It's defensive. I think Verizon (VZ) had to do a deal. People keep looking at this Yahoo-AOL deal as something that bails out Yahoo or that is about a chance to steal a company that's not working well. I think defense is what matters.
Look, Sprint (S) reported a smashing quarter today. This company had its highest first-quarter postpaid net additions. It had its lowest postpaid phone churn. It added 180,000 subs. It had $2.7 billion increase in cash flow year over year.
I have to admit I have been a skeptic. But those numbers are incredible. At the same time T-Mobile TMUS has been doing incredibly well, taking and creating new subs. AT&T (T) bought DirectTV and that was an aggressive act that seems to be paying off.
Now it is true that Sprint CEO Marcelo Claure is correct in saying that user-generated content is the home run. YouTube, Facebook (FB) , Instagram -- they are the holy grail of cellphone use.
But I think that Verizon can give Tim Armstrong a chance to roll up editorial all over the place and really offer a channel that you want that can help sell Verizon cellphones and shore up any losses that might come from renewed competition from the other three. Go listen to Sprint's Claure and you know this company is NOT going away.
I think Yahoo is undermanaged and with Armstrong at the helm that can all change. Let's say that Armstrong decides to brand the company as HuffPo and buys other media properties. It's a defense that might work.
It's time that people put this deal in the perspective that Verizon CEO Lowell McAdam did when he was on "Mad Money" back in February when he said that at the right price this could be strategic for Verizon. Strategic means big think, not afterthought. This move will give Verizon something special. Sure, journalism might be a commodity. But let's play it out. Let's say that McAdam and Armstrong decide they want to own the sports vertical. They can buy the NFL rights for all international and have a game every Sunday. Let's say you have to take a Verizon phone to get that game. How big is that?
Remember, Sprint's breathing down everyone's neck. AT&T has the NFL ticket. T-Mobile has John Legere and his guerilla marketing.
This is how Verizon stays ahead. It's genius and it's necessary, too.