In a pair of documents filed with the U.S. Securities and Exchange Commission yesterday, Yahoo revealed that CEO Marissa Mayer will resign after core parts of her company are acquired by Verizon as expected sometime early this year. The unacquired pieces of Yahoo's business will be renamed "Altaba" after the deal is completed, according to the filings.
An unnamed "person familiar with the company's thinking" said the name comes from a blend of the words "alternative" and "Alibaba," The Washington Post reported yesterday. The parts of Yahoo not being purchased by Verizon include shares in Yahoo Japan and the Alibaba Group, the Chinese e-commerce giant.
In July, Verizon announced that it planned to acquire Yahoo's operating business for $4.83 billion in cash to boost its position in mobile media technology and add new sources of digital ad revenues. However, the course of the transaction has been complicated by subsequent news of two major hacks on Yahoo -- taking place in 2013 and 2014 -- that affected more than 1 billion user accounts.
Yahoo's Long-Declining Fortunes
Mayer (pictured above), a former Google executive, was brought on to lead Yahoo in 2012, as the company was struggling with layoffs and restructuring in an attempt to turn around its declining Internet fortunes. Four years earlier, Yahoo had rejected a $44.6 billion acquisition offer by Microsoft. Subsequently, Yahoo's revenues dropped from nearly $7 billion in 2007 to $4.4 billion in 2011.
Following the close of Verizon's purchase this year, several other executives, including co-founder David Filo and board members Eddy Hartenstein, Richard Hill, Jane Shaw and Maynard Webb, are expected to leave Yahoo.
Hartenstein is a former president and CEO of the Tribune Company, which last year was widely derided and mocked for renaming itself "tronc" (Tribune online content). Yahoo's announcement yesterday that its remaining properties would be called Altaba received similar criticism, with comments on Twitter ranging from "Altaba is Arabic for 'set money on fire'" to "Altaba is Latin for 'We should have taken Microsoft's $45 billion offer in 2008.'"
Verizon's Mobile Media Ambitions
Yahoo is hardly the first one-time Internet giant to fall and eventually be absorbed by another company. AOL suffered a similar fate in 2015 when it was acquired -- also by Verizon -- for $4.4 billion.
Verizon said the addition of Yahoo's business will boost its digital media portfolio with news, finance and sports properties. The company will also gain 225 million users of Yahoo's email service, along with Yahoo advertising technology assets such as Brightroll, Flurry and Gemini.
"We see tremendous opportunity in the digital video marketplace, which has an estimated addressable market of $180 billion by 2020," Verizon chairman and CEO Lowell McAdam said during the company's Q2 earnings call in July. "By acquiring Yahoo's operating business, we are scaling up to be a major competitor in mobile media. Yahoo's operations provide a valuable portfolio of online properties and mobile applications, which attract over 1 billion monthly active consumer views."
McAdam added that the addition of Yahoo will also complement the businesses brought into Verizon's fold through the AOL acquisition. "The global scale, volume of customer analytics, and market reach of the combined assets will allow us to create long-term value in a less capital-intensive manner," he said.