YHOO Stock: Could This Save Yahoo! Inc.’s Demise?

Yahoo StockIf you’re wondering when Yahoo! Inc.’s (NASDAQ:YHOO) stock will finally see a bottom, there’s good news. Verizon Communications Inc. (NYSE:VZ) might be buying the company.

According to a source familiar with the matter, Verizon is putting Tim Armstrong, CEO of AOL, in charge of exploring a possible deal. (Source: “Verizon Said to Enlist AOL CEO Armstrong to Explore Yahoo Deal,” Bloomberg, February 8, 2016.)

Is Verizon Interested in Buying Yahoo?

Tim Armstrong has a solid track record as a deal maker. He played crucial roles in AOL’s acquisitions of The Huffington Post and Tech Crunch. Most recently, he led Verizon’s $250-million acquisition of advertising technology specialist Millennial Media Inc.

It might also help that Armstrong and Yahoo CEO Marissa Mayer have known each other for years. The two were both executives at Google before they moved to their current companies.

Note that Verizon had already identified Yahoo as a potential acquisition target back in December. Verizon CFO Fran Shammo said that the company would consider the possibility if “there is a strategic fit and it makes sense for our shareholders and we can return value.” (Source: “Verizon would Explore Yahoo Deal If It Made Sense, CFO Says,” Bloomberg, December 7, 2015.)

Last week, Verizon Chairman and CEO Lowell McAdam told CNBC that the company is indeed considering a bid for Yahoo: “At the right price I think marrying up some of their assets with AOL under Tim Armstrong’s leadership would be a good thing for investors.” (Source: “Verizon CEO Confirms Interest in Buying Yahoo,” CNBC, February 6, 2016.)

Verizon completed its $4.4-billion acquisition of AOL last year. AOL’s two million users and online advertising technology helped with Verizon’s online and mobile video services.

Yahoo is much bigger compared to AOL. There are more than one billion people using its e-mail, finance, sports, and video sites. Having access to Yahoo’s enormous web traffic and content would be instrumental in Verizon’s expansion plan into video advertising.

Note that things haven’t been going that well for the potential acquiree. After a disappointing quarter, Yahoo is laying off 15% of its workforce and is closing offices in Dubai, Mexico City, Buenos Aires, Madrid, and Milan.

Will Verizon eventually be able to acquire Yahoo? It’s too early to say right now. However, given the current situation, Yahoo might want to entertain the potential offers.

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