The acquisition of Yahoo, one of the most well-known but troubled Internet giants finally came through after multiple roadblocks. Once Verizon finalized the transaction, it was declared that the combined entity of Yahoo and AOL (which it already owns) will be simply named — Oath.
All this happened back in early April, so fast forward two months and fresh reports now suggest that the said merger is resulting in massive layoffs at Verizon — or more specifically, Oath. According to a report in Recode, the number of layoffs could peak up to a thousand employees as Verizon moves ahead with its decision to build a completely new media division at the company. This means the merged entity will hand out pink slips to almost 20 percent of the combined workforce.
The adoption of this strategy is nothing new or surprising. We already expected the merger of Yahoo and AOL to ultimately result in a lengthy list of redundancies across several verticals such as human resources, finance, marketing and general administration. This is because certain roles under the umbrella brand will now have double the workforce than required by the company. Thus, the one and only way will be to get rid of the redundant staff.
In a statement sent out to The Street, an AOL spokesperson did not directly comment on the massive layoffs but acknowledged the fact that changes at the merged entity are currently underway. The spokesperson further added:
Consistent with what we have said since the deal was announced, we will be aligning our global organization to the strategy.
As for the combined entity, Oath branding has been described as more about creating a brand that could sustain and support both AOL and Yahoo, rather than creating a all new name in the field. This new division will be headed by AOL CEO Tim Armstrong as Marissa Mayer, the CEO of Yahoo, has walked out with a handsome reward package totaling around $200 million.
The U.S-headquartered telecom major picked up the core assets of Yahoo for a hefty $4.48 billion, which is a discounted price on the original transaction price. This was the case because Yahoo had suffered some major setbacks just after its acquisition deal with Verizon was announced publicly.
The Internet giant revealed that its email servers had been compromised not once but thrice and the cookies data was used to gain access to personal user accounts. Over 32 million accounts were compromised whereas the data of about a billion Yahoo users was lifted off by the hackers back in 2013.
And Verizon thought that the effects of these breaches would be material to the users and it was mulling to let go of the transaction completely. But, the telecom giant pursued a discount on the original price and settled for $350 million less due to the materialistic effects of the security breaches. This transaction includes Yahoo’s search, content, ad-tech, and mail-related businesses. And now, it will operate as Oath under the telecom giant, whose working will be kept a close
