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End of the road or new beginning for Yahoo?
By Rob Lever
Washington (AFP) July 26, 2016


Armstrong re-emerges as key figure after Yahoo deal
San Francisco (AFP) July 26, 2016 - With the Yahoo-Verizon deal Monday, AOL chief Tim Armstrong has re-emerged as a figure who may be key in the effort to shape a new internet strategy.

Armstrong, who remained head of AOL when it was acquired last year by Verizon, is now set to inherit another faded internet star.

In the statement announcing the $4.8 billion acquisition of Yahoo's core internet assets, Verizon said the online operations would be "integrated with AOL."

Armstrong said in the statement, "Our mission at AOL is to build brands people love, and we will continue to invest in and grow them."

The tall, chisled-featured 44-year-old has steered AOL since 2009 -- first when it was part of the Time Warner conglomerate, then as an independent company, and since last year under Verizon.

Armstrong comes from a marketing background, studying economics and sociology at Connecticut College and co-founding a newspaper in Boston.

Yahoo's chief executive Marissa Mayer was an engineer, with a master's degree in computer science from Stanford.

But they have crossed paths before. Both were early employees at Google.

He joined Google in 2000, a year after Mayer, and helped develop the AdSense platform that has been hugely lucrative for the search giant.

Armstrong is considered one of the first executives to see a future for "programmatic" online advertising, which uses software and algorithms to learn about users and deliver relevant marketing messages.

At AOL, Armstrong had the task of trying to revive a company that had been the leading online service provider but was sinking fast.

His "Project Everest" strategy reorganized AOL and helped focus on digital media, investing in the Huffington Post and other news sites, while strengthening its ad-tech services.

After Verizon bought AOL for $4.4 billion, the telecom giant kept Armstrong as the head of a semi-autonomous unit.

While he has been praised for his business and marketing acumen, there have also been some ruffled feathers.

In 2013, Armstrong was holding a meeting of AOL's Patch hyperlocal news operations when he became unnerved by an employee using a camera. His words caught on tape -- "Abel, you're fired. Out" -- sent shock waves through the company and were circulated online.

He was also criticized for making comments about "distressed babies" who raised healthcare costs for the company -- even though executives were not supposed to have private details about employees' medical matters.

It appears at first glance to be an ignominious fate for Yahoo, the internet pioneer which has long been one of the best-known names in Silicon Valley.

A deal announced Monday delivers the core assets of Yahoo to telecom giant Verizon for $4.8 billion, a fraction of its peak market value of $125 billion at the height of the dot-com boom.

But while Yahoo as a corporate entity may be disappearing, the brand it created is likely to live on and potentially grow under its new corporate benefactor, analysts say.

"Let's call it a new beginning for Yahoo," said Forrester Research analyst Shar VanBoskirk.

"I don't anticipate Verizon doing away with the Yahoo brand, they will maintain the Yahoo name on a lot of its very good media properties."

While Yahoo has been successful in building a global audience of as many as one billion worldwide, "it hasn't been able to change and adjust its brand as the market has changed," VanBoskirk told AFP.

"It could be good for them if they think differently about what it means to be Yahoo. The brand will have a platform that may let them go farther than they have over the past five years."

The deal announced Monday was described as offering synergies for the two firms, as Verizon seeks to expand beyond a carrier and Yahoo needs help in stemming its decline against online rivals Google and Facebook.

Yahoo will be run through the recently acquired Verizon unit AOL, another faded internet star.

Bob O'Donnell of the consultancy Technalysis Research agreed that Verizon will want to keep the Yahoo brand which is recognized worldwide, at least for the near term.

"My guess is that Verizon will take a hands-off approach and might even tie it together with some AOL properties," O'Donnell said.

Greg Sterling, a contributing editor to the Search Engine Land blog, said he was generally upbeat about the deal, assuming Verizon gives Yahoo breathing room and investments.

"Yahoo was struggling to meet investor expectations each quarter," Sterling said.

"Maybe this will allow them to take a longer-term view."

Yahoo's chief executive Marissa Mayer said that the two-decade-old California company "has changed the world, and will continue to do so through this combination with Verizon and AOL."

She told a conference call that Verizon "offers significant strategic alignments in Yahoo's focus on informing, connecting and entertaining our users."

- Culture clash -

One of the keys for the deal is whether two companies with vastly different histories and cultures and come together and thrive.

While Yahoo comes from the freewheeling, innovative world of Silicon Valley, Verizon has staid roots as a regulated telecom operator on the eastern seaboard.

"They are about as far on the spectrum as any two companies can be," said Roger Kay of Endpoint Technologies Associates.

Kay said Verizon "is an uninnovative company, very different from the software-oriented world" from which Yahoo comes.

Verizon needs to handle Yahoo with care if it wants the deal to work, analysts said.

"Culture is a key issue, it may be the key issue," Sterling said.

"Verizon will be the corporate master and exercise control but they want to create opportunities for innovation and not impose a culture that will send employees out the door."

He said some established firms such as Disney appear to have successfully integrated smaller firms without hurting innovation.

"It is possible for Verizon to use some corporate oversight and still give its new business unit enough autonomy... to attract talent and be creative," he said.

Yahoo seals $4.8 bn deal to sell core assets to Verizon
San Francisco (AFP) July 25, 2016 - Yahoo sealed a deal Monday to sell its core business to telecom giant Verizon for $4.8 billion, ending a two-decade run as an independent company for the internet pioneer.

The agreement announced by the two companies after months of negotiations comes following a years-long decline for the iconic firm that introduced many people around the world to the internet.

Verizon chief executive Lowell McAdam said Yahoo would be integrated into its recently acquired AOL unit to create "a top global mobile media company, and help accelerate our revenue stream in digital advertising."

The acquisition, expected to close in early 2017, pending shareholder and regulatory approval, will exclude Yahoo's cash, certain patent holdings, and its big share in China's Alibaba Group and stake in Yahoo Japan.

The deal will, however, turn over the popular Yahoo News, Mail and other online services used by more than a billion people worldwide.

Marissa Mayer, CEO of Yahoo, said in a statement: "Yahoo is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL."

She told a conference call that Verizon "offers significant strategic alignments in Yahoo's focus on informing, connecting and entertaining our users."

She added that the agreement is "an exceptional outcome for Yahoo shareholders" and that Verizon was chosen because it "believed in our vision the most."

With the sale of its core, Yahoo will be left as a separate investment company and change its name after the transaction.

Yahoo shares fell 2.7 percent after the long-expected deal was announced. Verizon lost 0.4 percent.

- Bringing synergies -

The deal comes with Yahoo, a onetime leader in the online space, coping with years of decline and struggling to keep up with rivals like Google and Facebook.

Yahoo will operate independently until the acquisition and then fall under the aegis of the AOL unit chief, Tim Armstrong, a former Google colleague of Mayer.

Mayer's future role with Yahoo was unclear.

In an email to employees, she wrote that "I'm planning to stay... It's important to me to see Yahoo into its next chapter."

But it was not clear if she would remain after the transition. According to documents filed with regulators this year, Mayer would get a severance package of $55 million if removed within a year of a change of control.

Mayer arrived in 2012 from Google seeking to revitalize Yahoo, which at its peak had a market value of over $100 billion.

The company was founded in 1994 by two Stanford University students, Jerry Yang and David Filo, as "Jerry and David's Guide to the World Wide Web." It went public in 1996 in one of the most hotly anticipated stock offerings of the time -- surging 270 percent in the first day of trading.

Yahoo remains a major force online, but has lagged its rivals in its ability to "monetize" its audience through advertising that is linked to customers' browsing and other online activities.

Research firm eMarketer estimated that Yahoo's share of the digital advertising market would fall this year to around 1.5 percent, with Google getting some 30 percent and Facebook 12 percent.

Several other bidders had been in talks, according to reports, including Quicken Loans founder Dan Gilbert, who was being backed by billionaire Warren Buffett.

- Verizon strategy -

But Verizon appeared to be the leading candidate because of its ability to integrate AOL's advertising technology into Yahoo services.

Technology analyst Jack Gold of J. Gold Associates said the deal makes sense with telecom companies such as Verizon and AT&T seeking to move beyond their role as carriers.

Verizon, he said "is looking at ways to stay competitive primarily with AT&T" and that Yahoo gives it "the ability to expand into the online content arena" and a large base of users.

But Roger Kay of Endpoint Technologies Associates said Verizon should keep its goals more modest and may get a small benefit from the Yahoo brand.

"I don't think they have enough juice to take down Google and Facebook," Kay said.

With better operating efficiencies and lower costs, "they'll be lucky if they get their money back" from the deal, he said.

Some analysts said Verizon is likely to keep the Yahoo brand, which is recognized globally and used by about a billion people.

"You will see the Yahoo brand but Yahoo as a company pretty much does go away," said Bob O'Donnell of Technalysis Research.

Forrester Research analyst Shar VanBoskirk said combining the firms could allow Verizon to get better data on customers across mobile, television and internet to improve advertising as well as content.

"From the user perspective, if you have an entity that knows who you are and manages content, you get content that is relevant to you and that improves the user experience," she said.

Mayer had been under pressure from shareholders to "unlock" value for Yahoo, whose core business has been effectively held at zero or negative value.

Yahoo had a $37 billion market value at the end of trade Friday, but its Alibaba and Yahoo Japan holdings are estimated to be worth $40 billion or more.


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Previous Report
INTERNET SPACE
Mayer's experience, star power failed to revive Yahoo
San Francisco (AFP) July 25, 2016
She came to Yahoo with glamour, star power and a wealth of experience at rival Google that was expected to help revive the fortunes of the faded internet pioneer. But in the end, the best Marissa Mayer could do was to negotiate a deal to sell the core internet assets of Yahoo to telecom giant Verizon, ending a two-decade run for the Silicon Valley icon as an independent company. In the d ... read more


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