Verizon recently bought AOL for $4.4B and Millennial Media for $250M. Adding Yahoo would help it build its online digital advertising further, allowing it to compete with market leaders such as Google and Facebook. Verizon’s deep experience as a mobile telecom service provider should enable it to enhance the search engine’s availability on smart phones and tablets of course. My charts here show the addition of the annual revenues and net profit of both since 2005. From a revenue point of view Verizon’s rise off-sets Yahoo’s fall, making the combination of both virtually level across the 11 years.
Yahoo successfully saw off Microsoft’s attempts to buy it back in 2008, but its falling revenues and profits make a sale necessary now. Losing Yahoo’s search engine would increase the dominance of Microsoft and the ever-present Google, which would be a bad thing for many IT users who value multiple choices and open markets. From a net profit point of view Yahoo’s decline in 2015 was far steeper than Verizon’s small but continuous rise (see Figure). If it succeeds in acquiring Yahoo it looks as if restructuring and refocusing will be the highest priority for Verizon – my view is that under such circumstance it would seem unlikely that CEO Marissa Mayer would stay on.