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July 25, 2016

Yahoo sells up to Verizon for $4.8bn

Speculation finally ends for web firm

By Alexander Sword

Telecoms giant Verizon will pay $4.8 billion to acquire Yahoo after the company failed to achieve a turnaround in its core internet business.

The deal will cover Yahoo’s core internet business and some real estate assets.

Yahoo shareholders will retain a 35.5 percent stake in Yahoo Japan, as well as a 15 percent interest in Chinese e-commerce giant Alibaba.

The deal comes after weeks of speculation as Yahoo looked for a buyer.

Yahoo has seen its share of internet search traffic snapped up by Google and other providers. According to, Yahoo now has a global search share of 7.68 percent, behind Baidu at 8.8 percent, Bing at 11.31 percent and Google at 70.16 percent.

Yahoo has also failed to capitalise on the lucrative mobile market. In the first half of 2015, Yahoo took only 20 percent of its revenue from mobile, compared to 88 percent of Twitter's and 74 percent of Facebook's.

Between H1 2013 and H1 2015, Twitter saw its mobile revenue rise from $165 million to $744 million, while Facebook saw its rise from $1.024 billion to $5.287 billion. Yahoo's rose from being not material to $485 million in the same period.

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However, services such as email are still used. According to, Yahoo! Mail has the eighth biggest market share at 3 percent, behind Apple iPhone and Gmail at 33 percent and Gmail at 16 percent.

CEO Marissa Mayer is not expected to join Verizon. The New York Times cited compensation research firm Equilar saying that CEO Marissa Mayer would receive a severance package worth around $57 million.

The hire of Google veteran Marissa Mayer in 2012 was considered a gamble at the time. Forrester analyst Shar VanBoskirk wrote that Yahoo needed a “strategic visionary, not a product engineer”, saying that her background was not in corporate strategy and marketing, the areas where Yahoo’s need was greatest.

Her tenure at the company has attracted significant criticism. As Mayer took maternity leave in December, Yahoo investor SpringOwl Asset Management proposed a new plan to cut the company's workforce by 75 percent and oust her.

Spending on employee perks such as free food and iPhones came under particular criticism, as well as spending on lavish company events such as a $7 million Great Gatsby-themed party.

SpringOwl said that the fact that 15 percent of Yahoo's top performers leaving in the course of 2015 was an indictment of Mayer's leadership.

From Verizon’s perspective, the deal follows an agreement to acquire another internet giant of yesteryear AOL in May 2015 for approximately $4.4 billion. AOL's major assets included its subscription business, global content brands, original video content and programmatic advertising platforms.

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