On Monday, 25th July 2016, one of the early pioneers of the internet, Yahoo Inc, announced that it has been taken over by US telecommunications giant, Verizon, in a deal worth $4.8 billion. According to tech experts, this is the saddest deal in all of tech history, only a month after Microsoft acquired LinkedIn for $US 26.2 billion.
Between the late 90s and early 2000s, Yahoo was the major platform allowing people to interact with each other across the world. The Yahoo account was a must-have for everyone who wanted to be regarded as tech savvy.
Back then, when internet connectivity was very poor, slow and expensive across Africa, people searched for ways to get connected to the internet, just to get on Yahoo Messenger. People who used the program frequently will definitely remember the “ASL” abbreviation for Age, Sex and Location, always used immediately after saying “Hi” to a new contact that you didn’t know.
Yahoo used to be the go-to search engine and messenger platform before Google and Facebook came on board and swept them under the carpet. It lost out because it could not find an innovative way to get an edge over its competitors in search, social media and video. In January of 2000, it reached its peak value of $130billion, becoming a worldwide household name.
Where did Yahoo go wrong?
The Yahoo-Verizon deal is regarded as the saddest deal ever in the history of tech because, as recent as 2008, Microsoft offered to buy the company for $US 44.6 billion but it was rejected because they felt it was undervalued.
In 2001, the company could have bought Google for $3 billion but it couldn’t pull through. It offered Facebook $1 billion 2006 and was unable to increase the offer when it was knocked back. Today, Google is reportedly worth $498 billion and Facebook about $350 billion. These mistakes and a failure to adapt to new technology as the internet evolved are largely behind Yahoo’s fall from the top.
Did Marissa Mayer fail?
The fate of Yahoo’s Chief Executive, Marissa Mayer, who was hired in 2012 after pervious chiefs had failed to bring the company back from the dot-com crash in 2000, is unclear.
In an interview, Marissa said, “I plan to stay. I love Yahoo and I want to see it into its next chapter.” But she and Tim Armstrong, the Chief Executive of America On Line (AOL), said it had not yet been decided whether or not she will have a role at the company after the deal closes in early 2017.
After she took the helm, the stock price rebounded to its highest levels since the dot-com crash, but last year the company’s value deteriorated again. Under Mayer, the company acquired dozens of startups to boost its mobile team, bought Tumblr for $1.1 billion to broaden its audience and spent lavishly on hiring big names in media like Katie Couric and David Pogue.
Yahoo’s sale to Verizon clearly shows that Marissa’s plan to resuscitate the company failed despite the many acquisitions, layoffs and hires. Now, she has left a once mighty company to join its former competitor.
What did Verizon buy or not buy?
Verizon bought all of Yahoo’s consumer services including email, search, news, finance, sports, videos, Flickr and Tumblr. This will be added to its quest to build an array of digital businesses that will compete with the likes of Facebook and Google after acquiring AOL last year for $4.4 billion. However, it is worthy to note that Verizon didn’t buy Yahoo’s stake in Chinese e-commerce giant, Alibaba, a 35 percent stake in Yahoo Japan and some other yahoo patents.
Here is what you didn’t know about Yahoo
Yahoo stands for Yet Another Hierarchically Organised Oracle it was founded in 2000 and valued at $125bn at height of the dot-com boom.
Marissa is the sixth CEO of Yahoo after its incorporation in 1995. Other ousted CEOs include:
- Tim Koogle – Began shortly after Yahoo was incorporated in March 1995.
- Terry Semel – He was hired from Warner Brothers and stepped down under shareholder pressure.
- Jerry Yang – He is a Co-founder the company. He agreed to resign under shareholder pressure.
- Carol Bartz – She was fired after failing to revive the company.
- Scott Thompson – He left after it was disclosed his biography included a college degree he never received.
In 2015, Yahoo! made a net loss of $4.4bn.
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