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All Eyes on Verizon, Yahoo! Next Week; $5 billion deal on tap

Just over a year after buying AOL, Verizon Verizon (NYSE: VZ) seems poised to buy the last of the remaining Internet providers – Yahoo!.

Word on the street is that the wireless service provider could announce its acquisition of Yahoo! next week. The price being bandied about is roughly $5 billion.

The wireless giant has long been considered the favorite to buy Yahoo’s Internet assets. The point is to combine those assets with those of AOL, which Verizon bought last year form $4.4 billion.
 

 · Reasons for this deal

 
Why would the number one wireless carrier want to add another relic of the early days of the Internet to its portfolio? To compete with Facebook (NASDAQ: FB)and Google and carve out space in the lucrative online advertising space. (Google is now Alphabet, but still trades on the NASDAQ under the GOOGL ticker).
 

 · Yahoo draws many suitors

 
Redcode reported Friday that Verizon had raised the price it was willing to pay in its most recent offer for Yahoo. While it was rumored that Yahoo’s board members barked at Verizon’s offer as being too low, it would be wise for Yahoo to accept it.
 

 · Bad, costly choices

 
That’s because Yahoo’s operations are in a mess. There are a countless number of reasons that led to the mess. This includes the high frequency of CEO turnovers, and a slew of costly acquisitions that proved to be worthless.

Gizmodo took the time to highlight 53 acquisitions that took place under current CEO Marissa Mayer’s watch. Gizmodo tallied the acquisitions to be $2.3 billion. Given that many of them are out of business, the $5 billion from Verizon should seem reasonable.

With AOL and Yahoo in its portfolio, Verizon would have two large Internet companies at its disposal. That would bolster its effort to secure market share in digital ad spending, which is currently dominated by Facebook and Google.

Verizon believes that it can use quality consumer targeting to attract advertisers.

Missteps include not selling to Microsoft several years ago.





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