With Yahoo!, Verizon bets big on digital but gets nowhere near Google, FB

Yahoo!’s pain is finally coming to an end. If media reports are to be believed, the company will be taken over by Verizon for about $4.8 billion.

Yahoo!, a pioneer in the internet space, has been in dire straits for the least few years. In April-June, Yahoo’s loss widened to $440 million and amounted to 46 cents a share, compared with a loss of $22 million, or 2 cents a share, a year ago.

A report in Associated Press said the fall in Yahoo’s net revenue — after subtracting ad commissions — from slightly from more than $1 billion a year ago to $842 million in the latest quarter as a “telling sign of the company’s deterioration”. That’s the steepest decline yet under embattled CEO Marissa Mayer.

Mayer has resorted to spending and job cuts at the company, which now has about 8,800 employees, in a bid to revive the fortunes.

So what is Verizon’s gameplan?

With the acquisition, analysts expect the company to broaden its range of digital services, which include websites focussed on news, search engine operations, social network Tumblr and email services. These are properties that will spruce up the offerings from AOL, a business Verizon bought in June 2015 for $4.4 billion in order to increase its presence in the online space.

An earlier Bloomberg report said in Yahoo! “Verizon sees a complimentary set of businesses that could find a home alongside its AOL properties”. Citing sources the report said AOL Chief Executive Officer Tim Armstrong may be a “key asset to make the integration (of Yahoo! and AOL) a success”.

With Flickr, Tumblr and Yahoo Finance and Sports and digital-ad tech such as Flurry and BrightRoll, Verizon may be able to take on the big players in the digital advertising space – Facebook and Google, the report said.

However, not all analysts buy the view that Verizon will be able to take on the big two with Yahoo! buy.

“The idea that buying Yahoo somehow positions Verizon to compete against Google and Facebook is laughable,” Jonathan Chaplin, an analyst with New Street Research LLC, has been quoted as saying in another Bloomberg report .

Verizon may be have superiority in wireless but Yahoo and AOL “are the complete opposite”, he has been quoted as saying in the report.

With inputs from AP