Verizon’s $4.8 billion acquisition of Yahoo just shows how much has changed in the company’s over 20-years pioneering history. Yahoo went from being one of the world’s biggest companies in online search to an internet company that’s struggled in recent years to move beyond display advertising.
Now, Verizon wants to build a digital advertising and media company that rivals Google—one of Yahoo’s longest-standing competitors—as well as Facebook and others.While there was a mixture of positive and skeptical reactions to Verizon Communications ’s (VZ ) announcement to buy Yahoo ’s ( YHOO ) “core” advertising business for $4.83 billion, cloud analysts are already predicting doom for the venture. The harsh words of criticism as far as Verizon came from Global Equities ’s came from Chowdhry , who believes that “Verizon shareholders are setting themselves up for a huge disappointment.”
Mr Chowdhry thinks the deal will be a repeat of Verizon’s 2011 purchase of data center hosting outfit Terremark Worldwide , which cost $1.4 billion, which he labels a “total disaster.”
Chowdhry postulated and we quote:
Remember, all the nitwit Analysts and Industry Visionaries coming on the media and touting VZ + Terremark Deal as “Ground Breaking” … will propel VZ in Cloud Computing, will put an end to AMZN AWS […] These clueless VZ Executives at that time said “We will accelerate ‘everything-as-a-Service’ cloud strategy” Fast forward to 2016: AMZN AWS has created and owns the SuperClouds with its AWS offering AMZN AWS is consistently growing revenues at >45% y–y on a revenue base of $10 billion Where is VZ Terremark … It is a total disaster, and today VZ is trying to sell off this P.O.S …and sadly the same is going to happen with YHOO acquisition…
According to Zenith Media, Alphabet, Google’s holding company, controls 12 percent of all global media spend, meaning Verizon and AOL have their work cut out for them.
“The acquisition of Yahoo will put Verizon in a highly competitive position as a top global mobile media company, and help accelerate our revenue stream in digital advertising,” said Lowell McAdam, Verizon CEO and chairman, in a statement.
In other Chowdhry’s negative review of the merger he further stated:
YHOO is a declining asset business – recovery, or sustainability is impossible: YHOO is a non-event in each and every Internet Trend: Internet is going Visual – YHOO is a non-event Internet is going real-time-messaging – YHOO is a non-event Internet is going “Live-streaming” – YHOO is a non-event Internet is going mobile – YHOO is a non-event Internet is going social – YHOO is a non-event Internet is going social-payments – YHOO is a non-event Machine Learning is driving – Preference Vector, Interest Vector, Knowledge Vector, Association Vector, etc…YHOO has nothing to offer….fundamentally it is an obsolete offering.
“Basically, we are seeing a replay of the previous movie, VZ buys Terremark, but with a different actor, YHOO replacing Terremark.” Verizon executives are “as clueless as they have been with Terremark,” claims Chowdhry, while “Nitwit analysts and industry visionaries are playing the same song with VZ + YHOO, that they had played when VZ + Terremark Fundamental problem with VZ has not changed – VZ has zero insights and zero innovation.”-he concludes
Data has shown some of the 22-year-old company’s highs and lows, acquisitions, and other noteworthy events. If nothing else, Yahoo’s history serves as a cautionary tale of the potential pitfalls of building a digital powerhouse that’s constantly forced to reinvent itself, particularly when it comes to relying on advertising for money. Hit the jump:
1994: David Filo and Jerry Yang launch Yahoo—an acronym for Yet Another Hierarchically Organized Oracle—as a catalog for managing websites.
1996: Yahoo, valued at $848 million, goes public.
2000: Yahoo hits its highest valuation at $125 billion thanks to the dot-com boom.
2002: Then CEO Terry Semel puts in a $3 billion bid to acquire Google. The rising search player turned down the offer.
2005: Yahoo invests $1 billion in Chinese e-commerce player Alibaba, a 40 percent stake.
2008: Yahoo turns down a $44.6 billion acquisition deal from Microsoft aimed at building a competitor to Google.
2011: Yahoo pushes into web video, launching Yahoo Screen—a hub of original content including NBC’s Community. Yahoo Screen is shut down in January 2016.
2012: The company poaches Google exec Marissa Mayer as CEO to help turn around the struggling internet company as revenues from display advertising continue to slip.
2013: Mayer acquires hot social network Tumblr for $1.1 billion —her first big acquisition—with the aim of reaching a millennial audience.
2014 : Mayer launches 11 digital magazines across food, tech, sports and lifestyle. In February 2016, seven of the verticals—health, parenting, food, makers, travel, automotive and real estate—are shut down.
2014: Yahoo acquires mobile app analytics company Flurry and programmatic video player BrightRoll to build up its ad-tech stack. Pre-Verizon, rumors swirl that AOL wants to buy Yahoo to build a programmatic, data-driven platform.
2015: The company signs a deal with Google to place some ads and search features on Yahoo search listings. It also partners with the NFL on the league’s first online-only livestream, broadcasting a game between the Buffalo Bills and Jacksonville Jaguars at London’s Wembley Stadium.
2016: Tumblr partners with video apps YouNow, Kanvas and YouTube to power livestreaming on the site. Unlike similar efforts from Facebook, Twitter and Google, Tumblr plugs into existing video apps, so it doesn’t not need to build a platform to power the technology.
Verizon shares today closed down 23 cents, or 0.4%, at $55.87. Yahoo! closed off $1.06, or 2.7%, at $38.32.
What do you feel about this projection and forecast? Drop us a comment.
Adobserver: Jimmy Adesanya
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