Yahoo Might Pull This Deal Of Yet
If Yahoo is such a mess, why does everyone want it so badly? You would guess from the sniping back and forth between Microsoft and Yahoo, and the on-again, off-again talks between the Web portal and potential suitors Google and News Corp.’s Rupert Murdoch, that there’s no love lost there. Perhaps not, but Yahoo has one big thing going for it: eyeballs. Internet ratings and advertising revenues from Yahoo would make Microsoft, or News Corp., a new leader in audience ratings online, immediately. According to Web researcher Nielsen/Net Ratings, Yahoo reaches a "unique audience” of nearly 94 million viewers at home, and at the office.
Microsoft grabs nearly 106 million viewers at home and at the office, and News Corp., which owns MySpace, snags 49 million viewers at home and at the office, on a weekly basis.
Google reaches 112 million viewers.
More importantly, people "stick” to Yahoo pages, a legacy of former CEO Terry Semel’s work developing content. On average, readers are on a Google page about a minute, a Microsoft page a little longer, at one minute and a half.
Yahoo readers stay around for longer than two minutes, all the more likely to click on an ad or be influenced by video ads streaming automatically next to more pedestrian print content.
There may be a tentative deal, soon, experts say.
"Microsoft’s unsolicited bid for Yahoo made many Yahoo investors very happy,” says Harry Wang, an analyst at Parks Associates, a technology industry research firm.
"Long-battered Yahoo stock price soared nearly 50 percent. Yahoo is likely to surrender its independence under the pressure from shareholders, at a good share price between $35 and $28 a share.”
[Editor’s Note: Warren Buffett's Top 39 Stock Picks Revealed]
Pushing all this along has been a rumored bid for Yahoo by yet another suitor — an unnamed private equity firm in New York City. That deal reportedly fell through when Microsoft expressed its interest in Yahoo.
"There are many questions raised by that bid,” says Wang. "Anti-trust concerns, integration difficulties, due to overlapping businesses, culture clashes, etc.”
A possible deal by Yahoo with News Corp. also raises issues, analysts say.
The plan being mulled by executives at both firms would give News Corp. a more than 20 percent stake in Yahoo but combine the search engine with MySpace and Murdoch’s other digital assets.
That’s a potential strategic advantage for Yahoo, as its attempts at entering the world of social networking have been dismal.
Some analysts, however, say these talks are unlikely to produce a real alternative to Microsoft's bid, which a number of its investors support as offering an immediate investment return.
For years, Yahoo has been tagged as technologically deficient, when it comes to competition with chief rival, Google. One analyst goes so far as to call Yahoo an "also-ran, technologically.”
To bolster its fortunes, Yahoo this week purchased a smaller firm, Maven Networks for $160 million. The firm provides video for Internet applications.
"Video is projected to be the fastest growing segment of the online ad market, and Maven will significantly help advance Yahoo’s strategy,” says Hilary Schneider, executive vice president, Global Partner Solutions at Yahoo.
The purchase complicates matters — considerably, as does a potential strategic alliance, an idea floated this week, with rival Google.
What happens next? That’s the big question for Yahoo and investors.
"It all comes down to how badly Microsoft wants Yahoo,” says Wang. "Microsoft is making its largest bet ever.”
Editor's Notes:
|