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Verizon to Buy Yahoo, What Happens to Ecommerce Biz?

Uncertainty continues for online merchants who use Yahoo Small Business even as a major development in its parent company’s saga was disclosed on Monday morning: Verizon is acquiring Yahoo. However, merchants appear to have some breathing room until early next year.

Early last year, Yahoo was planning to spin off the unit and renamed it Aabaco Small Business. While there was no mention of what would happen to the Aabaco in Monday’s announcement, a Yahoo spokesperson told EcommerceBytes that the Aabaco unit is part of the core operating business that Verizon is acquiring. “Until such time as the deal closes, we will continue to operate as an independent company and stay very focused on executing against the strategy that we laid out at the beginning of this year.”

The telecommunications company agreed to acquire Yahoo’s operating business in the first quarter of 2017 for approximately $4.83 billion in cash, subject to customary closing adjustments. Verizon will merge Yahoo into another of the Internet’s “senior citizens” – AOL, which Verizon had acquired last year for $4.4 billion.

Yahoo will be integrated with AOL under Marni Walden, EVP and President of the Product Innovation and New Businesses organization at Verizon.

Yahoo CEO Marissa Mayer told employees in an email and Tumblr on Monday morning, “This sale is not only an important step in our plan to unlock shareholder value for Yahoo, it is also a great opportunity for Yahoo to build further distribution and accelerate our work in mobile, video, native advertising, and social.”

But neither Mayer’s message nor the Verizon press release revealed what was in store for many of Yahoo’s units, including Aabaco, Tumblr, and Flickr.

Scott Smigler, President of Exclusive Concepts, took it as positive news that the company was being acquired by Verizon rather than a private equity firm. He outlined various scenarios that could play out – one includes Verizon investing in Aabaco, another would be spinning it off, or it could do what he called a reverse spin. Another possibility would see Verizon closing the unit, but Smigler called that very unlikely since the unit is profitable, he said.

Smigler said Aabaco bought a lot of good-will among merchants this year by continuing to release useful features despite what he called the tumult and uncertainty of the fate of the unit. “The reaction I’m hearing from many (merchants) is, “at least the end in sight,”” he said. “Those planning to move off the platform had decided to do so months ago. The Verizon acquisition won’t make most merchants any more or less likely to migrate.”

The uncertainty Smigler refers began in January 2015 when Yahoo announced it planned to cast off Yahoo Small Business as part of its plan to unload its shares in Alibaba. But by October, the deal was postponed over uncertainty over tax implications of the move.

Aabaco merchants aren’t the only ones facing uncertainty. Yahoo also owns Tumblr, and one Tumblr user posted, “Ya know, if you’re going to announce this in a Tumblr post, maybe throw a few lines in there about how this sale will AFFECT TUMBLR. I mean, hopefully someone’s thought that through…but I’m sure you’ve got it all worked out, Marissa.”

Others wondered about the impact on photo hosting site Flickr, which Yahoo also owns.

Wall Street analyst Colby Synesael of Cowen and Company said Yahoo would provide an immediate boost to the nascent Verizon mobile platform with additional content and increased advertising scale.

He explained what Yahoo brought to the table when he wrote, “Specifically, Yahoo owns content that is most notably known for its popular sports, news, and finance properties as well as its email service. To this point, Yahoo brings with it approx. 1B monthly active users including approx. 600MM monthly mobile users and approx. 225MM monthly active email users.

“All in, Verizon will have more than 25 brands in its portfolio which it can monetize primarily via its advertising platform. Yahoo also brings additional ad-tech tools including Brightroll (video ad-tech), Flurry (mobile apps and analytics), and Gemini (native and search advertising) to augment the AOL ad-tech stack. All in, the combined AOL/Yahoo platform should provide a level of scale that makes it a more meaningful player than either company was alone,” Synesael said.

Kevin Richards of Ventura Web Design said he’s advising his clients to stay focused on improving their websites and allow the major corporations to move forward with whatever their plans are. “Anything that Verizon, Yahoo, or Aabaco does, really has very little effect on our merchants,” he said.

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Ina Steiner
Ina Steiner
Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). She is a member of the Online News Association (Sep 2005 - present) and Investigative Reporters and Editors (Mar 2006 - present). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com. See disclosure at EcommerceBytes.com/disclosure/.