Yahoo to become Altaba, Marissa Mayer to become Scapegoat?

Everything is looking up for investors after the latest acquisition announcement, following months of speculation.

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Yahoo! (NASDAQ:YHOO) is to split in half in the Verizon Communications (NYSE:VZ) takeover, with one side of the board staying and the others leaving to take a new path. CEO Marissa Mayer, who has been at the helm for five years, since 2012, will resign when the sale goes through. Yahoo’s digital services, including email, websites, mobile apps and advertising tools, will go to Verizon. $4.8 billion later, Altaba will become an investment company. According to CBC News, the “new name is meant to reflect Yahoo’s transformation into a holding company for investments in China’s e-commerce leader, Alibaba Group, and Yahoo Japan”.

Many have claimed Mayer’s only mistake was accepting the job in the first place. Indeed, tech forecaster Paul Saffo says it “was a suicide mission.” But this is all a far cry from the welcome reception she received on being named chief executive officer. Mayer said she would stay but has jumped ship, leaving news sites to speculate about her next move.

Hacks stacked odds against the deal

2016 spelled the beginning of the end for the Mayer era. Major hacks, affecting over a billion users, were announced after the fact. Sensitive personal details were stolen on two occasions, one reported in September and one in December. Despite reports of Verizon being unsure about finishing what they started, it is full steam ahead for the takeover.

Indeed Michael Mahoney, senior managing director at Falcon Point Capital, was proved right. He said “I tend to not feel like these hacks are that big of a deal in the broader scheme of things.. Obviously they can be damaging. But it doesn’t take too long before people forget about it.”

Investor takeaway

Verizon is down 1.72 percent year-to-date. Some will see Verizon’s penchant for ailing companies as a negative and are likely to be cautious until it all plays out.

Yahoo is up 10.14 percent year-to-date and on the day of the filing, the share price reached $41.64. This has continued to rise.

So far the stocks have been performing like opposites; when seen visually on a chart, Verizon shares resemble a bridge, whereas Yahoo!’s resemble a valley, with lows in the weeks leading up to Christmas and then highs when the good news of the buy filtered through to shareholders. Investors will be interested to see how this story develops and whether they are treated to any more twists and turns.

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Securities Disclosure: I, Emma Harwood, hold no direct investment interest in any company mentioned in this article. 

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