Major Layoffs Aren't Expected After Yahoo-Verizon Deal (Yet), Analysts Say
Wall Street thinks the $4.8 billion buyout was more about creating the third-largest digital advertising platform, after Facebook and Google.
More major layoffs at Yahoo as a result of its merger with Verizon aren't expected, at least not this year.
Wall Street analysts think the $4.8 billion buyout was more about creating the third-largest digital advertising platform, after Facebook and Google, than about finding places to cut costs within Yahoo and Verizon's extensive portfolio of brands.
"The outlook is uncertain, but [Yahoo CEO] Marissa [Mayer] won't touch anyone for six to nine months," analyst Laura Martin of Needham & Company told The Hollywood Reporter. "This deal is more about the revenue side than the cost side."
It wouldn't be until the first quarter of 2017, when the merger is expected to be finalized, that Verizon is likely to spin off or shut down any of the Yahoo brands it deems unfit to maintain or too similar to properties it already owns.
Those parallel properties include AOL's TechCrunch and Yahoo Tech; AOL's Huffington Post and Yahoo News; and AOL's Weblogs, Inc. and Yahoo's Tumblr, among many others.
"In 2017, AOL may do a strategic review and figure out if they want to sell any of those assets," said Martin.
A head count reduction in ad sales departments is a strong possibility, according to another analyst, due to the costliness of those divisions.
Despite the merger, analysts are skeptical that Verizon and Yahoo will be able to steal significant market share from industry leaders Facebook and Google, which account for nearly two-thirds of global digital advertising revenues.
During Mayer's tenure as CEO, Yahoo's adjusted earnings fell to $750 million in the most recent quarter from $1.5 billion in 2012. Share price, however, has more than doubled over the same period to $38.32 from $15.92, when Mayer took the helm.
"By no Wall Street metric was that a success," said Martin. "When your earnings halve, your operating strategy was a misstep."
Mayer said in a CNBC interview that she hopes to stay on as CEO of Verizon, though her future with the company remains uncertain.