Yahoo (YHOO) keeps hacking Verizon Oath right between the eyes, over and over again. Over the last year or two, Verizon (VZ) and Yahoo danced around trying to merge, and they finally did it. During that time, there was warning flags waving in the wind right in front of their eyes. With all the chaos, I warned Verizon not to go near Yahoo. I warned the problem could only get worse. That it would get in the way of Oath.
However, they didn’t listen. Today, Verizon now owns Yahoo and they now own this massive and growing Yahoo hack problem.
All Verizon wanted to do was buy their way into the marketplace and quickly become the next growth giant like Google (GOOGL) or Amazon.com (AMZN) with their new Oath. They acquired AOL to get their hands on their users. They targeted Yahoo for the same reason. They thought if they could just acquire users, they could quickly transform them into customers and transform Verizon itself.
The reason was simple. They had to maintain shareholder interest. Shareholders are only interested in growth. So, every few years companies need to start their next growth wave. It’s like ten years ago when the iPhone and Android growth wave started. Now wireless carriers need to find new areas of growth. Verizon chose Oath.
Verizon wanted to acquire lots of users they could turn into customers rather than build their way there. That’s why they acquired AOL and Yahoo!
However, this path doesn’t seem to be working out. They wanted Oath to attract customers. They wanted to start selling things to customers like Internet giants Amazon, Google and others. They wanted to create an atmosphere to attract many more users.
This was completely out of their area. Their core area was communications like telephone, wireless and Internet. They got all caught up in their big dreams. However, they didn’t want to take the time to build that business over time. They wanted to buy their way into the business by acquiring companies like AOL and Yahoo! That’s where the trouble started.
Marni Walden Verizon EVP Stepping Down
I feel bad for Marni Walden, Verizon EVP and president of Global Media who will step down from her post at the end of this year. She is the Verizon exec who was leading Oath and is now falling on the sword. She was one of many key executives who bought into this black hole called Yahoo which turned out to be much more than Verizon could chew.
This problem wasn’t a Verizon problem. It was a Yahoo problem. But Verizon acquired Yahoo and now it’s their problem.
Verizon knew exactly what they were buying when they acquired Yahoo. There were so many hacking problems the marketplace thought the deal was dead. It should have been. They should have walked away.
This new problem is just more icing on the cake. There were already knowledge of hacking and they kept getting worse over time, but Verizon acquired them anyway. And that was their big mistake.
Big Verizon Oath Mistake Was Acquiring Yahoo!
I warned them in columns and media interviews, to walk away from this nuclear meltdown. I was confused why in the world Verizon wanted to acquire customers so badly. Customers who were damaged by hacking. Angry customers. Customers who would not help them grow. And this would likely only get worse, not better.
Bottom line, they knew about the growing hack problem with Yahoo. They didn’t care. They jumped into the water anyway. Now they learn this is a pot of boiling water and they are now being cooked!
So, what’s next for Verizon and Oath? They are a big company. They will survive. However, they are now badly burned and it will take a long while to recover. They are not the same company they were five to ten years ago. They have grown and changed like every other competitor. They can recover if they do the right things going forward. Will they? That’s the question. I hope so, because I want to write good things about them going forward. But it’s all up to them.
Jeff Kagan is an Equities.com columnist. Kagan is a Wireless Analyst, Telecom Analyst, Industry Analyst, speaker and consultant. He follows wireless, wire line, telecom, Internet, cable TV, IPTV, Cloud, Mobile Pay, FinTech and communications technology. Email him at [email protected]. His web site is www.jeffKAGAN.com. Follow him on Twitter @jeffkagan.
