What will Verizon do with Yahoo?

by philg

The decline of Yahoo! has long fascinated me. Here are some earlier postings on the subject:

What happens next, though? Verizon could conduct an experiment by letting a $200,000/year manager handle the Yahoo! division. Then see how this person’s performance compares to what Mayer was able do in exchange for hundreds of millions of dollars in personal compensation. But that still leaves the question of what the manager would actually change?

Personally I’m sticking to my theory that there are still a huge number of useful applications that nobody is providing to Internet users. I think that Yahoo! could code its way out of the pit. But Verizon is not known as a software company. In the late 1990s I was telling everyone who would listen (i.e., mom and dad) that mobile phone companies would be the vendors of all kinds of services, e.g., hotel room and restaurant reservations, because the phone company knew where you were and the phone had a web browser on it (well, a WAP/WML browser anyway). Like other U.S. carriers, Verizon hasn’t done anything like that.

Readers: What strategy would you pursue if you were running Yahoo! on behalf of Verizon?

[Separately, Marissa Mayer is apparently blaming the smoking crater that she left shareholders with on “gender-charged reporting” by the media: “Yahoo CEO Marissa Mayer Accuses Media of Gender-Biased Reporting” (Fortune, July 25, 2016). If Marissa had changed gender ID to “male” during her time at Yahoo! would the company then have been able to add some value on top of their shareholdings in Alibaba?]

12 thoughts on “What will Verizon do with Yahoo?”

  1. The board of the Silicon Valley company has agreed to sell Yahoo’s core internet operations and land holdings to Verizon Communications for $4.8 billion, according to people briefed on the matter, who were not authorized to speak about the deal before the planned announcement on Monday morning.

    After the sale, Yahoo shareholders will be left with about $41 billion in investments in the Chinese e-commerce company Alibaba, as well as Yahoo Japan and a small portfolio of patents.

    So about 10% of Yahoo got sold?

  2. Tekumse: The remaining parts of Yahoo! can fit into a single filing cabinet drawer. So if you measure by employees then about 99.9% of Yahoo! got sold. As you note, the file folder of stock certificates is 90% of the value, but most of that is due to the fact that the Chinese and Japanese teams were vastly more effective than the American team. The Chinese and Japanese holdings certainly were at one time worth much less than the American operation recently sold to Verizon.

  3. Now Marissa Meyer and the giant value-sucking black hole she created around a bolus of Alibaba shares will be jettisoned.

    Deleting value destruction = unlocking value creation

  4. Think of it as AOL buying Yahoo. The right management could turn AOL/Yahoo assets into a successful company. It probably won’t happen, but it is possible.

    I am reading this on AOL Reader, a very nice product.

  5. Maybe Verizon thinks it is getting a bargain because Yahoo at one time was worth (or at least had a market value) that was vastly more. I doubt that they will do anything with it. Big companies make these acquisitions for their own internal reasons which often have nothing to do with profitability – what did Microsoft gain from Nokia?

    Once you have lost your mojo, it is rare to get it back. Apple sort of lucked into the iPhone and for that Jobs is remembered as the genius of our time but other than that, there are very few second acts. If you have won the Powerball Lottery once (and having your business be a big hit like Yahoo once was is in large part a matter of luck – being in the exact right place at the exact right time) chances are you are not going to win it again.

    Verizon has many times attempted to add software to its phones. Not for nothing is such software known as “crapware”. It is mostly of the short sighted “for your convenience” type (meaning the exact opposite). For your convenience, we have blocked the hotspot application on your phone so you have to buy a separate device or data plan from us. For your convenience, we are putting ads all over your browser screen. For your convenience, we are selling 5 second ringtones for more $ than you would pay for an entire song. I don’t think that they will ever be able to get rid of this customers as cows to be milked mentality.

    This goes back to their days as a wireline company. We are going to sell you touch tone “service” even though it costs us less money to provide it than rotary dial. We are going to sell you “features” such as call forwarding even though they are just software settings that cost us nothing to provide. Once you see your customers that way it’s very hard to see them any other way.

  6. Jackie:

    That’s the only way to see customers, as in they exchange their dollars for your services. Your internal cost of services never reflects the actual cost of delivery. Some services are delivered at big losses, some services are delivered at giant profits, that’s just the nature of business. How else do you want customers to be seen? I love your comment “just software settings that cost nothing to provide”. Apparently you’ve never run weekly payroll for software engineers…I have, many times exceeding 7 figures in one week on a large enough project…

  7. Jackie: “Apple sort of lucked into the iPhone”

    “Luck” is a very peculiar choose of words there.

  8. There’s another way to see customers – as people who have a long term relationship with your business and who will treat you right if you treat them right and not as carnival marks to be nickeled and dimed and fleeced at every turn. If your customers all hate you, you’re doing it wrong.

    I am not a software engineer, but for only SIX figures per week (for a year or two or as long as I could milk it), I could write a program that would forward a phone call to another number. Just drop off the contract and a six month advance and I’ll get right on it.

  9. Yahoo! finance is still the best source of financial information on the web, and it hasn’t really changed very much since the ’90s. They had a Java-based stock screener that was awesome but got canned shortly after M. Mayer took the helm. Finviz Elite has most of what the Yahoo! finance screener had, with a dumber interface, for $24.96/month. If I were running Yahoo! I would monetize the financial site with paid services like screens, access to research reports, get more original user-contributed content like Seeking Alpha. Do some financial video blogs and interviews. I have no idea what to do with the rest of Yahoo! except dump Tumblr.

  11. Phil, good news for you, bad news for potential gender flip-flopper Marissa Mayer: anti-switchable-gender movement is starting to be heard. Or at least overheard at Edinburgh Fringe Festival from the mouth of (currently femme-onomastic) Bethany Black:

    “I bought my nephews some Cisformers for Christmas. They start off as cars – and stay that way.” https://gu.com/p/5vvv8

    Note that the lady has chosen to stick with the non-ecumenical “Christmas” in lieu of Hallmark® Seasons’ Greetings!

  12. philg, “Personally I’m sticking to my theory that there are still a huge number of useful applications that nobody is providing to Internet users.”

    Such as?

Comments are closed.