Yahoo sells to Verizon for measly $7bn

10:49 am on 26 July 2016

United States communications company Verizon is buying the core business of internet pioneer Yahoo for close to $7 billion.

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Photo: AFP

It marks the end of 20 years of independence for Yahoo.

Yahoo will be combined with AOL, another faded internet star, which Verizon bought last year for $US4.4bn, but the deal did not include Yahoo's valuable stake in Chinese firm Alibaba.

The nearly $US4.83bn price tag for the deal is well below the $US44bn Microsoft offered for Yahoo in 2008 or the $US125bn it was worth during the dot-com boom.

Verizon said the deal for Yahoo's core internet business, which has more than a billion active users a month, would make it a global mobile media company.

Yahoo, founded in 1994, was a dominant player in the early days of the internet, but has long lost its leadership position in internet search and advertising to Google, Facebook and others.

Yahoo is still one of the largest properties on the internet, with hundreds of millions of customers using its email, finance and fantasy sports offerings, among others, and a heavily trafficked home page.

However traditional web banner advertising, which had long been Yahoo's strength, has become much less lucrative in the age of mobile and video.

In an email to staff, Yahoo chief executive Marissa Mayer said she was planning to remain with the company and she still saw a path for growth for the company.

"Yahoo is a company that has changed the world, and will continue to do so through this combination with Verizon and AOL," she said.

However, the takeover, which is due to be completed in early 2017, raises questions about whether the Yahoo brand could disappear.

Verizon head of product innovation and new business Marni Walden would head up the combined internet unit.

AOL chief executive Tim Armstrong said the deal was about "unleashing Yahoo's full potential", and creating a major player in mobile media.

Together AOL and Yahoo would have more than 25 brands, including Yahoo Mail, Flickr and Tumblr as well as AOL's Huffington Post and Techcrunch news sites.

Ms Mayer, who took the helm at Yahoo in 2012, has made little progress in returning the company to profit.

Last week the firm reported a $440m loss in the second quarter, but said the board had made "great progress on strategic alternatives".

- BBC/Reuters

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