By Jessica Van Sack, Boston Herald
The mobile phone wars could be the answer to the woes of Yahoo Inc., as AT&T joined the bidding for the Sunnyvale, Calif.-based Internet business yesterday — likely in part to spoil plans by its archrival, Verizon, to acquire the ailing company.
Yahoo has been slowly fading away under CEO Marissa Mayer, whose plans to innovate through acquisition have yielded nothing but pain for the company balance sheets.
AT&T didn’t show much interest in Yahoo until Verizon became its likely suitor, so the move is probably as much about taking on Verizon as it is expanding its own advertising portfolio.
Verizon gobbled up AOL one year ago for that same reason, to gain access to advertising technology and targeting tools that reach an estimated 67 million millennials and 103 million women each month. AOL has a partnership with Microsoft that allows it to serve up ads on properties such as MSN, Outlook and Xbox. Not only did the AOL acquisition allow Verizon to advertise its own products more easily, it also gave the mobile subscription giant control of valuable channels such as Huffington Post, which could be made even more valuable with Yahoo’s proprietary algorithms.
Yahoo’s advertising boils down to two platforms: Gemini, a tool that targets consumers based on their likes and habits, and BrightRoll, a tool that targets consumers based on their location and what device they use. It’s easy to see why AT&T doesn’t want to see Verizon land Yahoo’s ad improvements.
Buying Yahoo would also benefit AT&T, allowing it to bring its TV advertising business to mobile devices.
AT&T acquired DirecTV for $48.5 billion last year, and shortly thereafter launched a new TV advertising platform that targets about 26 million household television subscribers. Adding Yahoo’s proprietary ad algorithms to those platforms would significantly increase its ad targeting capabilities.
That’s not to say that either Verizon or AT&T will ultimately prevail in the Yahoo bidding war. Bidders have also included Quicken Loans founder Dan Gilbert with investor Warren Buffett, Bain Capital and some private investment firms.
Yahoo’s sale became more urgent yesterday as shares in the company fell an astonishing 5 percent in one day to close at $35.59.
The company’s current market cap equates to the full value of its largest asset, its $30 billion stake in Alibaba, the Chinese e-commerce giant — a holding that is likely not on the auction block.
Yahoo really has no choice but to sell its core business. No matter the buyer, it’s likely that the company will look completely different a year or two from now.
©2016 the Boston Herald Distributed by Tribune Content Agency, LLC.
