commentators were skeptical about the combined power of AOL and Yahoo.
John Colley, a professor at Warwick Business School, said the merger was an alliance of two weak companies unlikely to form a single strong one. “Technology history is littered with the remnants of once all-powerful businesses – take Nokia and RIM, makers of the Blackberry,” Colley said.
He said it was difficult to see how Verizon would benefit from this acquisition. The sale does not include Yahoo’s cash, its shares in Alibaba, its shares in Yahoo Japan, Yahoo’s convertible notes, certain minority investments and Yahoo’s non-core patents.
The Alibaba and Yahoo Japan investments are worth about $40bn, while Yahoo had a market value of about $37.4bn as of Friday’s close. Verizon prevailed over rival bidders for Yahoo, including AT&T; a group led by the Quicken Loans founder Dan Gilbert and backed by the billionaire Warren Buffett; the private equity firm TPG Capital; and a consortium of buyout firms, Vector Capital and Sycamore Partners.
The telecoms company is hoping that a combined AOL and Yahoo will create a strong third player to compete with Alphabet and Facebook for online revenues.
Source: Guardian UK