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Verizon writes down US$4.6 billion of value of AOL-Yahoo business
[NEW YORK] Verizon Communications Inc slashed the value of its AOL and Yahoo acquisitions by US$4.6 billion, conceding that tough competition for digital advertising is leading to shortfalls in revenue and profit.
The revision of the Oath division's accounting leaves its goodwill balance, a measure of the intangible value of an acquisition, at about US$200 million, Verizon said in a filing. The unit still has about US$5 billion of assets remaining.
Oath, a subsidiary of Verizon, was the vision of former Verizon executive Tim Armstrong, who had led a turnaround at AOL before the telecommunications giant acquired the business. But Mr Armstrong stepped down from his position as CEO of Oath in October, shortly after Hans Vestberg became CEO of Verizon.
Verizon announced this week that 10,400 employees, or about 6.8 per cent of its staff, had accepted voluntary buyouts as part of a cost-cutting campaign. That will result in a charge of as much as US$2.1 billion, which will be offset by a US$2.1 billion tax benefit in the fourth quarter, the phone carrier said Tuesday.