Verizon to Absorb a $4.6 Billion Charge for Yahoo and AOL

cageymaru

cageymaru

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New Verizon CEO Hans Vestberg is taking an aggressive approach to reviewing business units and cost-saving measures. After reporting that Verizon was laying off over 10,000 workers yesterday, today CNBC is reporting that the company is taking a goodwill impairment charge of $4.6 billion in value for its Oath media business which include AOL and Yahoo. A 5-year strategic planning review of Oath's business prospects resulted in unfavorable adjustments to Oath's financial projections.

Verizon's Media business, branded Oath, has experienced increased competitive and market pressures throughout 2018 that have resulted in lower than expected revenues and earnings. These pressures are expected to continue and have resulted in a loss of market positioning to our competitors in the digital advertising business. Oath has also achieved lower than expected benefits from the integration of the Yahoo Inc. and AOL Inc. businesses. As a result, the Company expects to record a non-cash goodwill impairment charge of approximately $4.6 billion ($4.5 billion after-tax) in the fourth quarter of 2018. The goodwill balance of the Oath reporting unit was approximately $4.8 billion prior to the incurrence of this impairment charge.
 
I can't say I understand what a goodwill impairment charge is, but I knew from the get go that buying Aol and Yahoo were really stupid moves. Billions of dollars being played with here, the people who made the call to buy these companies should be held personally responsible for this absolute failure that could be seen from the very instant it was considered. Aol and Yahoo should have been left to die on their own.
 
arnemetis said:
I can't say I understand what a goodwill impairment charge is, but I knew from the get go that buying Aol and Yahoo were really stupid moves. Billions of dollars being played with here, the people who made the call to buy these companies should be held personally responsible for this absolute failure that could be seen from the very instant it was considered. Aol and Yahoo should have been left to die on their own.
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Goodwill in finance terms is an asset maintained on the balance sheets that represents a company's brand/customer relationship value.

Goodwill is an intangible asset associated with the purchase of one company by another. Specifically, goodwill is recorded in a situation in which the purchase price is higher than the sum of the fair value of all identifiable tangible and intangible assets purchased in the acquisition and the liabilities assumed in the process. The value of a company’s brand name, solid customer base, good customer relations, good employee relations, and any patents or proprietary technology represent some examples of goodwill.
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The Verizon buying of yahoo is still baffling to me.

There was a poison pill built into almost every contract for the employees at a certain level and they made out like bandits when they were acquired and laid off. It was so bad they all wanted to be laid off because the bonus was much better than staying with VZW.
 
Whaaat? Purchasing Yahoo! for $5 billion was a bad move? Who could have foreseen that??? More baffling than the demise of the pet rocks!
 
Wondering if those in charge of making the purchase decisions may or may not have had their pockets padded after the sale from AOL or Yahoo.
 
arnemetis said:
I can't say I understand what a goodwill impairment charge is, but I knew from the get go that buying Aol and Yahoo were really stupid moves. Billions of dollars being played with here, the people who made the call to buy these companies should be held personally responsible for this absolute failure that could be seen from the very instant it was considered. Aol and Yahoo should have been left to die on their own.
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That is what should happen. Most likely, the executives responsible will resign "To pursue other exciting opportunities." or "To spend more time with family." With their bank accounts swollen with many millions as a reward. Even if fired, most will have contracts specifying a termination payout. This habit is so prevalent in current corporate practice that the still twitching parts of the mostly dead zombie Sears Holding company wants to pay several of the current executives millions in bonus money.
 
Hey, considering Verizon was too continue rolling out their FIOS service with all the money they received but did not do so at all, all well keeping the money...…. :rolleyes:o_O
 
Dead Parrot said:
That is what should happen. Most likely, the executives responsible will resign "To pursue other exciting opportunities." or "To spend more time with family." With their bank accounts swollen with many millions as a reward. Even if fired, most will have contracts specifying a termination payout. This habit is so prevalent in current corporate practice that the still twitching parts of the mostly dead zombie Sears Holding company wants to pay several of the current executives millions in bonus money.
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its a weird place to be. from the other side can you imagine trying to prosecute these guys, with 12 idiots deciding what a "good" business decision is? Half of the people that can get off work/home life for jury duty would be 80 year olds who would think aol and yahoo were great buys.
 
ecuador said:
Whaaat? Purchasing Yahoo! for $5 billion was a bad move? Who could have foreseen that??? More baffling than the demise of the pet rocks!
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Just think about how lucky Microsoft was to dodge that $45 billion bullet a few years ago, mostly due to Yahoo’s CEO and board being complete idiots IIRC. At least back then, Yahoo had a huge stake in Alibaba so maybe it would’ve worked out OK if Microsoft bought them, but I think Yahoo sold most of that stake prior to Verizon purchasing them.
 
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bad management decisions caused this...

meanwhile, lets continue to ban porn on Tumblr, and have Huffpost dominate Yahoo News.
 
purple_monster said:
80 year olds who would think aol and yahoo were great buys.
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one of the things that really made me sit up and go WTF?!?!?! was when a spam service we use for our clients had an issue with AOL emails around business tax time. we had several people who were sending very confidential tax info via their personal AOL emails.. and i was like WTF are you still using AOL for??
 
This just means they have not been properly evaluating the assets for impairment. You generally don't suddenly need to write down 4.6 billion.
 
arnemetis said:
I can't say I understand what a goodwill impairment charge is, but I knew from the get go that buying Aol and Yahoo were really stupid moves. Billions of dollars being played with here, the people who made the call to buy these companies should be held personally responsible for this absolute failure that could be seen from the very instant it was considered. Aol and Yahoo should have been left to die on their own.
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It's when you admit the amount you paid above a company's book value (aka goodwill) was money flushed down the toilet and your acquisition wasn't in fact worth the inflated price you paid.
 
I have Frontier FiOS and was a Verizon FiOS customer since 2007 when I first moved to Texas. I can tell you Verizon has made off like a bandit with so many mega moves they think they can't make a mistake. Both Frontier and Fairpoint absorbed HUGE portions of Verizon's debt as part of their deals. Way more than the 5B Verizon paid for Yahoo. The CEOs of Frontier and Fairpoint that agree to take Verizon's debt are the true criminals. Verizon's just a squirrel trying to get that nut. It's like blaming the guy you caught bangin' your wife instead of your wife.
 
I understand the hate for AOL and Yahoo but to call it a bad acquisition is very debatable. Yahoo still has around 227.8 million monthly active users with some 26 billion emails sent daily. That's not worth nothing and if you can use advertising against that I'd be interested to see what revenue it's pulling in. Add about 5 million still using AOL dial up also.

I have to imagine Verizon knew what they were doing but maybe it wasn't worth that much? No one here can really make that call but let's all act like we know how dumb that buyout actually was. *SMH*
 
Rahh said:
I understand the hate for AOL and Yahoo but to call it a bad acquisition is very debatable. Yahoo still has around 227.8 million monthly active users with some 26 billion emails sent daily. That's not worth nothing and if you can use advertising against that I'd be interested to see what revenue it's pulling in. Add about 5 million still using AOL dial up also.

I have to imagine Verizon knew what they were doing but maybe it wasn't worth that much? No one here can really make that call but let's all act like we know how dumb that buyout actually was. *SMH*
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"Verizon's Media business, branded Oath, has experienced increased competitive and market pressures throughout 2018 that have resulted in lower than expected revenues and earnings. These pressures are expected to continue and have resulted in a loss of market positioning to our competitors in the digital advertising business. Oath has also achieved lower than expected benefits from the integration of the Yahoo Inc. and AOL Inc. businesses. As a result, the Company expects to record a non-cash goodwill impairment charge of approximately $4.6 billion ($4.5 billion after-tax) in the fourth quarter of 2018. The goodwill balance of the Oath reporting unit was approximately $4.8 billion prior to the incurrence of this impairment charge."

Yahoo's big value in the past decade was when they owned a huge chunk of Alibaba, and that's around the time Microsoft tried to buy them. Once they (Yahoo) divested themselves of that and Marissa Mayer had time to literally do nothing to improve their position, their value went way down. Of course, Verizon only paid $4.8 billion which I suppose is pocket change for them. Still though, the underlined text above indicates that Verizon didn't really realize how worthless the combination of AOL and Yahoo would be. Poor execution on their part? Perhaps.
 
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arnemetis said:
I can't say I understand what a goodwill impairment charge is, but I knew from the get go that buying Aol and Yahoo were really stupid moves. Billions of dollars being played with here, the people who made the call to buy these companies should be held personally responsible for this absolute failure that could be seen from the very instant it was considered. Aol and Yahoo should have been left to die on their own.
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Indeed. I don't know why Verizon decided to get onboard those two sinking ships.
 
Dan_D said:
Indeed. I don't know why Verizon decided to get onboard those two sinking ships.
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Because having the opportunity to advertise, collect data, or improve upon 230+ million active monthly users can be a huge profit. Are they utilizing that correctly? Signs point to no but none the less the opportunity is still there.
 
Rahh said:
Because having the opportunity to advertise, collect data, or improve upon 230+ million active monthly users can be a huge profit. Are they utilizing that correctly? Signs point to no but none the less the opportunity is still there.
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It seemed unlikely that Verizon would have seen a return on its investments with either of those two acquisitions.
 
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