Home » Science & Technology » Yahoo spurned an offer of $45 billion. Now selling to Verizon for a mere $4.8 billion

Yahoo spurned an offer of $45 billion. Now selling to Verizon for a mere $4.8 billion

Sahil Bhalla | Updated on: 25 July 2016, 12:46 IST

1 February, 2008. 24 July, 2016. How times have changed in just eight short years. Back in 2008, Microsoft, one of the world's biggest technology companies, made an audacious $45 billion ($31 per share) bid to buy Yahoo. Microsoft was proposing to purchase all Yahoo shares at a 62% premium from their stocks closing price at that time.

Fast forward six years and Yahoo has just announced that it is selling its core business for a mere $4.8 billion. Or as we call it, chump change. Yahoo was at the forefront of technology with its advanced Yahoo Mail, Search, Finance and other services that, till this day, still attract a billion visitors a month. As far an Yahoo being an independent companies goes, well that's over now. Verizon Communications will be buying Yahoo's core internet operations and land holdings. The announced will be made on Monday morning.

Yahoo shareholders, after the deal goes through, will be left with about $41 billion in investments in Alibaba, Chinese e-commerce company, Yahoo Japan and a few patents here and there. The $4.8 billion valuation pales in comparision to Yahoo's peak value of moer than $125 billion that came during the dot come boom of 2000. Yahoo's chief executive, Marissa Mayer, is not expected to join Verizon Communicaitons, in any position.

Verizon plans to combine Yahoo's operations with AOL. AOL was purchased by Verzion last year and was in direct competition with Yaho.

Yahoo had turned down an opportunity to buy Google for a mere $1 million in 1997 and once again in 2002. David A. Vise explains why Yahoo refused to buy Google,

"In part, Yahoo rejected it because the firm wanted computer users to spend more time on Yahoo. The Google search engine was designed to give people fast answers to their questions by swiftly sending them to the most relevant Web site. The Yahoo directories were designed both to answer questions and to keep people on the Yahoo site, where they could shop, view ads, check their email, play games, and spend more money and time, rather than less."

In 2006, Yahoo also turned down a great opportunity of buying Facebook for $1 billion in 2006. Google is now valued at approximately $530 billion, while Facebook is presently valued at around $350 billion.

When Marissa Mayer was brought in, many analysts thought that move would bring about the turning point in Yahoo. It didn't. During her tenure, and this is where she has gone most wrong, was buying 53 different companies - Tumblr, Qwiki, EvntLive, MessageMe, Hitpost, Aviate - and 41 of them have shut down. Mayer failed to monetize Tumblr, a platform used by many. If Tumblr had been monetized, it would have brought about huge profits for the company.

Mayer, who is expected to resign, stands to make $57 million in severance payout. Not so bad for a company that has literally fallen apart.

First published: 25 July 2016, 12:46 IST
Sahil Bhalla @IMSahilBhalla

Sahil is a correspondent at Catch. A gadget freak, he loves offering free tech support to family and friends. He studied at Sarah Lawrence College, New York and worked previously for Scroll. He selectively boycotts fast food chains, worries about Arsenal, and travels whenever and wherever he can. Sahil is an unapologetic foodie and a film aficionado.