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Tech History Broken As Yahoo Sells To Verizon For $5 Billion

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Tech History Broken As Yahoo Sells To Verizon For $5 Billion

Yahoo was once considered to be a king of sorts when it came to the internet.

It was seen as a behemoth worth $125 billion and comparable to the greatness that Google and Facebook are engaging in today.

However, it is now being sold to Verizon for mere change.

As shown below, the speculation that preceding the deal led to an increase in value for the shares around Yahoo:

Yahoo! Shares | Tech History Broken As Yahoo Sells To Verizon For $5 Billion

Yahoo made an announcement on Monday Morning regarding their future.

There had been a long and tedious process, but it had finally concluded with the decision to sell Yahoo’s core operating business to Verizon for just under $5 billion in cash.

Though it came after Yahoo had created a mess of their doing and were attempting to extricate from it, this transaction, unfortunately, marks the end of the independence of one of the most iconic pioneering companies in Silicon Valley.

Marissa Mayer, the seventh, as well as final, CEO of Yahoo, is reported to depart following the conclusion of the deal.

She will receive a severance pay worth upwards of $50 million.

The sale with Verizon will cause Yahoo to unite with another fallen internet king.

Last year, Verizon bought AOL for $4.4 billion, making it their first web portal purchase.

The largest wireless provider in the United States is betting almost $10 billion that the combination of these two formerly dominating websites will raise it above expectations in both mobile content and advertising technology that can be used to gain leverage with over 140 million subscribers.

Marissa Mayer  announced the news through an email and said that the deal would not only lead to a significant step towards creating a separation between the operating business of Yahoo and Asian asset equity stakes, but it would also create exciting and new opportunities that would speed up Yahoo’s transformation.

She also mentioned that though many separate entities expressed an interest in Yahoo, Verizon was the company to show the most belief in the value that everyone at Yahoo created.

Verizon also revealed that they believed in the power a combination could offer their advertisers, partners, and users.

To focus on Yahoo offers the bigger story today when you think about how it completely squandered its enormous head start by allowing every new wave of technology sweep past it, whether it be in search, mobile, or social.

Compared to what it was ten years ago, Yahoo seems to have remained the same company for the most part as a portal used by hundreds of millions of people all around the world.

Their users rely on Yahoo for a majority of tasks, including basics like news and weather, as well as critical functions that include email or searching.

When the word became indulged in the universe of smartphones and mobile apps, the advantage that Yahoo had held over the desktop battleground started to fade away.

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To give a history, Yahoo commenced in 1994 under the name Jerry’s Guide to the World Wide Web, which was essentially a compilation of websites curated by two students of Stanford University, Jerry Yang and David Filo.

This list grew at a fast pace due to the millions of Americans that began to turn on dial-up Internet connections.

When people set up these internet connections, they desired a homepage that could direct them to all of the destinations that they deemed essential and visited frequently.

The website went public in 1996 and gained popularity until it rose to astounding heights, eventually reaching their peak of $500 per share in January of 2000.

A share during today’s post-split calculations would equal around $125.

This is major because internet usage shot up during the following years, as shown in the graph below.

Internet users in the world | Tech History Broken As Yahoo Sells To Verizon For $5 Billion

However, Yahoo missed a crucial opportunity by not choosing to convert the website into something greater than just a portal.

With their early lead and millions of users, it could have been something huge.

At the peak of the bubble, Yahoo spent $5.7 billion on buying Broadcast.com, as well as $4.5 billion to buy Geocities.

It was reported that they later destroyed their chance to buy early versions of Facebook and Google, websites that are now thriving in the technological world.

Yahoo’s particular search offering holds a mere fraction of the market currently, though they tried to make up for missing out on buying Facebook by purchasing another social network, Tumblr.

This eventual purchase did not help them.

You can see Tumblr valued by Yahoo here.

During the last four years, Mayer, who is a former executive for Google, attempted to take control of Yahoo and put them back on the playing field.

Sadly, her tenure was unsuccessful due to confused strategy and unfortunate mismanagement.

When the iPhone came out, revenue peaked the year after in 2008, but traffic has maintained a steady decline as users continually find that their attention is drawn to newer and more relevant apps and websites.

When Jerry Yang made the risk of betting $1 billion on Alibaba in 2005, it managed to keep Yahoo afloat and successful enough to stay alive.

That move bought 40% in what would eventually turn into China’s e-commerce leader.

Over time, Yahoo made the decision to sell parts of the holding, but its current stakes remains at a worth of over $30 billion at prices today.

This investment ended up being so abundantly successful that it became worth much more than the flagging core business of Yahoo.

In 2015, management at Yahoo mapped out a tax-free spin-off for its stake in Alibaba, a plan that would unlock shareholder value.

However, they canceled the move at the last minute due to the IRS refusing to offer its blessing for the action.

Yahoo has since been evaluating other strategic means and alternatives with a long auction process lasting months that would benefit its core business.

This process has earned headlines, as well as constant speculation and questions.

The sale will not contain Yahoo Japan or the company’s stakes and holdings in Alibaba.

While many experts have been certain for a long time that Verizon in the frontrunner, others put in bids.

Dan Gilbert and Warren Buffett, both billionaires, pledged their support to one offer while the parent company of Yellow Pages, as well as a private equity firm called TPG followed suit.

In the final accounting, however, Verizon reigned victorious in snagging Yahoo’s technology and web properties for a relatively low price, 22 years following inception.

Some say that the end of Yahoo is an ironic one.

While the consumer web opened and allowed the portal to be a sort of online superpower, Yahoo is now destined to be consumed by a company that allows a higher number of users to access the Internet daily from anywhere in the world.

These figures are greater than the founders of Yahoo could have ever anticipated or dreamed about when the website first launched.

Conclusion

Yahoo started out as a simple web portal.

It has since become a great internet powerhouse used for searching, gaming, and weather and news updates.

Some say the fall of Yahoo is due to poor buying choices by the company, including passing up young versions of Facebook and Google.

Yahoo’s shares were plummeting since the beginning of 2015, as the graph below indicated.

However, these numbers were growing after there was speculation that Verizon would purchase Yahoo to combine with AOL, a fact that was announced in the last week.

Yahoo! NASDAQ | Tech History Broken As Yahoo Sells To Verizon For $5 Billion

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Trump Says Economy ‘Roaring Back’ in June As 4.8 Million Jobs Added

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Trump Says Economy ‘Roaring Back’ in June As 4.8 Million Jobs Added

The economy added back 4.8 million jobs last month, according to the government’s June jobs report released yesterday. That handily beat the 3.7 million jobs forecasted by economists and dropped the unemployment rate down to 11.1%.

After the report was released, President Trump said the economy was “extremely strong” and “roaring back” after the country has regained more than 7.5 million jobs in the last two months. Trump added that the economy will keep growing unless voters elected Democrat Joe Biden in November. He said Biden would raise taxes and hurt the economy and the stock market would “drop down to nothing.”

Jobs Added

Of the jobs added back in June, bars and restaurants hired – or rehired – 1.48 million workers. This comes as many reopened for outdoor dining in the early phases of the reopening. They brought back a similar number of workers in May. It happened after shedding more than 6 million jobs due to the pandemic.

The retail sector regained 740,000 jobs, healthcare added back 358,000 workers, and manufacturing saw 356,000 jobs added.

The energy sector continues to be battered by low oil prices amidst the economic slowdown. Additionally, that industry shed an additional 10,000 jobs last month.

The return of lower-paying jobs like those found in the restaurant and hospitality industry dragged down the average hourly wages for the second straight month.

Many are cautioning against reading too much into reports like average hourly wages while the economy is in such turmoil.

Stephen Stanley, chief economist of Amherst Pierpont Securities, says, “The wage figures will be pretty much useless for a long while until the labor market gets back to some semblance of normality.”

Andrew Chamberlain, chief economist of the job site Glassdoor, also gave an explanation. He added, “Today’s positive jobs report does provide a powerful signal of how swiftly U.S. job growth can bounce back and how rapidly businesses can reopen once the nation finally brings the coronavirus under control — a reason for optimism in coming months.”

Looking Forward

Unfortunately for many of the workers recently rehired to work in bars and restaurants, the recent spike in new coronavirus cases could lead to those jobs quickly being lost for a second time. Bars in many states are being shut down again in an effort to curb the growing number of cases.

The unemployment rate fell for the second straight month. However, the Bureau of Labor Statistics is trying to fix a reporting error that, if corrected, would increase the unemployment rate by 1%.

The problem is how households respond to the monthly survey that is used to calculate the unemployment rate. The jobless rate would have been 1 point higher if not for continued problems in how respondents answer the question about their employment status.

What many consider the “real” unemployment rate, which is the U6 rate, includes workers who can only find part-time jobs. It also includes those who’ve become too discouraged to look for jobs because so few are available. Using that measurement, the unemployment rate stands at 18% in June, down from 21.2% in May.

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Trump Favors Larger Stimulus Checks, Says ‘Tremendous’ Market Crash if Biden Wins

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Trump Favors Larger Stimulus Checks, Says ‘Tremendous’ Market Crash if Biden Wins

In a wide-ranging interview with Fox Business News, President Trump mentioned his support for another round of stimulus checks and says should Joe Biden win the election in November, we should expect the stock market to crash “a tremendous amount.”

On Stimulus Checks

Speaking with Blake Burman, the president says he is in favor of another round of stimulus checks, but wants to make sure that there is a financial incentive for Americans to return to work.

“I support it, but it has to be done properly. I support actually larger numbers than the Democrats, but it’s got to be done properly. We had something where it gave you a disincentive to work last time. And it was still money going to people, and helping people, so I was all for that. But we want to create a very great incentive to work.”

Trump also mentioned he wants the checks to arrive quickly and spent quickly, without the Democrats adding complications.

“I want the money getting to people to be larger so they can spend it, I want the money to get there quickly and in a non-complicated fashion. And they wanted to make it too complicated, also it was an incentive not to go to work,” said Trump.

Returning to work is what hard-working Americans are looking forward to, says Trump, and he wants there to be a financial incentive to do so.

“You’d make more money if you don’t go to work. That’s not what the country is all about. And people didn’t want that. They wanted to go to work but it didn’t make sense because they make more money if they didn’t… we want people to get out and we want to create a tremendous incentive for people to want to go back to work.”

On Biden and Taxes

When asked about Joe Biden’s recently announced plans to raise corporate taxes if he becomes President, Trump said “You’re going to crash the market. 401(k)s will be down the tubes, the wealth of the country will be down.”

He added “That will kill the market. It will kill everything we are doing, it will kill jobs, and it will be very bad. Frankly, the stock market is doing well, but it’s an overhang. If he got elected, and they say this, that’s an overhang over the market, because the market would crash. Would absolutely crash.”

When asked what he means by crash, Trump responded, “Markets would go down by tremendous amounts. He’d raise taxes, he’d raise regulations. Look, one of the biggest things I’ve done is I’ve cut regulations more than any President in history. We still have regulations, but they’re much less. His people, the people around him (Biden) are radical left. They’re going to raise taxes, they’re going to raise regulations, and they’re going to put everyone out of business. It would be a disaster.”

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Fed to Keep Rates At Zero, Worried About Market Crash Later This Year

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Fed Will Keep Rates At Zero, Worried About Market Crash Later This Year

The Federal Reserve will keep rates at near zero percent for the foreseeable future. Also, a few members feel worried about a second wave of the coronavirus crashing the markets later this year. These are according to the minutes of the June 9-10 meeting.

Near-Zero Rates

Federal Open Market Committee members voted to keep the benchmark short-term borrowing rate in a range of 0%-0.25%. They also said that, until the economy “had weathered recent events,” they would keep it there. Without providing specifics, the notes also mention that “a number” of members believe there is a high probability of additional “waves of outbreaks” of the coronavirus.

This worry over additional outbreak waves and the economic damage it could bring led the FOMC committee to downgrade their economic outlook from the April meeting. The said meeting had predicted a more benign baseline forecast.

The members also indicated that they will begin providing the markets with stronger guidance about future interest rate moves. However, Fed watchers don’t expect the committee to begin providing this guidance any earlier than the September meeting.

“In particular, most participants commented that the Committee should communicate a more explicit form of forward guidance for the path of the federal funds rate and provide more clarity regarding purchases of Treasury securities and agency [mortgage-backed securities] as more information about the trajectory of the economy becomes available,” the minutes said.

Milestones and Metrics

The committee also discussed what milestones they will use to determine an appropriate time to start raising interest rates. When they did, the metrics proposed has split the committee.

In 2012 for example, the Fed said it would keep rates at zero until the unemployment rate fell below 6.5%. Alternatively, they also said it would keep zero rates until the inflation goes above 2.5%.

In June’s meeting, a “number” of members said any interest rate increases should be tied to the Fed’s 2% inflation target. Meanwhile, a “couple” favored using the unemployment rate. A “few” members suggested the committee set a specific date.

The FOMC also released its expectations for GDP over the next few years. The median GDP projection for 2020 was a contraction of 6.5%. A 5% increase in 2021 and a 3.5% in 2022 will follow this. However, they acknowledged “that there remained an extraordinary amount of uncertainty and considerable risks to the economic outlook.”

Trump on Powell

Meanwhile, there’s a bit of good news for Federal Reserve chairman Jay Powell. It appears he has slowly won over his most vocal critic, President Trump.

During an interview on Fox Business News, Trump said Powell has “stepped up to the plate” and he’s happy with Powell and Treasury Secretary Steve Mnuchin for the work they’ve done to help the economy recover.

“I would say that I was not happy with him at the beginning, and I’m getting more and more happy with him, I think he’s stepped up to the plate. He’s done a good job, he’s had to liquify a little bit, let us liquify, put out the money that you needed, and I would say over the last period of 6 months he’s really stepped up to the plate.

“I can tell you I’m very happy with his performance, and Steve Mnuchin, I think they’ve both done a very good job, they’re working together very closely.”

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