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Verizon Seizes the Zoom Work-From-Home Future in BlueJeans

Verizon Seizes the Zoom Work-From-Home Future in BlueJeans

 Michael Vi | Dreamstime.com

By Thursday, 16 April 2020 01:31 PM Current | Bio | Archive

This time Verizon’s asking, “Can you see me now?”

Verizon Communications Inc. said Thursday that it’s acquiring BlueJeans Network, a privately held videoconferencing rival to Zoom Video Communications Inc., which has become the face of at-home work during this pandemic. But while Zoom has been embroiled in criticism for making misleading claims about how secure its virtual conferences really are, BlueJeans’s big selling point for business customers is its encryption — an added layer of security that Zoom says it’s working to implement.

In mergers and acquisitions, the parties will often go to such lengths as using code names and meeting only in person to help keep the discussions under wraps. In this case, deal negotiations between Verizon and BlueJeans took place over a number of BlueJeans videoconferences, spokespeople for both companies confirmed. The CEOs for Verizon and BlueJeans may not have been able to seal the deal with a handshake, but they can at least say that striking their own transaction over video chat is a testament to the service. Walt Disney Co. Executive Chairman Bob Iger reportedly uses BlueJeans for video calls with staff, too.

The terms of the deal weren’t disclosed, but the price is said to be about $400 million, a person familiar with the transaction told Bloomberg News. (Zoom has a public market value of $42 billion.) That makes it one of Hans Vestberg’s biggest purchases since taking the helm at Verizon in August 2018.

Talks between Verizon and BlueJeans reportedly began late last year. That was before either company could predict that a potentially lethal virus would force a national quarantine in the U.S. and other afflicted countries, making offices suddenly dependent on virtual-meeting software just to stay up and running. Considering that Zoom’s own stock price has more than doubled in 2020, Verizon may be kicking itself for not finalizing the BlueJeans acquisition sooner.

It’s a long-term bet that ties into Verizon’s 5G plans. Offering faster connections over a more robust network goes hand-in-hand with improving videoconference latency and with what may be a new normal for businesses in some regard. (Verizon also cited opportunities for telemedicine and distance learning.)

Still, Verizon’s notoriously poor acquisition track record perhaps behooves it to move carefully when expanding into new lines of business. In 2018, the wireless giant had to write down much of the value of its Oath media and advertising division that was built from its nearly $10 billion in acquisitions of AOL and Yahoo (under the last CEO). Even Verizon’s 5G spectrum play has been puzzling: The company has focused on millimeter-wave spectrum, which provides ultra-fast connections, but because the data can travel only short distances, the airwaves are impractical for use across broad swathes of land in less densely populated areas.

Buying a trusted videoconferencing software would seem to be more of a natural fit for Verizon than its other past non-wireless ventures. (Though perhaps a more appropriate name for BlueJeans would be SweatPants or YogaPants since that’s probably the most dressed we’re getting these days — who works from home in jeans?) And if real-time video connections are going to become a bigger part of our day-to-day lives and business dealings, it makes sense to go all in. Just pour one out for the M&A handshake — an emoji might have to suffice.

Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.

© Copyright 2021 Bloomberg L.P. All Rights Reserved.


   
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BlueJeans’s videoconferencing software fits with the wireless carrier’s 5G plans and a new reality.
verizon, zoom, rival, bluejeans, new normal
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2020-31-16
Thursday, 16 April 2020 01:31 PM
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