Verizon’s 1st move with Yahoo: Ditch 2,100 jobs

Yahoo’s shareholders Thursday approved the $4.5 billion sale of its key businesses to Verizon.

NEW YORK » About 2,100 jobs are on the chopping block as Verizon prepares to combine Yahoo and AOL for a digital advertising offensive.

Yahoo’s shareholders Thursday approved the $4.5 billion sale of its key businesses to Verizon. The deal is expected to close by Tuesday. AOL and Yahoo will cut 15 percent of the 14,000 workers they now employ, or about 2,100 jobs, said a person familiar with the matter who requested not to be identified discussing the cuts.

Verizon has a simple goal in buying Yahoo’s core business: It wants to challenge Google and Facebook in the huge and lucrative field of digital advertising. But Verizon faces its own challenge in doing so, given that it will be competing against a slew of other companies also looking to break in.

Verizon wants to become a strong third choice for advertisers by adding Yahoo’s popular sites and billion users worldwide to its own media business, which includes AOL and Verizon’s home-grown go90 video service. It can place ads on those sites, and can also combine data from visitors to those sites with AOL’s ad technologies and sales teams, and possibly also personal data from Verizon mobile customers such as location and other information, in order to better target ads at individuals.

Verizon has programs that use mobile-customer data for targeted ads and may combine that with data gathered by AOL and Yahoo. Verizon says customers can choose whether to participate.

Yahoo and AOL are “positioned to do better together than apart,” Pivotal Research Group analyst Brian Wieser said.

But he is setting the bar low. While Verizon talks of growth from the deal, Wieser said “not declining would be a success. Five years from now, if the combined entity were the same size as it is today, I would consider that to be successful.”

Verizon sees online ads — particularly targeted ads — as a potential new source of growth as the wireless industry fights for U.S. users with lower prices and other discounts. Verizon has “essentially turned into a no-growth business,” said CFRA Research’s Angelo Zino. The ad business would be a “big deal” for Verizon if it goes well, he said.

Tim Armstrong, the former Google executive who joined AOL as CEO in 2009, has for years wanted to combine AOL with the long-declining Yahoo. Although AOL has big-name properties such as HuffPost and Engadget, it hasn’t been as big of an online destination as Yahoo’s mail, finance, sports and other properties.

The combined business, to be called Oath, will expand its news, sports, entertainment, finance and lifestyle coverage. Like everyone else, Oath will focus on video and mobile, where consumers increasingly spend their time online.

Armstrong says he wants Oath properties to be a place consumers “come and visit every day” and predicts users growing to 2 billion from 1.3 billion by 2020, with annual revenue of $10 billion to $20 billion from roughly $7 billion today.

Lowell McAdam, CEO of New York-based Verizon, teased last month that this could set the stage for a new streaming video service, competing with the slew of internet-TV services already out there. Verizon already has a free mobile video service, go90, that isn’t well known.