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Kagan: Verizon getting back on track after selling AOL, Yahoo

Verizon, like every other company must continually find new pathways for growth going forward. That’s why several years ago they acquired both AOL and Yahoo. I never saw the benefit and thought it was a big mistake. Now, several years later, apparently Verizon CEO Hans Vestberg agrees.

Verizon is selling AOL and Yahoo for about half what it paid. They are selling to the owner of the Venetian casino in Las Vegas. Not sure what they see with this purchase, but at least Verizon can finally wash its hands of this distracting and costly adventure into the land of obscurity.

Hans Vestberg Verizon CEO off to good start

I like what Vestberg has been doing for Verizon since taking over as CEO from Lowell McAdam a few years ago. McAdam took the helm from Ivan Seidenberg. After a rocky start, Verizon saw substantial growth and success from Seidenberg.

As the wireless and telecom industry continued to grow and change, it was clear that every player in the wireless, telecom, Internet, pay TV space and more were not only growing, but entering each other’s industries.

That meant even if a company is successful today, they must continue to change and expand and start their next growth waves to be successful tomorrow.

Growth Wave impacts every wireless carrier

This is the Growth Wave, or Growth Curve I always talk about. Every company, product and service ride a Growth Wave. At any point in time, they are either on the upward, growth side of the curve, or they have crested, or worse they are on the falling side.

This mistake negatively impacted many companies including Motorola, Blackberry, Nokia and more. And they paid a significant price for not creating the next growth wave.

This was the challenge Verizon faced along with others like AT&T, Sprint, T-Mobile, CenturyLink, Frontier, Comcast Xfinity, Charter Spectrum, Altice and many others.

Some companies and senior executives made intelligent moves and have seen growth and expansion of their business. Think AT&T Warner Media, Comcast NBC Universal and others.

Others stayed in their lane and have seen their growth limited, even slowing. Still others tried other ideas and failed.

Verizon ignored the Growth Curve for far too long

That’s where Verizon fits into this story.

They were and are a strong wireless company, but they had a limited area of practice. They needed to expand. They needed to prepare for growth going forward. They needed to create the next growth wave or two or three. They needed to be like Apple, Google, Facebook and others.

Past Verizon CEO Lowell McAdam told CNBC several years ago that we should not expect growth from Verizon for at least several years. That said Verizon was lost at that time.

A company is always moving. Either moving forward or backwards, but always moving.

Over time McAdam acquired AOL and Yahoo. Verizon never really articulated their vision… who they wanted to become. They still seemed lost.

Theories were, they wanted to become the next Google or Amazon.com. They saw significant growth potential in the new world of technology which was transforming our world. They wanted to play a role in this transformation.

This was the kind of bold move leaders need to make. I applaud them for that. However, not all decisions are successful.

The chances of success seemed nearly impossible to me. Yet, this was the path they took.

Verizon spent a fortune on AOL and Yahoo. However, in the years since this investment never really panned out. There was no growth. No transformation.

Company leadership should understand the Growth Wave theory. Companies need to be constantly throwing ideas against the wall. Whatever sticks, build. Whatever doesn’t, walk away from.

The success secret is really that simple.

To survive and grow, companies must stay on Growth Wave

When one company makes acquisitions, they need to make sure what they are acquiring is on the growing side of the Growth Curve. They want to avoid acquiring a company which has crested or worse, falling. Turning around a failing company is like trying to catch a falling knife.

Vestberg saw the path that Verizon was on with AOL and Yahoo and decided it was not sustainable. This is exactly what I said when this journey started.

So, I am very happy that Verizon under the leadership of Vestberg is focusing on their core wireless services.

That being said, the need to expand is still there. So, I look forward to watching Vestberg, the moves Verizon makes going forward, and discussing the changes he has in mind as CEO. Stay tuned.

ABOUT AUTHOR

Jeff Kagan
Jeff Kaganhttp://jeffkagan.com
Jeff is a RCR Wireless News Columnist, Industry Analyst, Key Opinion Leader and Influencer. He shares his colorful perspectives and opinions on the companies and technologies that are transforming the industry he has followed for 35 years. Jeff follows wireless, wire line telecom, Internet, Pay-TV, cable TV, AI, IoT, Digital Healthcare, Cloud, Mobile Pay, Smart cities, Smart Homes and more.