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Yahoo Cuts $4.8 Billion Deal to Sell Core Business to Verizon

Yahoo was the front door to the web for an early generation of internet users, and its services still attract a billion visitors a month.
But the internet is an unforgiving place for yesterday’s great idea, and Yahoo has now reached the end of the line as an independent company.
The board of the Silicon Valley company has agreed to sell Yahoo’s core internet operations and land holdings to Verizon Communications for $4.8 billion, according to people briefed on the matter, who were not authorized to speak about the deal before the planned announcement on Monday morning.
After the sale, Yahoo shareholders will be left with about $41 billion in investments in the Chinese e-commerce company Alibaba, as well as Yahoo Japan and a small portfolio of patents.
That compares with Yahoo’s peak value of more than $125 billion, reached in January 2000.
Marissa Mayer, Yahoo’s chief executive, is not expected to join Verizon, but she is due to receive a severance payout worth about $57 million, according to Equilar, a compensation research firm.
Verizon and Yahoo declined to comment on the deal.
Founded in 1994, Yahoo was one of the last independently operated pioneers of the web. Many of those groundbreaking companies, like the maker of the web browser Netscape, never made it to the end of the first dot-com boom.
But Yahoo, despite constant management turmoil, kept growing. Started as a directory of websites, the company was soon doing much more, offering searches, email, shopping and news. Those services, which were free to consumers, were supported by advertising displayed on its various pages.
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For a long time, the model worked. It seemed as if every company in America — and across much of the world — wanted to reach people using the new medium, and ad revenue poured into Yahoo.
In the end, the company was done in by Google and Facebook, two younger behemoths that figured out that survival required a continuous process of reinvention and staying ahead of the next big thing. Yahoo, which flirted with buying both companies in their infancies, watched its fortunes sink as users moved on to apps and social networks.
Verizon, one of the nation’s biggest telecommunications companies, plans to combine Yahoo’s operations with AOL, a longtime Yahoo competitor that Verizon acquired last year. The idea is to use Yahoo’s vast array of content and its advertising technology to offer more robust services to Verizon customers and advertisers. Bloomberg first reported the price of the transaction.
Ms. Mayer, who was hired as Yahoo’s chief executive four years ago but failed to halt its decline, was nevertheless rewarded handsomely for her efforts. Including the severance, she will have received cash and stock compensation worth about $218 million during her time at Yahoo, according to Equilar’s calculations.
Created by two Stanford graduate students, Jerry Yang and David Filo, Yahoo was originally a hand-selected directory to the nascent World Wide Web, but it quickly expanded its ambitions.
“Yahoo is where you start,” Jeff Mallett, the company’s first chief operating officer, explained during a 1996 interview with a job candidate, Dan Finnigan. Mr. Finnigan, now the chief executive of Jobvite, said that he was skeptical of Yahoo’s quest to dominate every category of content, but he later joined the company to run its HotJobs division.
Google, which emerged a few years later, used a superior, more automated approach to indexing the web. Under its first chief executive, Timothy Koogle, Yahoo struck a four-year deal with Google in June 2000 to make Google’s search engine the default on its website. Yahoo’s leaders also tried to buy Google but eventually settled on building their own search tool.

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