Why Buying Yahoo! Makes Perfect, Logical Sense for Verizon

I'll admit, at first, I didn’t 100% get the acquisition.   Isn't Yahoo! shrinking?  Isn't its user base atrophying away?  I didn't really get it.  Until -- I read that Verizon’s revenues fell 5% this quarter.

Now it makes sense to me. All of Verizon’s core businesses are either shrinking, or not growing fast enough, or are highly mature:

• wireless is highly mature and has become a zero-sum game
• wireline is in perpetual decline
• TV and high-speed internet business growth is declining (down 26%, and 60%, from a year ago)

They have to try something that (x) has scale and (y) is synergistic with their core businesses, more or less.

Yahoo! may not be growing, but it does have scale and is big enough to help grow the top-line. And it fits into a strategy to own more in adtech and more value on top of the “pipes” it owns and serves.

You gotta do something when growth stagnates, folks. And sometimes, a good plan today is better than a perfect plan tomorrow. Especially if it helps you keep your job for a few more years.

Verizon profit rises, but revenue falls short

And $6b (including options) for Yahoo! is affordable for Verizon to buy this revenue. Would they prefer to buy Facebook instead? Sure. But FB’s market cap is $350 billion. When you buy revenue, you have to buy the biggest, best asset you can afford. Sometimes that even means one that isn’t really growing, or is otherwise deeply flawed.