Verizon will write down $4.6 billion in value of Oath, the unit that combined AOL and Yahoo assets
- Verizon will write down the value of Oath in the fourth quarter 2018 by $4.6 billion.
- The writedown is the result of competitive pressures in the digital ad business.
- The integration between Yahoo and AOL never achieved the benefits Verizon previously anticipated, according to the filing.
Verizon expects to write down the value of its Oath business by $4.6 billion in the fourth quarter of 2018.
In an SEC filing on Tuesday, Verizon stated the expected writedown is the result of competitive pressures in the digital ad business and an integration between Yahoo and AOL that never achieved the benefits Verizon previously anticipated."The new leadership at both Oath and Verizon completed a comprehensive five-year strategic planning review of Oath's business prospects resulting in unfavorable adjustments to Oath's financial projections," Verizon stated in an 8-K filing.
The Oath business unit - a combination of technology and media assets gained through a 2015 AOL acquisition and 2017 Yahoo acquisition - has seen seismic changes in its roughly one year of existence.
Tim Armstrong stepped down as CEO in October. Armstrong had been at Verizon since it acquired AOL and helped shepherd the acquisition of Yahoo. In his place is former Oath president and COO Guru Gowrappan. The leadership in place at the company has been a revolving door of executives, with three CFO changes and other leadership positions left vacant.
In the third quarter 2018, Oath reported revenue of $1.8 billion, down 6.9% from a year prior. Verizon said it expected revenue to be "flat in the near term" and that it won't meet its previously stated goal of $10 billion in revenues by 2020.
In November, Vestberg reorganized the business that was split between wireless and wireline businesses and created three main business segments: Verizon Consumer Group, Verizon Business Group, and Verizon Media Group. By June 2019, 10,400 employees will leave the company.