Some unstructured thoughts on Yahoo
Nope, not another “analysis” of the deal really, but some quick thoughts:
- M&A Would take a big dip for next 2-3 years.
Had dinner with Michael Montgomery yesterday, first thing he pointed out was that MS and Yahoo are 2 of the most common bidders for web companies, i know Yahoo is pretty much ALWAYS in the mix for web companies, so would be quite a blow. Time to get back on horse would be a while, considering integration would be 12 months or more, then another 12 months to find out where things have gone wrong and how they can patch it together by buying someone to fill the gap. IHT have a story on it today to.
- Search monetization wouldn’t increase hugely.
Why? Google receives a very large part of their search revenue from non US operations, both MSN and Yahoo are not market leaders in any region (well except Japan in Yahoo’s case) - And Yahoo’s Contextual program is still only available for US based companies/people.
- People are stuck with Google
Maybe i’m very much biased here because i know the back end technology a lot better, and understand how to structure a query to get the result i want. But i think people who use google currently will be stuck with it, and even though it’s a much simpler switch than say from Windows to Mac Os, i still think it will be hard to win over current users.
- News Corp and PE firms make an offer, would be very interesting.
Why, well according to a US piece by a analyst, Yahoo sits on a lot of, off balance sheet assets, if News Corp could get someone to pick these up, so strip company of all “non media/ad assets” they could probably get in the range of something doable combined with some PE money, another issue though would be whom to run that unit, my suggestion is Omid Kordestani, but i guess it would be hard to tear him away from Google and his 3$ billion or so, very nice guy and seems incredibly smart.
Yahoo’s Off-Balance Sheet Assets:
Jeff Lindsay’s Yahoo valuation, as relayed by Eric Savitz at Barrons:
He calculates the total value of the company’s non-operating assets at $13.24 a share: $6.48 a share for the Yahoo! Japan stake, $3.13 for its share of Alibaba.com, $1.07 for its Alibaba Group stake, 8 cents for its share of GMarket (GMKT), $1.99 a share in cash, and 49 cents a share in net operating loss carryforwards. That leaves the value of core Yahoo as of last night’s close at just $10.85.”
- Yahoo used to own quite a bit of google shares, 8.2 Million to be exact
Yahoo settled a patent dispute with Google back in 2004, regarding serving contextual ad’s depending on a search query. They got another 2.7 Million shares for that, today that looks quite little. But if Yahoo had held on to those shares, at closing time they would have been worth a bit more than $4.2 Billion, which would have been more than 10% of Yahoo’s Market Cap.
- Yahoo/MS would be world leading on IM and E-mail
Just to bad you don’t make any money off that…
But would be interesting if News Corp bought Yahoo, and then bought Skype…
February 4th, 2008 at 6:47 pm
The story of Microsoft really started buying MSDOS in 1981. And they make it BIG.
So now more than 25 years later, I think they will be able to make good and quick money out of it.
Bill gates has already said he is volonteer, now that he has free time ( what a coincidence), to lead the integration.
Once said that, I agree with you that traditional media companies has moore to offer to Yahoo. But they don’t see it.
khalil