When Verizon (VZ) chose to christen its media and advertising arm as Oath – which houses struggling tech brands AOL and Yahoo which joined the company in the recent past – the new venture and its unconventional name had evoked mixed reactions.
However, the muted performance of Oath since it was created a few months ago proved the skeptics right, to some extent. Less than a month after CEO Hans Vestberg dismissed rumors of a possible spinoff, Oath suffered a setback Friday when its CEO Timothy Armstrong reportedly announced plans to leave the company by next month.
The muted performance of Oath since it was created a few months ago, combining AOL and Yahoo, proved the skeptics right
The exit of Armstrong, who has been tasked to reorganize the fading brands and develop them into a major digital content platform in the lines of Google (GOOG) and Facebook (FB), is likely to cast a shadow over the growth prospects of Oath.
Meanwhile, a statement from the company said Oath will be integrated into the rest of the business, putting speculations of a spinoff to rest. After joining the Verizon team as the CEO of AOL, which was added to its fold about three years ago, Armstrong played a key role in the acquisition of Yahoo a year later.
A spinoff would have benefited Armstrong, who had been keeping a low profile ever since his involvement in the daily activities of Oath was curtailed considerably following a recent reorganization.
Recent developments clearly indicate that Verizon is currently treading a different path to take forward its media and ad business, rather than following the conventional strategy adopted by rivals like AT&T (T). One of the reasons behind the policy shift could be disillusionment over the tedious task of gaining a foothold in the ad and media industry currently dominated by the Silicon Valley tech giants.
Ending a long-drawn slump that began in January, Verizon shares hit the recovery path in May and pared most of the losses. The stock is currently trading close to the levels seen at the beginning of the year.