30 July 2016

Rise and Fall of Yahoo $YHOO, What Happened, Missed Opportunities

Yahoo CEO Marissa Mayer Talks Verizon Deal and Her Future at the Company:

Video above: Marissa Mayer, chief executive officer at Yahoo (principal domain: yahoo.com), discusses Verizon's $4.83 billion acquisition of Yahoo's web business, how she envisions her role at the new company, the legacy of Yahoo on the web, and reflects on her experiences at Yahoo. She speaks with Bloomberg's Emily Chang on "Bloomberg ‹GO› on July 25.


Infographic above courtesy of VisualCapitalist.com: The saga surrounding one of the world’s most recognizable internet stocks has come to a close. Yahoo $YHOO has finally sold its operating business to the highest bidder. The winner was Verizon – and the price was $4.8 billion. That’s worth less than 1% of the company it had multiple opportunities to buy: Google (now Alphabet).

WHAT HAPPENED? Technology changes fast, and successful companies must leverage smart acquisitions in building for the future. Facebook bought Oculus Rift and Instagram, and Google bought companies like Youtube and DoubleClick.

YAHOO'S MISSED OPPORTUNITIES: In 1998, Yahoo was approached by two young Stanford Ph.D. students to buy their search engine algorithm. Larry Page and Sergey Brin had created PageRank – a quick way to find the most relevant website for a given search query. Yahoo skipped out on buying it for $1 million, rationalizing that it would take people off of Yahoo’s website, while decreasing traffic and ad revenues. Even later on when Google’s search business was well-established, Yahoo CEO Terry Semel balked at Larry and Sergey’s $1 billion asking price. He would eventually agree to it, but by then it was too late. The Google guys had already decided to up their price to a heftier $3 billion. Around that same time, Yahoo was turned down by a 22-year-old Mark Zuckerberg. Yahoo offered to buy Facebook for $1 billion, but Zuckerberg declined. This was a moment that billionaire Facebook investor Peter Thiel lauds as the major turning point for the company that allowed it to become the behemoth it is today. Some sources even say that if the offer was increased to $1.1 billion, that Facebook’s board would have forced Zuckerberg to take it. But it’s not just the offers made that were missed opportunities. Yahoo also turned down a hostile takeover from Microsoft in 2008 for $44.6 billion that valued the company for far more than it is worth today.

ALIBABAIn 2005, Yahoo bought a 40% stake in emerging online retail company Alibaba, which makes up the majority of Yahoo’s market capitalization today. In the context of the recent Verizon deal, the Alibaba shares are likely being spun off into a separate investment vehicle.

See also on Domain MondoYAHOO $YHOO Q2 2016 Earnings, Webcast Monday July 18

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