The deal between Viacom and Microsoft made me think about Yahoo! I have a number of contacts at Yahoo! and I hear stuff “off the record,” which I refrain from discussing. Part of that is respect for these individuals and part is the fact that very few people see an entire organization clearly. Regardless, Yahoo! is struggling right now.
This next year will be a critical year for the company in terms of whether investors press for a merger or an outright acquisition, which the company clearly doesn’t want. I’ve argued before that AT&T is a logical buyer if it should come to that. However there may be others.
I think there are two quarters of results (Q4 and Q1) before the pressure eases — or increases. Do you agree? What will happen to the company in 2008:
A) It will regain its footing and place in the top tier of Internet companies (which it’s still in basically)
B) It will be forced to find a buyer or major strategic partner/investor
C) It will be the victim of a hostile takeover if the stock dips (market cap: $31 billion)
D) It will continue independently, as it is today, making money but not “outperforming”
What do you think?
December 19, 2007 at 11:49 pm |
D for me.
December 20, 2007 at 12:49 am |
Option D is out of the question – shareholders won’t have it and Yahoo!’s assets are too great to be overlooked by a major partner or outright takeover. I’m hoping it’s option A and Yahoo! finds a way to outperform as it has in the past, but either A, B, or C will likely be a short-term win for shareholders. That’s why I think YHOO is a buy – they either right the ship and the stock goes up, or they crap the bed and someone comes along and buys them at a premium.
December 20, 2007 at 2:12 am |
I think its Option B. Yahoo is a great company but the landscape is changing so fast that I don’t think they can keep up. Additionally, they are being attacked from so many different directions there is no way they can be focused on ‘what’s next.’
Of course, if they do another 10 reorg’s and final get it right, who knows …..
December 20, 2007 at 8:52 pm |
Option B, and the partner group is MSFT and one or more media companies or groups. Perhaps M (who has cash) and a worldwide consortium of newspapers to embed/extend the brand in print & classifieds everywhere. Y! can’t steal share from G, they need to bring a new audience online as a complement to traditonal media.
December 21, 2007 at 3:01 am |
I’ll give it D+
I believe (unless I’ve missed something) that in order for B to be true, based on their holdings, SoftBank and the two founders would have to be persuaded to sell their interests in the company.
I also think that being dominant these days is overrated…why endure the stress of a bullseye target on your forehead in the face of a fragmented consumer landscape? I think the market is clearly showing its desire to mix’n match rather than “portalize” their media consumption.
Yahoo can comfortably continue to generate ridiculous amounts of revenue without the leader badge.
December 22, 2007 at 6:08 pm |
Its too bad there is so much stock market pressure on companies. Yahoo is profitable, it is generating cash flow. It’s revenues have grown. There is so much upwward movement with regard to money flowing into the search engines and web advertising in general.
There are still so many apps and approaches yet to be developed. All the engines are experimenting with different ideas. Google won’t be the first with every new app. Google won’t apply every new app the best.
It would be more competitive and better if there were more companies competing in these arenas then less.
I hope Yahoo doesn’t sell out. I hope they don’t merge with another existing SE.
I hope they stick with part of D and find more ways to “outperform”
But as to betting what will happen; I don’t know.
January 1, 2008 at 7:20 pm |
[...] 2008: What Will Happen to Yahoo? [...]
January 3, 2008 at 12:07 pm |
[...] 2008: What Will Happen to Yahoo? [...]
January 6, 2008 at 9:15 am |
I peg option B as the most likely followed by option C. Honestly, I love a good proxy fight – bring out the popcorn!
I don’t think it’ll be private equity doing the buying of Yahoo! unless credit markets improve and I don’t see that happening till some time in late 2009 or early 2010 (yes, with all the subprime mortgages due to reset in the coming year coupled with the restructuring of the ABCP and CDO debt markets, I think we’re in for a couple years of volatile stock markets. We won’t see a dot-com crash like 2001 but we will see less interest in buying Web 2.0 startups and reductions in valuations as a result.)
Who would initiate a hostile takeover, then? Microsoft, perhaps, but do they have a history of hostile takeovers and, if so, have they had success with that strategy? If not, then Microsoft may prefer to do a friendly deal or no deal at all. Google is not a realistic possibility – that would certainly raise all kinds of anti-competitive concerns. What about CBS Corp. moving in and merging with Yahoo!? The two already have existing partnerships and would make more sense than a Viacom-Yahoo! combination.
A merger of equals between eBay and Yahoo! or possibly Yahoo! buying AOL’s content businesses not transferred back to parent TimeWarner following the Platform-A IPO is not out of the question, either.
Do you think the pension funds or “sovereign wealth funds” (state-owned entities) would be interested in a Yahoo! acquisition? There is some history to pension funds acquiring an advertising-focused company. Ontario Teachers Pension Plan was one of the parties that took Yellow Pages Group private in a leveraged buyout from former parent Bell Canada Enterprises, Inc., before having it do an IPO. Is that SUP in Russia that bought LiveJournal large enough to purchase Yahoo!? Probably not, but what about a consortium of global advertising agency behemoths? Or, maybe a large newspaper and magazine publisher?
Cheers,
Doug