The telecommunication giant is planning on buying on the internet search engine giant as it would help it grow with the help of AOL.
Lowell McAdam, the chief executive officer and chairman of Verizon Communication has shown interest in buying the ever struggling Internet search engine giant Yahoo! Inc. The CEO talked about biding on the search engine company in talks with CNBC’s Jim Cramer from on “Mad Money”. It was about time a knight in shining armor rescued the failing business.
Lowell believes that if the telecommunication company decided to take over the struggling giant it was just to enhance its business operations. While showing interest to Jim Cramer at ‘Mad Money’ the CEO further stated this acquisition would be completely in line with the telecom corporation’s three tier strategy which includes ‘developing platforms to increase subscriptions’, ‘with the help of establishing greater connectivity expanding its business’ along with ‘owning content that facilitates the ecosystem’.
Previously, the wireless network corporation had acquired AOL at a price of $4.4 billion in a buyout in May 2015 and it believes that buying Yahoo! Inc. would prove to be quite beneficial for the business as its assets along with AOL could combine under a joint leadership. Previously, rumors of Verizon buying the search engine business has surfaced, which the telecom business completely denied but looking at the interest that Lowell showed in the company clearly justifies those rumors.
The telecom giant is indeed interested in buying Yahoo as it would help the company grow further in terms of mobile advertising and live video streaming on cellphones. The buying out news makes more senses as the search engine business recently posted lower than expected earnings results for the fourth quarter and almost zero growth under the supervision and leadership of the current chief executive officer, Marissa Mayor.
According to the earnings report for the fourth quarter, the internet giant reported a decline of 15% in the revenue generation which amounted to over $1 billion. The analysts at Wall Street had hoped that the company will report fairly acceptable figures for the quarter but it failed to do so and performed below the expectations which ultimately questioned the CEO’s plan on turning things around for the corporation. These declining numbers simply forced Marissa Mayor to cut the company’s workforce by as much as 15%.
At this point in time, this potential acquisition deal does not seem like a bad idea at all as it might work on in the favor of the both the companies. Even though Yahoo! Inc. has managed to underperform for a long time and has lost much of its credibility in the face of Google and Microsoft Corporation, it still remains in the household of over 200 million monthly active users.
On the other hand, Verizon stock is being traded at a share price of $50.04 which indicates a decline of 1.82%. During the previous trading session, the highest level at which the stock price was seen at was $50.80 and the lowest at which the share price was seen at was $50.02. The 52-week high was reported to be $51.20 and the one year low was reported to be $38.06. Additionally, the earnings per share reported by Verizon was $4.37 with a price to earnings ratio of $11.45.
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