In the news today it says “Verizon Announces $4.8 Billion Deal for Yahoo’s Internet Business” and “Verizon Buys Yahoo for $4.83B”. This confused me at first because Yahoo has over 40 billion in assets. Then I read the article and realized that Verizon bought the operating business but NOT the capital and assets.
Here is the relevant part:
“After the sale is completed early next year, Yahoo will become a holding company for its two stakes in China’s e-commerce leader, Alibaba Group, and Yahoo Japan. Those investments” … “are worth more than $40 billion before taxes.”
“Yahoo also still has a patent portfolio that it intends to sell, and about $7.7 billion in cash.”
“The holding company will drop the Yahoo name and adopt a new identity after Verizon takes control.”
With that much money and holdings, the new identity (let’s call it NewHoo!) could potentially become the world’s largest venture capital firm. My prediction is that NewHoo! Investments becomes a world behemoth in VC. This will spur innovation (and some wasted effort) in lots of new companies.
It’s possible they retain some building space and do a Y Combinator space sharing incubator thing with their investments.
For Verizon, the deal makes sense. They need page views to put their AOL (purchased last year) ads on. 5 billion is chump change to them. It might as well be a life-style purchase.
For Yahoo! it makes even more sense. They have no reason for making content. They don’t know who they are. This is way to put their assets to work. They collect 5 billion and sell another 7 in patents. Google and Microsoft are likely bidders in that war.
So, Verizon bought the crap Yahoo wanted to get rid of. Yahoo becomes the worlds largest VC. And the world keeps on spinning. Long live Silicon Valley.