What Verizon Will Get When It Buys Yahoo
RENEE MONTAGNE, HOST:
An early pioneer of the World Wide Web is getting ready to close its doors - or we should say sell them. Yahoo is entering into a deal, selling its core internet business for $4.8 billion to Verizon, the phone company. Here to discuss that is NPR's Aarti Shahani. Good morning.
AARTI SHAHANI, BYLINE: Good morning.
MONTAGNE: Now, so Yahoo is not some no-name brand. Obviously, it's one of the giants - Yahoo Mail, its search engine, the Yahoo home page, these are staples of so many people's digital life. And the company could not or cannot hold it together?
SHAHANI: That's exactly right. They announced it this morning. And, you know, from your question, you're kind of hinting at a core issue here, which is that Yahoo had so many products, but the company had a hard time keeping them competitive, making Mail the very best mail service in the world, bringing new features to Yahoo groups. You know, code is like paint. It needs to get touchups or total redoes sometimes. And while Yahoo let the paint chip away, the world did not stop turning. Technology marched forward, and Yahoo fell terribly behind in the mobile revolution. They didn't build new products, like a great messaging or texting service to keep up with how younger people like to communicate, you know, which means a typical Yahoo user is in her 40s, not her 20s. Also, this is a stunning fact, the company kept changing who's at the helm. Since 2009, Yahoo has had five CEOs or interim CEOs.
MONTAGNE: Well, Yahoo is going, as I just said, for just about $5 billion. Is this a good deal for Verizon?
SHAHANI: You know - you know when you walk by a store with a big orange neon sign that says liquidation sale, 80 percent off, and it's for real, not like a Time Square gimmick? Well, that's what Verizon landed. You know, about $5 billion, it sounds like a lot. For Verizon, it's a rounding error.
And in the past, Yahoo was worth a whole lot more. Back in 2008, Microsoft famously offered to buy Yahoo for more than 44 billion dollars. The Yahoo board rejected that. And now - well, five is a lot less than 44. What horizon gets is all of Yahoo's content - Yahoo Sports and Finance, Tumblr. What is not part of the deal for anyone who follows Yahoo closely is Yahoo's massive stake in the Chinese company Alibaba. It's by far Yahoo's most valuable asset, and they're being really clear it's not included.
MONTAGNE: Well, then how exactly does Verizon make money from Yahoo's content?
SHAHANI: Ah, that is the question. The theory so it goes is this - Verizon bought AOL last year - America Online - for roughly the same amount of money. AOL has this great advertising technology, which helps place ads on web pages that you might visit. But Verizon needs more web pages to put the ad tech into to make the money. Well, Yahoo has loads of those. So if - and, you know, this is a big if - if Verizon can properly wed the ad tech of AOL with the content of Yahoo, it'll be a home run. You know, I'm waiting to hear details in terms of how Verizon will get the two companies to integrate seamlessly. CEO Mayer had a kind of quirky way of describing this deal in the statement they just released. She called it, quote, "poetic" that AOL and Yahoo, both Internet pioneers, would join forces in this way.
MONTAGNE: In some ways, it is a strange story though, right? We don't usually think of a phone company - such old-fashioned phone company - taking over a tech pioneer.
SHAHANI: Yeah. And, you know, one of my sources pointed out Yahoo used to lead in mail and search and advertising. And now, he says, it's not even being bought by one of the cool kids, you know, like a Google or an Apple. It's being bought by suits. And in fact, I spoke to several former Yahoo employees who tell me that over the weekend, in recent days there's been a lot of bittersweet emails going around, people who are heartbroken because they wanted to believe their company, Yahoo, could be turned around, could be powerful. But CEO Mayer couldn't pull it off.
MONTAGNE: That's NPR's Aarti Shahani. Aarti, thanks very much.
SHAHANI: Thank you. Transcript provided by NPR, Copyright NPR.