Verizon and Yahoo Brace for Layoffs
There are a lot of mergers in the air. As Fox is trying to make good on its offer to buy Britain’s Sky TV network, Verizon is in the process of trying to collect Yahoo. And it looks like Verizon is a lot closer to making this happen than they were after shareholders approved a revised buyout agreement that would send Yahoo’s core assets over to Verizon’s keeping.
When the acquisition is approved, market watchers say the next step for Verizon will be to merge Yahoo and AOL into a single digital company, changing the name to Oath. When that happens, Verizon has already said it would eliminate up to 2,100 jobs, which amounts to about 15 percent of the combined workforce. One of the first to go after the buyout will be current Yahoo CEO Marissa Mayer, who is expected to walk away with about $186 million from stock and another $3 million in severance.
AOL CEO Tim Armstrong will helm Oath into the future, though he begins his tenure facing fallout from negative PR related to the layoffs, which are expected to begin immediately.
The idea, then, is for Oath to take its digital operations global, competing with both domestic and international interests across the world. First, though, Verizon will have a bit of a mess to clean up. Yahoo has been hamstrung for months now after a major security problem was announced this past February. Accounts representing more than one billion users were compromised in the security breach, leading to major issues across the board at Yahoo.
Public sentiment was not kind to the company that was already flailing, trying to keep pace with other internet entities that had long since passed them by. Between the business struggles, the scandal and the subsequent PR mess, Verizon was obliged to lower its deal price by about $350 million just to get it done.
So, even when the deal is done, it looks like it will be rough sledding for at least a few months as Oath tries to get off the ground. Between the hacking scandal and the layoffs, it will likely be a rocky summer and fall for Oath. But if Armstrong can get the ship righted and keep the company moving in the right direction, it’s possible they will come out of this with a much better outlook than Yahoo faced since February.
Of course, even if they do get everything moving in the right direction, there’s still some major competition out there they have to catch, both at home and abroad.