Verizon Writes Down $4.6 Billion from AOL and Yahoo Acquisitions

Verizon announced today that it will write down $4.6 billion associated with its acquisitions of AOL and Yahoo. The resulting Verizon subsidiary, called Oath, is worth a lot less than Verizon had hoped.

To be clear, these were separate purchases. Verizon acquired AOL in 2015 for $4.4 billion, a far cry from the $160 billion that AOL commanded in its early and failed merger with Time Warner. Verizon acquired Yahoo, another flailing Internet pioneer, two years later for $4.48 billion, proving that it had learned no lessons at all from the past. (Indeed, a former AOL executive championed the purchase.)

Verizon combined AOL and Yahoo into a new subsidiary called Oath whose only claim to fame was that it snuffed out two of the most important brands from the Internet boom’s heyday. The firm claimed it would be “one of the most disruptive brand companies in digital.”

It’s been nothing of the sort. Oath was as much a failure as the two turkeys that formed it, and it has seen a revolving set of executives since its inception. The $4.5 billion write-down eats up most of Oath’s $4.8 billion goodwill balance. And Verizon will reduce its headcount and revise its financial projections.

“In connection with Verizon’s annual budget process in the fourth quarter, the new leadership at both Oath and Verizon completed a comprehensive five-year strategic planning review of Oath’s business prospects resulting in unfavorable adjustments to Oath’s financial projections,” Verizon told the U.S. Securities and Exchange Commission in a recent filing.

The firm will also take a $1.8 billion to $2.1 billion hit associated with an employee buyout plan that will reduce Verizon’s headcount by over 10,000. Almost half of them are leaving this month, but the exodus will continue through June 2019, Verizon says.

Maybe Verizon should just stick to its wireless communications business.


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Conversation 22 comments

  • will

    Premium Member
    11 December, 2018 - 10:10 am

    <p>Remember when Microsoft was going to buy Yahoo? </p>

    • ChuckOp

      Premium Member
      11 December, 2018 - 10:54 am

      <blockquote><em><a href="#380763">In reply to will:</a></em></blockquote><p><br></p><p>Specifically, Microsoft offered cash and stock to Yahoo, and decided not to because Y! wanted too much money. Ballmer wanted a piece of Alibaba and Yahoo had a big piece of the Chinese search engine company back then – which they don't now.</p>

    • BeckoningEagle

      Premium Member
      11 December, 2018 - 11:06 am

      <blockquote><em><a href="#380763">In reply to will:</a></em></blockquote><p>For twenty something billions. Microsoft should be thankful Yahoo! declined.</p>

      • digiguy

        Premium Member
        11 December, 2018 - 12:10 pm

        <blockquote><em><a href="#380796">In reply to BeckoningEagle:</a></em></blockquote><p>20 something? 45 billions!! That would have been a disaster… Indeed, MS should thank yahoo stupidly greedy management for avoiding such a debacle </p>

  • ben55124

    Premium Member
    11 December, 2018 - 10:16 am

    <p>So in microsoft terms that would be a 60% nokia</p>

    • Paul Thurrott

      Premium Member
      11 December, 2018 - 10:24 am

      <blockquote><em><a href="#380770">In reply to ben55124:</a></em></blockquote><p>Yeah I was trying to decide if this was collectively Verizon's Surface or Nokia. </p>

      • Jackwagon

        Premium Member
        12 December, 2018 - 1:23 pm

        <blockquote><em><a href="#380775">In reply to paul-thurrott:</a></em></blockquote><p>I feel like Nokia would be more apt either way; at least Surface set a standard for OEM's to follow.</p>

  • Scott Ross

    Premium Member
    11 December, 2018 - 10:19 am

    <p>Stupid AIM costing Oath all that money, </p>

  • evox81

    Premium Member
    11 December, 2018 - 10:24 am

    <p>The wireless carriers were (and still are to some degree) so afraid of becoming a "dumb pipe" that they made some truly dumb decisions. I'll rarely give prop to AT&amp;T, but comparing their purchase of DirecTV to Verizon's purchase of Yahoo, it's obvious which one knew what they were doing. </p>

    • jchampeau

      Premium Member
      11 December, 2018 - 4:05 pm

      <blockquote><em><a href="#380776">In reply to evox81:</a></em></blockquote><p>I don't think AT&amp;T's purchase of DirecTV is the one with which to compare. It's AT&amp;T's purchase of Time Warner, with brands like Warner Bros., HBO, Cartoon Network, CNN, etc. that makes for a better comparison.</p>

  • webdev511

    Premium Member
    11 December, 2018 - 10:25 am

    <p>Huh. Who could have possibly known that it would turn out like this? I mean aside from pretty much everyone.</p>

  • lvthunder

    Premium Member
    11 December, 2018 - 10:38 am

    <p>Wow. It's sad that 5,000 people are going to be losing their jobs around Christmas time and another 5,000 after that.</p>

  • jimchamplin

    Premium Member
    11 December, 2018 - 11:04 am

    <p>Lol these are the same mental midgets who are banning “NSFW” user content on sites like Tumblr while doing nothing about porn bot accounts.</p><p><br></p><p>Banning entire accounts! And of course their algorithm based approach is soooooo accurate, with no false positives.</p><p><br></p><p>I don’t use the site, so it isn’t something that’s affected me. Just pointing out the subpar IQ of the chuckleheads we’re dealing with here. </p>

  • HellcatM

    11 December, 2018 - 12:02 pm

    <p>They were dumb buys! Verizon thought they could make something out of these two crap companies? What a joke! What were they hoping they could do with these two dumpster fires? Compete with the AP? Or with Google? They can't even compete with Bing or Duck Duck Go. They're just burning money they could have put toward R&amp;D.</p>

  • Paul Tarnowski

    11 December, 2018 - 12:14 pm

    <p>Melissa Meyer had ONE job.</p><p><br></p><p>And after a few false starts, thinking she was there to <em>save</em> the company by sprucing up the website UI and stuff she had a lot of experience in, she did her real job <em>very, very</em> well.</p>

  • beckerrt

    Premium Member
    11 December, 2018 - 12:18 pm

    <p>Verizon should just sell this bundle of crap. They seem to have settled on a strategy of building the best network possible while avoiding all these media purchases that the other telecom companies are doing (AT&amp;T). I would imagine Yahoo still has some value and relevance, but AOL? Really? </p>

  • YouWereWarned

    11 December, 2018 - 12:19 pm

    <p>Verizon prints money in the data-moving realm. So no urgency or requirement to be creative. Apple is bumping into a similar consequence of success.</p>

  • Daekar

    11 December, 2018 - 12:35 pm

    <p>I'm very glad this has been a bungle. We do NOT need the same companies dominating content delivery AND content production. Those should be VERY separate entities.</p>

  • waethorn

    11 December, 2018 - 1:11 pm

    <p>They should've seen this coming what with all the security problems with Yahoo.</p>

  • glenn8878

    11 December, 2018 - 2:32 pm

    <p>So it's worth $2 Billion after another $2 Billion in the employee&nbsp;buyout plan?&nbsp; Soon it'll be worth zero. Microsoft should be worried about it's LinkedIn purchase, which occurred after it's botched Nokia and Skype purchase. They never learn.</p>

  • silversee

    11 December, 2018 - 3:24 pm

    <p>It couldn't happen to a nicer company…</p>

  • Michael_Miller

    11 December, 2018 - 8:45 pm

    <p>It is like two poor students studying together.</p>


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