Tech & Gadgets

Verizon Acquires Yahoo! for 4.8 Billion

Verizon acquires Yahoo

After the huge deal of Microsoft buying LinkedIn for 26.2 billion this is the second big news for Silicon Valley in last two months. It is sad to see that once a company who was competing Silicon Valley giants like Microsoft and Google, has failed to retain its glory. Yahoo! was once valued staggering 128 billion but the failure of the CEO Marissa Mayer’s decisions let the Yahoo! to get acquitted by Verizon for very less price of 4.8 billion.

The Deal

Verizon acquired Yahoo! for 4.8 billion which once was an Internet major valued 128 billion. The exact terms and conditions are yet to be disclosed but the deal gives Verizon ownership of Yahoo!’s core internet business along with some real estate. Yahoo! still, owns a number of patents worth $3 to $4 billion. Yahoo! also, retains a stake worth approximately $32 billion in the Chinese company and a multi-billion-dollar slice in Yahoo Japan.

What Went Wrong?

Why Yahoo! couldn’t succeed to hold its position and reputation in the market.

MaVeNS Strategy

Marissa Mayer’s MaVeNS (Mobile, Video, Native Advertising and Social Networking services) Strategy failed miserably to bring back the glory days of Yahoo!. MaVeNS Strategy appeared promising in its early days, as it covers every aspect of a budding business. Focusing on Huge Smartphone user rise, MaVeNS strategy was impressive, but the hasty execution of the strategy cause the failure of the project. A Huge amount of sum was spent on buying resources. Also, Marissa engaged herself in the micro level decisions rather than focusing on the company’s global vision and goals. Soon the clash of egos between senior executives or conflicts in ideas caused the project to lose its track.

Tumbling Tumblr

Yahoo! acquired the budding startup Tumblr in 2013 for 1.1 billion which was way more than the actual market value of it, suggested experts. Also, CEO Marissa failed to keep the vision of Tumblr alive resulting the value of Tumblr drastically fall down to 350 million very less than its acquisition value which is 1.1 bn. Yahoo!’s plan of expanding it’s user base and social media power using Tumblr’s user base backfired. The sole reason of the failure was CEO Marissa’s decision to merge the Ad Sales departments of both the companies also the executive she hired had very less knowledge of Tumblr’s business model. Marissa also set an unrealistic goal of earning 100 million revenues by Sales in the short amount of time. Hence Tumblr failed to retain its’s user base as it never offered it’s users new and engaging content. And Yahoo!’s revenue dropped by 20% from a prior year.

Yahoo!’s Biggest Mistakes

  1. In 1997 Yahoo! turned down the offer of acquiring Google for only 1 million but failed to realize the power of Search as Yahoo! wanted to keep the users on its own site rather than directing them to other websites as Google does.

  2. In 2006 Yahoo lets the Facebook walk away even though it had Facebook investors eager to sell it. But the depreciation in stocks causes the value to 875 million which would have been 1 billion, causing Mark Zuckerberg walk away.

  3. In 2008, Yahoo’s board decided to turn down Microsoft because their $44 billion offer was “too low.

  4. Yahoo couldn’t realize the power of communities and users of Flickr
    and just concentrated on monetizing the image content resulting in the death of Flickr which was at the upfront of revolution of the Web becoming social.

  5. Yahoo! made money through ads rather than software and technology hence, making it a Media company, but it often operated as a Tech company. This confusion leads Yahoo to fail in making a perfect global vision.

    Now, Mayer is expected to resign, because of her failure as CEO, she stands to make $57 million in severance, according to the New York Times.

    What are your views on this acquisition? Let us know in comment section below.

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About the author

Ajay Chavan

A small town guy with eyes full of dreams. On a quest of self-exploration. Technology Enthusiast, Passionate Writer, Photographer, Foodie, Internet Gypsy. If above all is boring, I am COO and Co-Founder of TeenAtHeart.