Yahoo, which was once worth $125 billion, sold its core operating business for $4.8 billion in what Brian Solomon from Forbes described as, “the saddest $5 billion deal in tech history.”
Yahoo attracts over one billion users per month and its website still brings in heavy traffic, which is why companies like Verizon showed so much interest. It has failed to keep pace with companies like Google and Facebook in recent years. Yahoo was a Silicon Valley powerhouse at the start of the new millennium, surviving the dotcom bubble as one of the leading Silicon Valley firms.
Yahoo was started in January, 1994, by two Stanford University students as a website named “Jerry and David’s Guide to the World Wide Web.” The website was originally a directory of other websites, and grew throughout the 90s as it acquired other websites and added services such as email and games.
The advent of the Internet as a mass medium meant Yahoo and others were able to provide services such as news and email for free to consumers. Yahoo offered consumers a comprehensive search engine, email, games, shopping and news at no cost, while advertisers poured millions into the site to access users. It was a model used by Yahoo and its competitors into the 2000s.
Verizon hopes the purchase will strengthen its presence online, focusing on the content and advertising benefits that Yahoo will bring. Last year, Verizon purchased AOL, another former Silicon Valley powerhouse that had fallen on hard times, for $4.4 billion. Verizon is one of the nation’s largest telecommunications companies and is hoping the purchase of Yahoo, along with AOL, will allow it to offer more services to its customers and advertisers.
Hundreds of millions of users still visit the Yahoo home screen every time they access the Internet from their mobile phone; Yahoo games are popular, especially their fantasy sports. Following the deal, Yahoo will become a holding company for its two stakes in Alibaba Group, of which it owns about 15 percent, and Yahoo Japan. The company also owns patents worth a total of around $8 billion, which it plans to sell. The holding company will be renamed after the deal.
Many experts believe that Yahoo’s CEO, Marissa Mayer, will leave the company once the deal is concluded, with a severance pay of $57 million.
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