Why Yahoo could actually do better under Verizon

Sometime around late 2007, there was a debate raging in the tech world: Is Yahoo a tech company or is it a media firm? Yahoo's executives, however, weren't sure. If this Dot-Com hero was positioned as a media venture, it would certainly temper analyst expectations, perhaps avoid direct comparisons with Google, to whom it lost the search battle long ago. Just when the positioning drama gained momentum, yet another one emerged. Microsoft made an unsolicited $44.6 billion bid to acquire the company. Yahoo thought this price undervalued it majorly. The offer was rejected.

Cut to 2016. American telecommunications company Verizon said it is acquiring Yahoo's core business for nine times less - at $4.83 billion in cash. This, of course, does not include the company's cash, its shares in Alibaba Group Holdings, and its shares in Yahoo Japan (these assets will continue to be held by Yahoo, which will change its name to become a publicly traded investment company).

Nevertheless, one cannot stop pondering over the need to time the market right when it comes to mergers. Exactly when does a company know its value has peaked?

A second lesson is the need for a stable management - Yahoo has seen multiple chief executives, frequent changes in strategy, poor bottom line, and major shareholder tiffs.

Third, were the bets the company made. Yahoo, founded by Jerry Yang and David Filo in January 1994, quickly became a tech darling by becoming a gateway to the Internet in the late 1990s. However, post the Dot-Com burst, it lost much of its value. Some of its key assets such as finance, news, sports, and e-mail services (225 million monthly active users today) remained strong but the company lost the money-spinning search battle. Today, ironically, its most valuable asset is a 15 per cent stake in Alibaba (worth more than $31 billion).

Likely, Yahoo would do much better under Verizon's umbrella. Verizon had acquired AOL last year and together with Yahoo, the telecom company could transition from being a "dumb" network to a content-rich one. It could, indeed, become the third large force in the online advertising market, after Google and Facebook.