
Verizon nears deal to acquire Yahoo - kshatrea
http://www.bloomberg.com/news/articles/2016-07-22/verizon-said-nearing-deal-to-buy-yahoo-beating-rival-bidders
======
chollida1
It's now being reported that Verizon and Yahoo are exclusively negotiating.
That's as close as anyone has gotten since Microsoft made an offer years ago.

Verizon is really doing a big transition with this acquisition and their AOL
acquisition. They've acquired alot of valuable web space to put adds
on/monetize. This is a probably good news for Yahoo employee's as Verizon then
has a vested interest in keeping the company running and not splitting it up
into pieces like a PE firm may be more inclined to do.

The one interesting thing I've heard is that Verizon isn't interested in
Yahoo's patent portfolio, which means it could still be up for grabs.

Hopefully its bought by a Microsoft/Google consortium and very liberally cross
licensed rather than a private equity firm who will look to more aggressively
monetize it.

I also heard that Tim Armstrong, formerly of Google with Mayer will lead the
combined AOL/Yahoo company, which means that Mayer probably isn't coming along
as part of this deal. I think most people expected this.

If this ends up going through for the reported 3.5 billion, then Verizon has
bought a significant portion of traffic on the web for roughly 8 billion (AOL
was acquired for 4.4 Billion).

This could end up looking like a very good acquisition in a few years!

~~~
exhilaration
_Hopefully its bought by a Microsoft /Google consortium and very liberally
cross licensed_

I don't think such a consortium exists, Microsoft and Google are usually on
opposite sides. Microsoft (along with Apple/RIM/others) bought the Nortel
patents in 2011 and sued Google, Samsung, Huawei, and others. Google bought
Motorola and its patents the same year and sued Microsoft. Patents are
weaponized as soon as these companies acquire them.

~~~
argonaut
That patent war was started by Microsoft under Steve Ballmer and both
companies dropped it after Satya Nadella took over. I genuinely don't believe
Microsoft under Nadella would go to patent war except defensively. Everything
I've read about Ballmer leads me to believe he definitely shares similarities
to the stereotype of the businessman trying to squeeze out as much money as
possible.

~~~
eldavido
I think it's the sales mentality - you work with the product you have, today,
to get the deal done today/this quarter.

Not great for the ten-year plan, but those are a luxury of companies with lots
of products selling _today_.

~~~
SoftwareMaven
And, perhaps not surprisingly, Ballmer didn't last much over ten years as CEO
and left MS in a very precarious position when he did leave.

------
utopcell
It is deeply sad that there's even a chance that Yahoo will be sold for ~$5BN
to Verizon, which bough AOL for $4.4BN, especially considering that AOL has
0.9% of the US web search traffic while Yahoo still has more than 10% and
amazing agreements in place that allow it to show the best search results
between Google and Bing. How is this maximizing value for shareholders exactly
?

~~~
colechristensen
Yahoo has been on sale for a long time, clearly there have been issues with
buyers finding value. They probably have a point.

People don't see growth in Yahoo. They were on top before Google (I remember
Yahoo was _my_ choice for a long time) and it seems they've just been
existing, coasting on brand recognition but not accomplishing much. It's easy
to see a future where Yahoo only goes slowly downward.

~~~
utopcell
I doubt in this future AOL grows faster than Yahoo however.

~~~
zjaffee
I disagree, the AOL purchase came with things like Huffington Post and Tech
Crunch.

------
colordrops
So they dumped the great Fios on insanely incompetent Frontier, and are
picking up the failing Yahoo. What's their strategy here?

~~~
rayiner
In a typical year (excluding the Alibaba sale or big write-down last year),
Yahoo makes as much profit as Verizon's entire wireline unit.[1] Selling
_part_ of the FiOS network for $10 billion to buy Yahoo for less than $5
billion is a no-brainer. It'd be better to buy a healthier tech company,
obviously, but Yahoo is what's on the market.

[1] While costing about $4 billion a year to run, versus $35 billion a year
for Verizon's wireline division.

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chkuendig
So finally that merger with Aol is happening after all...

~~~
cpeterso
A Yahoo!/AOL will be a bit of a homecoming for Mozilla. :)

~~~
empath75
We have the mozilla dragon down the hall at aol headquarters --- it's a
Pokemon Go Gym, even.

~~~
ngokevin
The San Francisco Mozilla Office is its own Pokemon Go Gym also. It's down the
street from the Niantic HQ too.

~~~
mintplant
It's in one of the official screenshots on the app's Google Play page, too.

[http://i.imgur.com/PjdPzcs.png](http://i.imgur.com/PjdPzcs.png)

As a Mozilla intern I've always thought that was funny.

------
hodder
Marissa Mayer is a terrible CEO. Unbelievable the amount of money she has been
paid to flush the remainder of Yahoo down the drain with no strategy while
employees suffer. Yahoo (net of BABA) is less than worthless.

~~~
mc32
I know she's unpopular, but she's hardly the first one who tried righting that
ship without success. I think she's stabilized it and made people believe
there was a possibility in turning around, giving it breathing room more than
the previous three. You have to remember that when she came on board, Y! was
taking water fast.

No one, no one could have saved it and made it relevant. I think she did a
pretty commendable job trying.

~~~
zamalek
_> No one, no one could have saved it and made it relevant._

Agreed. I simply can't understand why we keep flogging this dead horse, Mayer
or Verizon, none of it makes any sense. Am I missing something regarding the
true value of Yahoo _!_?

~~~
toomuchtodo
I _believe_ the reason the horse keeps getting flogged is because a wide swath
of HN doesn't believe Mayer had the skill set needed to make a real attempt to
right Yahoo (and, arguably, her actions support that assumption).

Yahoo never had a chance.

------
kartD
Yahoo did serve one purpose, it was the exit system for a lot of almost
successful startups. Hope that continues under Verizon, though I doubt it.

On Mayer, well eh she put her hand up and suffered. but then Yahoo was pretty
much past saving. Hopefully, she's learned from her mistakes and moves to
something more productive.

~~~
cft
The macro economically productive "purpose" of a start-up is to make profit,
not to "exit". Until this is understood and forced by the economy, the overall
economic climate in the US will continue to deteriorate.

~~~
michaelvoz
The purpose of a company is to make money. There is no disagreement there. But
the fact that economic climate in the US is deteriorating is bunk, and double
bunk that even if it were, it would be related to misunderstandings of the
purposes for which startups are founded and run...

~~~
cft
Do you own a house in SF now, as an Uber employee? In 1950s one would be able
to afford that, with a non-working wife and several children.

~~~
michaelvoz
Rather personal no? I guess a question merits answering. I do not - but not
because I cannot afford one, I am saving my money for something else :)

------
grandalf
I'm hoping Yahoo's Smart TV platform business is sold to someone who will make
it awesome. It has potential and a pretty massive installed base.

~~~
_puk
I got the impression that Yahoo's Smart TV platform was outdated, and being
eroded by Opera's HTML5 platform.

Given that this is pretty much all that is left of Opera after the Chinese
buyout [1] it may well be a chance for Yahoo to get back in the SoC game.

1:
[http://www.newsweb.no/newsweb/search.do?messageId=406030](http://www.newsweb.no/newsweb/search.do?messageId=406030)

------
finid
That's just wow!

Fifteen years or so from now, some company will likely be picking up Facebook
on the cheap. By that time, Twitter will probably be history.

Google?

The wheel of life...

~~~
Gargoyle
My bet the last couple years has been Google eventually becomes nationalized
as it gets to be "too big."

------
joobus
> Verizon is discussing a price close to $5 billion for Yahoo’s core Internet
> business...

Yahoo's current market cap is ~$37b

~~~
dangrossman
Yahoo! has three major assets: its stake in Alibaba (worth about $32B), its
stake in Yahoo! Japan (worth about $8.5B), and its core internet business.
Verizon would only be buying that last piece.

~~~
FlyingLawnmower
While it is fun to do the subtraction and see that Yahoo's core business is
negatively valued, liquidating the Alibaba and Yahoo Japan assets would come
at the expense of significant taxes, which I believe accounts for why
shareholders value the firm the way they do. Still shocking how drastically
small the core asset valuation is in comparison to a deal Yang struck years
ago, but it might make the valuation make more sense.

~~~
vonmoltke
Also, the simple subtraction ignores that the drag on Yahoo's value is debt.
If Yahoo sold their stakes in Alibaba and Yahoo Japan the cash would
presumably be used to pay off that debt. It is incorrect to tie all of the
debt only to the core business.

~~~
btian
No idea what you mean by that.

Yahoo has $6B in cash and short term investments, and $1.2B in debt.

~~~
vonmoltke
That is just the "current" debt. They also have almost $15B in long-term
liabilities, primarily $13.5B in deferred tax payments and $1.2B in general
long-term debt.

~~~
btian
Deferred tax is only payable when shares in Alibaba are sold, which will not.

Yahoo will spin it off tax free to shareholders.

~~~
vonmoltke
In which case that liability does not transfer and all the people here
subtracting Alibaba's asset value without subtracting that liability are
wrong.

~~~
btian
That is 100% wrong.

Ask an accountant if you don't believe me.

------
branchless
My requests:

1\. don't touch yahoo finance

2\. bring back pipes

~~~
trequartista
Don't touch Flickr as well

~~~
sdfjkl
I think it's a bit too late for that.

------
perseusprime11
I am hoping Verizon will change their logo after this aquisition. It looks
ridiculous..

[https://cdn0.vox-
cdn.com/thumbor/zL414AMfclnMcwL59xa3ZTXrcDw...](https://cdn0.vox-
cdn.com/thumbor/zL414AMfclnMcwL59xa3ZTXrcDw=/3x0:1418x796/1600x900/cdn0.vox-
cdn.com/uploads/chorus_image/image/47080648/Screen_Shot_2015-09-02_at_2.20.55_pm.0.0.png)

------
Floegipoky
Is Verizon Wireless still injecting tracking headers into cellular data
traffic? If so, how will these new acquisitions affect the way that these
headers can be used?

------
CodeSheikh
A bad marriage is taking place.

------
mark_l_watson
I have mixed feelings about this. I still use Yahoo once or twice a week to
read their news feed, and I am a long time Verizon customer (although my wife
and I are considering saving a lot of money each month and switch to Google Fi
when we need new phones).

I would hope that a media company like Yahoo could have existed independently
from a parent company.

------
mathattack
This certainly seems to make the most sense. It does seem like Verizon is
chasing the past with this acquisition, going for Internet 1996 and Internet
2000 rather than the mobile future. (I don't buy Mayer's contention that Yahoo
is now a mobile company)

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socrates1998
This isn't good for consumers. Verizon is looking to add web assets with a
longer term strategy, locking in people to their web space.

As in, two different data tiers, they family of businesses and everything
else.

If there were true net neutrality, the government would block this purchase.

~~~
vthallam
I don't think they would have any regulatory challenge. Remember comcast
invested in Vox media earlier?

Not sure how will the net neutrality be affected with this acquisition, but
this is mostly done to build a huge media/entertainment(Yahoo! + AOL) business
which will be complementary to Verizon's current offerings.

------
tomjen3
What, other than some japenese websites and Alibaba does Yahoo own that is
worth anything?

~~~
hacksonx
That $1.1Bilion price tag paid for Tumblr is just over 10% of the indicated
price tag. Maybe Tumblr are also good for something.

~~~
jonknee
You're joking right? They keep writing off Tumblr, it is worthless. Just 4
days ago:

[https://www.yahoo.com/tech/yahoo-reports-another-big-
loss-21...](https://www.yahoo.com/tech/yahoo-reports-another-big-
loss-212237743.html)

> Yahoo also reported Monday that it's writing down $482 million in charges
> related to the declining value of Tumblr, the social-blogging service that
> Yahoo acquired for $1.1 billion in 2013. Combined with an earlier write-down
> of $230 million, that indicates Tumblr's value has plunged by almost two-
> thirds.

~~~
toomanybeersies
There is a certain irony reading about the downfall of Yahoo on Yahoo news.

------
IamFermat
Wow, i gotta say this is like Time Warner/AOL. Perhaps the internet is more
mature now to make this work but Im not holding my breath. How will they
reconcile the 2 adtech stacks which are huge messes in and off themselves.

~~~
paulbjensen
I can imagine 3 years from now tech journalists will be writing that "history
repeats itself". I can foresee that 3 things will happen:

\- There will be a people drain from Yahoo. Anyone was is passionate about
Yahoo will feel completely disenfranchised with being merged into a smaller
competitor that is owned by a larger company. Some people will hold out for
being made redundant in the hope of a good severance package, and some will
simply stay regardless, but those who see what is happening will realise that
Yahoo is over, and won't want to be a part of the frankenstein being assembled
within Verizon.

\- Yahoo's main properties (Homepage, Weather, Finance, Mail) will survive,
Flickr/Tumblr I don't know. Tumblr itself has suffered from the difficulties
of merging into Yahoo's culture and way of doing things. Flickr was
resurrected in some ways, but struggles from the difficulties that other web
2.0 brands have - how to stay relevant and interesting to consumers today when
the industry has changed so much since their creation.

\- Mayer will go. She tried and she didn't succeed. She'll get a decent
severance package, but Tim Armstrong will finally get what he's wanted for a
long time. Whether he's able to successfully merge two large-sized businesses
together I don't know, this is a different challenge compared to acquiring
businesses like Goviral or Millenial Media, we're talking about a headcount of
~8000 employees, and there will be lots of duplicate roles. I don't expect the
merger to go smoothly - I expect it to be a bit messy.

Either way, the goal of creating a relatively strong #3 to Google and Facebook
seems at this point a lost cause - both Google and Facebook have market
valuations that dwarf what AOL and Yahoo were worth at the time of their
merger, and given a signal of what we might see in the next couple of years.

------
porsupah
From what I've read, it appears unclear as to what Yahoo defines to be its
"core business". Are there any details on what specifically Verizon is seeking
to acquire, and whether Flickr is included?

------
macspoofing
For 3.5 billion (rumored price), I'm surprised Google wouldn't take a flyer on
Yahoo.

~~~
dragonwriter
> For 3.5 billion (rumored price), I'm surprised Google wouldn't take a flyer
> on Yahoo.

If they anticipate substantial antitrust scrutiny of the deal (and I would
think Google buying Yahoo! would have to in ways many other suitors would
not), it might not be worth the purchase price _plus_ the cost associated with
the scrutiny.

------
drdeadringer
I wonder what Jerry Yang thinks about all this.

I still remember the "Go 3.0" marketing liner.

------
0xmohit
Curious what is Yahoo! worth sans stakes in Alibaba and Yahoo! Japan?

~~~
jackgavigan
[https://docs.google.com/spreadsheets/d/1UHMfzlmE7HXY_ph9BN68...](https://docs.google.com/spreadsheets/d/1UHMfzlmE7HXY_ph9BN686gOCiji1bQ-
rsbnjtKD3oho/edit?usp=sharing)

------
awqrre
Somewhat unrelated but: Since the Government is already tapping into wired and
wireless networks without consent, it would be nice if they would take control
of all ISPs... we would probably get better cellphone service at least.

------
bogomipz
"Ma Bell, proud owners of both AOL and Yahoo." Clinton running for president.
You would be forgiven for asking if it was the 1990s. It's hard for me to be
excited by any of this. Those are three really dull companies.

------
ArtDev
Ugh, isn't there a better company out there to buy Yahoo?

~~~
qaq
Do you really want verizon to buy a good company?

------
ilostmykeys
Hopefully this will sink Verizon.

~~~
maxerickson
There's ~0 chance of that happening. Verizon can afford to completely write
off $5 billion, so you would need some sort of poisonous cultural inversion
for the deal to sink Verizon.

(Verizon is a much larger company, so if the Yahoo culture ended up dominating
it would be an inversion)

------
Esau
"Verizon sees a complimentary set of businesses that could find a home
alongside its AOL properties."

This tells you everything you need to know, because AOL should have died years
ago as well.

~~~
empath75
What exactly do you think aol is?

