As of Tuesday June 13, Verizon Communications Inc. has officially purchased Yahoo! Inc. The much anticipated $4.5 billion acquisition gives Verizon dominion over 1 billion users, with an unrivaled roster of the world’s most recognized brands. Verizon expects to take a $500 million charge in the second quarter to cover integration expenses and severance linked with the purchase, as reported by Bloomberg News. While the agreement was announced last July, the deal was close to collapse after Yahoo revealed two massive security hacks which exposed user accounts and shook consumers’ trust. The fiasco led to Verizon slashing the agreed upon price by $350 million.
In its quest to expand beyond the main wireless business, the New York-based mobile-phone company also purchased AOL two years ago. Yahoo entities including Sports and Finance will form a new division of Verizon named Oath, which houses brands like AOL, the Huffington Post and TechCrunch. Oath will be headed by AOL’s former CEO Tim Armstrong. Yahoo CEO Marissa Mayer is stepping down. Mayer, 42, formerly with Google, began working with Yahoo in July 2012. In 2016, she was the fourth-highest-paid U.S. woman executive, earning $32.8 million for the year. “While reaching this moment has certainly been a long road traveled, it marks the end of an era for Yahoo, as well as the beginning of a new chapter — it’s an emotional time for all of us,” Mayer wrote on her blog. “Given the inherent changes to my role, I’ll be leaving the company.”
There will be more downsizing necessary for the communications giant. The combined businesses will cut about 2,100 jobs, or roughly 15 percent of the combined workforce. Most of those laid off will be for duplicate jobs, while engineering positions are less likely to be affected, as reported by the Chicago Tribune. Verizon expects approximately $1 billion in operating cost savings through 2020 from the Yahoo acquisition.
One of the first orders of business will be scratching Yahoo Esports, a site which covers the growing segment of professional video gaming. Esports began winding down Friday, as Verizon has decided to focus on the Yahoo Sports brand instead, as announced by Travis Gafford, head of the Esports unit.
“We have enormous respect for what Yahoo has accomplished: this transaction is about unleashing Yahoo’s full potential, building upon our collective synergies, and strengthening and accelerating that growth,” Armstrong said. “Combining Verizon, AOL and Yahoo will create a new powerful competitive rival in mobile media, and an open, scaled alternative offering for advertisers and publishers.”
By: Ilana Siyance
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