|
 |
Apr-14-2008AOL lands Verizon advertising deal(topic overview)
CONTENTS:
- The only publicly disclosed offer on the table is Microsoft's Jan. 31 bid to buy Yahoo for $31 per share, or $44.6 billion. (More...)
- Bloomberg News and others have reported that AOL, which ranks just after Yahoo among the most-used U.S. search sites, may combine with the company to thwart Microsoft. (More...)
- A News Corp deal with Microsoft could be further complicated by the fact that Google has a $900m exclusive ad deal with MySpace that runs until 2010. (More...)
- IN 2001 Rafat Ali, publisher of the new media website Paid Content, used four search engines to find something on the web. (More...)
- Software companies, for example, might not want to advertise with Yahoo, if it means the money goes to Microsoft. (More...)
- Debates about valuations helped create an impasse in similar discussions between Yahoo! and News Corp, where Yahoo was not willing to accept that MySpace, the News Corp social network that would have been injected into Yahoo!, was worth as much as $15 billion. (More...)
- The Yahoo bid was "a tactic and a strategy" toward that end, Turner said." (More...)
- Microsoft representative Frank Shaw didn't return a call seeking comment, and Teri Everett, a spokeswoman for New York-based News Corp., said the company doesn't comment on ''speculation.'' (More...)
- There's a big difference between being the clear number one search provider and being the only provider. (More...)
- My guess is we'''ll eventually have about two or three major competitors, each with a Microsoft or Google type of nucleus. http://en.wikipedia.org/wiki/Oligopoly -- I'm not an expert on disclosure but I can tell you that there is much about discussions between two companies that doesn't have to be disclosed. (More...)
- Flickr, Yahoo Finance, etc all have value that could be unlocked, but i'm not sure how. (More...)
- Microsoft has already taken my former 4-secretary office and turned into one lonely trooper over the last 15 years. (More...)
- For several reasons, I MUST have, at minimum, one clerical person''' so she'''ll for sure be there the next time I paint the place. (More...)
SOURCES
FIND OUT MORE ON THIS SUBJECT
The only publicly disclosed offer on the table is Microsoft's Jan. 31 bid to buy Yahoo for $31 per share, or $44.6 billion. Citigroup analysts Brent Thill and Mark Mahaney wrote in a note to clients Thursday that they still believe an acquisition of Yahoo by Microsoft is the most likely outcome. Especially in light of some of the reported activity this week, they predicted that the deal will be done at a price higher than $31 a share. They cited discussions between AOL and Yahoo as one reason. Earlier this week, Yahoo was close to a deal to combine its Internet operations with the Time Warner unit, according to a Wall Street Journal report. The prospect of an alternative deal may force Microsoft to raise its bid, the analysts said. Yahoo's exploration of an advertising alliance with Google could also force a higher Microsoft bid, they said. It's just a trial, for now, and Microsoft has already objected, on antitrust grounds, to any full advertising partnership between Google and Yahoo. The arrangement could help Yahoo boost its own revenue by tapping into Google's more lucrative advertising system. Microsoft's talks with News Corp., owner of the MySpace social networking site, could result in a combined bid for Yahoo by those two companies. That "very likely means a higher bid," the Citigroup analysts wrote Thursday. [1] During a Friday meeting, Yahoo's board authorized the company's management to meet with Time Warner and Microsoft this week, according to a New York Times article, but the portal still has not made a formal decision on its future structure. Earlier this year, Microsoft made public an acquisition bid of Yahoo, who's seen its stock price slide in recent years, worth $44.6 billion, though the value of the offer has dipped since then. Yahoo rejected this proposal, saying it undervalued the company, but last week Microsoft said it would, later this month, begin a proxy fight for control of the company if Yahoo didn't agree to terms. Yahoo has also been looking at a merger with Time Warner's AOL and it entered into a limited deal with Google, in which that company would sell some of its search ads. Yahoo will examine these options during the week, said the Times.[2] Seven years later AltaVista and Excite have gone, Ask Jeeves has become Ask. com and been taken over by IAC, the internet conglomerate, and Google has firmly pushed Yahoo into second place. "We are creatures of habit and if something enters the culture in such a deep manner as Google has, yes, the competitors are there, but you are fighting cultural forces that are difficult to change," said Ali. He was one of the first to report that Yahoo was considering a deal with AOL. Under the plan being discussed, Time Warner would fold its AOL unit into Yahoo and make a cash investment in return for about 20% of the combined entity. Yahoo would use Time Warner's cash and additional funds to buy back several billion dollars worth of its own stock at a price somewhere above Microsoft's $31-a-share offer. Last week Yahoo began a two-week trial with Google, using its rival's technology to place ads on some of its American search results. The trial should tell Yahoo whether outsourcing its ads to Google would have a significant impact on its advertising revenues.[3]
"Time Warner is hoping to scuttle a Microsoft bid for Yahoo, while News Corp. is hoping to get a slice of the pro forma Microhoo pie. We think both attempts make strategic sense. For both congloms, the race is on to make decisions and draft proposals for shareholder approval before Microsoft's bid is scheduled to go hostile on April 26. While News Corp. sources expressed caution about how tenuous talks are right now, those at Time Warner were more aggressive in making their case. "From the Yahoo shareholder point of view, the question is going to be whether it's better to take cash and then have Yahoo as you know it end, or whether a brighter future can be seen," said a Time Warner insider. "If you put together the Google ad trial and our content, it's an appealing alternative." AOL has been a particular albatross around the neck of Bewkes since he took over Time Warner last year. Though the CEO has made bold moves such as drastically downsizing New Line, he hasn't yet figured out a winning strategy for AOL, which has been struggling for years to reinvent itself ever since its Internet access business started fading. AOL recently has been re-thinking its approach to content with a focus on niche sites while beefing up its advertising operations under the rubric Platform A. Last month, it agreed to acquire British social-networking site Bebo for $850 million in order to better compete with MySpace and Facebook. Amid all that, AOL's advertising revenue has been growing at a healthy clip -- 18% last year -- but not nearly enough to make up for the huge losses in its subscription Internet access offering, which fell by 52% in 2007.[4] Yahoo is in talks to absorb AOL, with parent Time Warner taking a stake in Yahoo of about 18%, according to people familiar with the talks. Yahoo then wants to outsource much of its search-based advertising to Google to boost profit. Because that would leave the well-moneyed Microsoft with significant heartache, many expect the world's largest software company to offer more -- with or without help from News Corp. For Microsoft, investing heavily to develop a contender in Internet search was Plan A, and that didn't work, one major shareholder said. Buying Yahoo was Plan B, he said, and there is no Plan C. If Microsoft is left out at the end, it might try to deal just with News Corp., analysts said.[5] Although Yahoo wants to remain independent, Microsoft's overtures have forced it to seek a merger with Time Warner Inc.' s AOL and a search-advertising deal with Google Inc. The Sunnyvale, Calif., company is seeking alternatives for investors. Similar logic is fueling the deal-making ambitions of AOL, Rupert Murdoch's News Corp. and Microsoft, executives said Thursday. Time Warner is trying to find a buyer for AOL. And News Corp. hopes to get a partner for its MySpace social networking site out of Yahoo's predicament: The media giant is talking with Yahoo about helping it avoid Microsoft, and with Microsoft about helping it swallow Yahoo, according to people familiar with the talks. All the maneuvering shows how the Web, in its second decade, is growing increasingly susceptible to the same forces that shrink the leadership of other industries. "You get too many players selling too many wares, and they compete on price and you end up consolidating," Sanford C. Bernstein analyst Charles Di Bona said.[5]
Yahoo! and TW are discussing combining AOL with Yahoo! and having TW make a cash investment in return for about 20 percent of the combined entity. Yahoo! would use the TW cash and additional funds to buy back several billion dollars worth of its own stock. Whomever -- if anyone -- winds up aligned with Yahoo! will stay in the shadow of search engine behemoth Google, which remains in an online league of its own. The overtures by Microsoft, News Corp. and AOL are in part driven by the unmatched performance of this true belle of the ball, analysts said. Other companies remain second-tier online players for now. "We suspect both Time Warner and News Corp. want to avoid tertiary status on the Web as consolidation accelerates," Bazinet said.[6] The slumping Internet pioneer might not get the chance to show off the latest improvements to its online advertising platform unless it can convince investors that the new approach will produce a bigger payoff than Microsoft's unsolicited offer to buy the company for more than $40 billion. Late last week more rumors were circulating, that News Corp. might join Microsoft in a bid for Yahoo, or that Time Warner might combine its struggling AOL services with Yahoo in exchange for a stake in the emerging company. Hoping to gain wiggle room, Yahoo has started to release more details about its effort to become a one-stop shop for selling and distributing online display ads. The upgrade, called "Amp," will not be available until this summer, and then only on a limited basis among more than 600 newspaper publishers trying to recover some of the revenue the Internet has siphoned from print editions. Yahoo began promoting Amp last week through an online video demonstration of a system that the company promises will make it easier for advertisers to aim their messages at specific demographic groups across scores of Web sites.[7] Microsofts cash-and-stock offer now values Yahoo at $29.33 per share, which the Web company rejects as too low. Before Wednesday, Yahoo appeared to have run out of alternatives to Microsoft, which threatened last weekend to lower its bid if it was not accepted within three weeks, or April 26. Yahoo is now nearing a deal with Time Warner to fold AOL, excluding its dial-up Internet access business, into a combined company, sources familiar with the talks said on Wednesday.[8] Yahoo is in talks to merge with Time Warner Incs AOL unit, a source familiar with the negotiations said, after Yahoo announced on Wednesday a test to use rival Google Incs Web search service -- a three-way option to try to extract a higher Microsoft bid or even stay independent. Microsoft has said it will launch a hostile bid for Yahoo and could lower its offer in about three weeks if it does not get a deal from Yahoo, a Web pioneer which argues it is worth more than Microsofts $42 billion (21 billion pounds) bid.[9] If Yahoo and AOL were to merge, Di Bona estimates that it could yield investors $28 a share. That depends on AOL parent Time Warner kicking in $2 billion for its Yahoo stake and the combined entity generating a minimum of $500 million in synergies. A better deal would be for Yahoo and AOL to merge, but for AOL to retain its lucrative Google search deal. The value of such an arrangement? A merger deal that could ultimately yield $31 a share, Di Bona estimates. As for a third option of AOL and Yahoo both relinquishing their search to Google, Di Bona casts doubt that such as scenario will come to fruition. The software giant's chief operating officer, Kevin Turner, reiterated Microsoft's stance that its initial offer was "fair," according to a Reuters report Friday on a presentation the chief operating officer gave in India.[10] Yahoo! has also been discussing a combination with AOL. Under the proposed deal, whose terms remain in flux, Time Warner would merge AOL into Yahoo! and provide the company with a cash infusion, said people briefed on the talks. The proposal would leave Time Warner with a 20 per cent stake in Yahoo! and would value AOL at about $US10 billion, these people said. The deal would not include AOL's rapidly declining dial-up business, they said. Yahoo! announced a limited test to outsource its search ads to Google. The test is intended to determine whether Yahoo! could make more money by letting Google sell its search ads.[11]
Based on current stock prices, the value of Microsofts proposed cash-and-stock bid for Yahoo is $42.1 billion. "This doesnt put an end to the negotiations, but it perhaps balances things out," Cowen and Co analyst Jim Friedland said. "It looked like Microsoft had all the cards. Yahoo is at least now able to use this for leverage to get Microsoft to pay more." A full-scale deal with Google would boost Yahoos cash flow by reducing spending on rival technology and allow it to redirect staff and resources into its larger business selling corporate brand advertising such as banner ads, the analyst said. Yahoo could also step up its focus on areas where it leads such as online news, finance and sports, he said.[12] Yahoo Inc.' s directors meet Friday to discuss alternatives to a Microsoft Corp. takeover, with many insiders still seeing a Microsoft deal -- without the participation of News Corp. -- as the most likely outcome. Behind the battle over Yahoo is a scramble by Internet and media giants to capture the flood of advertising dollars expected to move online and block Google Inc. from extending its Web-search-ad domination. Aside from Microsoft's solo bid, Yahoo's directors will likely discuss a plan under which Time Warner Inc. would fold its AOL unit into Yahoo in exchange for a roughly 20% stake in Yahoo.[13] The company is looking for ways to boost revenue, and Google's advertising system makes more money than Yahoo's does. Later, The Wall Street Journal, citing anonymous sources, reported that Yahoo was also getting close to a deal to combine its Internet operations with AOL, as an alternative to a Microsoft deal. The New York Times, also citing anonymous sources, reported that Microsoft was talking with News Corp. about joining its bid to acquire Yahoo, raising the possibility of combining Yahoo, Microsoft's MSN and News Corp.' s MySpace social networking site.[14] Wall Street analysts still think that an AOL deal is somewhat less likely than an eventual purchase by Microsoft, particularly now that News Corp. is considering joining forces with Microsoft for a joint bid that could combine Yahoo, MySpace and MSN into one giant online entity. Yahoo has also been flirting with Google, as it yesterday announced a trial partnership to use the search giant's advertising against a small percentage of its search traffic.[4]
Earlier, the Wall Street Journal, which is owned by News Corp, reported that people close to Microsoft said the software maker plans to pursue Yahoo alone rather than with News Corp, which had held talks with Microsoft on a joint bid for Yahoo. The Journal also said Yahoo's board of directors met on Friday to assess their options, including deepening their negotiations with Time Warner Inc's AOL on a deal to merge Yahoo and AOL, but that no decisions were reached.[15] March 5: Reports emerge that Yahoo is stepping up negotiations with Time Warner for some kind of tie-up with AOL. Meanwhile, reports make the rounds that Microsoft will mount a proxy fight if Yahoo won't play ball. March 11: News Corp.' s Murdoch says publicly that he won't "get into a fight" with Microsoft over Yahoo, because the software giant has "a lot more money" than his company. April 5: Microsoft sends Yahoo a join-us-or-die letter, claiming that if the two companies can't make a deal in three weeks, Microsoft will take its offer directly to shareholders in a proxy battle. In the letter, signed by Microsoft CEO Steve Ballmer, Microsoft basically tells Yahoo board members they've run out of better options, and it would be foolish not to accept an offer immediately. Microsoft also hints that it would consider Yahoo less valuable if it is forced to mount a proxy fight, thus threatening to lower its offer.[16]
The various discussions -- involving Yahoo, Microsoft, Google Inc., News Corp., and Time Warner's AOL unit -- are all part of the aftermath of Microsoft's $44.6 billion offer to buy Yahoo.[14] Then the idea is for Yahoo to use Time Warner's money to buy back a few billion dollars worth of stock for somewhere between $30 and $40 a share to pacify investors watching Microsoft and its money walk out the door. That was after Yahoo said last night that it's going to experiment with letting Google deliver ads alongside Yahoo's search results to test the revenue potential of an outsourcing arrangement apparently to substantiate that it's worth more than Microsoft's offer. Microsoft's chief counsel Brad Smith immediately branded the unholy alliance anti-competitive and the chairman of the Senate Judiciary Committee's Subcommittee on Antitrust, Competition and Consumer Rights Herb Kohl raised an eyebrow and indicated he would be watching where the test led.[17] The Wall Street Journal reported Thursday that Sunnyvale, Calif. -based Yahoo (NASDAQ: YHOO) may incorporate AOL's $10 billion unit while getting a cash infusion from Time Warner that could give it a 10 percent stake in the joined entity. Yahoo could then buy billions of dollars of its own stock at $30 to $40 a share -- higher than Microsoft's $44.6 billion, $31-a-share bid, the Journal reported.[18] One deal being discussed would see AOL folded into Yahoo. Time Warner, AOL's parent, would also make a cash investment and then own about 20 percent of the combined company. Yahoo would use the cash to buy back its own stock in an effort to boost its share price. A person close to the situation confirmed this scenario Thursday and called talks "serious."[19]
Google, based in Mountain View, slid $11.63 to $457.45, and Redmond, Washington-based Microsoft dropped 83 cents to $28.28, and is 21 percent down since the start of the year. Yahoo also considered a plan this week to swap a 20 percent stake in the company for control of AOL, plus a cash investment from AOL parent Time Warner Inc., a person with knowledge of the talks said.[20] None of the reported discussions involving Yahoo, Microsoft, News Corp. and Time Warner has resulted in an agreement yet. Yahoo and Google characterize their new advertising alliance as a limited trial. Amid all of this week's revelations, analysts are struggling to assess which talks are real, and which are meant to give one company leverage in separate talks with another. "I think it's confusing to people what's really going on, and it's getting to the point where you just can't separate fact from posturing," said Charles Di Bona, an analyst with Sanford C. Bernstein & Co. in New York.[1] Yahoo!'s board had met to evaluate Microsoft's takeover bid and other alternatives but had not decided which option to pursue, people briefed about the meeting said. The board authorised the company's management to continue meeting with Microsoft and with Time Warner, the sources said, and meetings with both were expected to be scheduled this week. The board was considering a plan to merge with the AOL unit of Time Warner and has been discussing a complementary plan to outsource its search advertising business - one of its principal sources of revenue - to Google in an effort to increase revenue and remain independent.[11] Yahoo rejects that price as too low and has been casting around for other partners. It announced last week a test to outsource search advertising to Google, which sources say is part of Yahoo's plans to form a three-way alliance with Time Warner Inc's AOL to fend off Microsoft. Antitrust experts said regulators would likely oppose any permanent alliance between Google and Yahoo, while they would likely approve Microsoft's proposed merger with Yahoo.[21]
Google, based in Mountain View, California, overtook Yahoo years ago as the most-popular Internet search engine. Its market value, $147 billion as of yesterday's close, is about equal to the total for Yahoo, Time Warner and News Corp. -- and that's after a 32 percent drop in its share price this year. Search advertisements from Google will appear on the U.S. Yahoo.com site for as long as two weeks under a test announced this week.[22] "However, the value of the Time Warner stake would then be tied to Yahoo's stock price, which could be at risk of further erosion given Yahoo's second-class status relative to Google." For its part, Microsoft has reportedly had discussions with News Corp ( NWS, Fortune 500 ). to combine MySpace with MSN and Yahoo to create some sort of massive Internet venture, according the New York Times. What's clear is that Microsoft is serious about expanding its shop on the Web, and, more importantly, fend off Google's encroaching threat.[23] Yahoo made the announcement after the stock market closed. Appcelerator announced that it has updated its platform to allow applications built using Appcelerator to be deployed to the free new Google App Engine. Used together, the offerings give developers a fast route to developing, deploying, managing and scaling their applications. Microsoft and News Corp are seriously considering pairing up for a joint run at Yahoo, according to both the Wall Street Journal and the New York Times. Yahoo! has managed to antagonize Microsoft into considering its options - like lowering its bid and girding for a hostile takeover - by sidling up to Google in a relationship that everyone knows can't go anywhere because of the antitrust issues.[17]
WITH YAHOO'S DIRECTORS MEETING TODAY to discuss alternatives to a Microsoft takeover, many insiders still believe a Microsoft deal, without News Corp., is the most likely eventual outcome. In the meanwhile, the online company still has a business to run, as evidenced by its plan to run Google search ads alongside 3% of its own paid and natural search results. It's been dubbed a quick way to boost revenue by some analysts, and part of a larger "scorched earth" anti-acquisition effort by others.[24] If Microsoft and News Corp. put together a deal for Yahoo that the Web technology company couldn't say no to without shareholder revolt, the combined forces of MSN, News Corp.' s MySpace and Yahoo could present Google with a serious challenge. Yahoo, still looking for a way to maintain its independence, is testing a search advertising partnership with Google.[25] Predictably, Microsoft was none too happy about the news and spared no time pointing out all the ways that kind of union could run into regulatory problems, because it would give Google and Yahoo 90 percent of the search-advertising market. News Corp. recently had been considered a possible spoiler to Microsoft's plan, but CEO Murdoch shot down those rumors in March. A deal to go in with Microsoft to buy Yahoo would at least give his company a piece of the action.[16]
The more meaningful response, of course, came days later when news leaked that Yahoo is discussing a deal involving a cash infusion from Time Warner in exchange for a stake in a combined Yahoo-AOL. Yahoo also said it had agreed on a trial basis to have Google handle sales of a small portion of advertisements for placement on Yahoo's site, an arrangement that could reduce expenses and boost revenue and make Yahoo a more attractive target. Both proposals are widely considered inferior to the Microsoft offer, and come with respective financial and regulatory hurdles. They put pressure on Microsoft to close the deal quickly before Yahoo can enter into any agreement that would impede Redmond's ability to acquire the company.[26] Yahoo is still looking for alternative deals it can bring to shareholders and is in ongoing talks with Time Warner's AOL. Brad Smith, Microsoft's general counsel, reiterated its view that it has made Yahoo a fair offer, and raised concerns about the Google deal.[27] Yahoo, facing a three-week deadline from Microsoft to reach a deal and eager for a higher offer, also is still in talks with Time Warner Incs AOL about a potential tie-up, a source familiar with the discussions said.[12]
It started to look that way on Wednesday, as it came out that Yahoo has been contemplating a merger with AOL as a way out of getting acquired by Microsoft, a situation that Yahoo CEO Jerry Yang and chairman Roy Bostock seem almost desperate to avoid. As contemplated, the deal would see Time Warner giving its troubled AOL unit's content and advertising operations to Yahoo, along with some cash, in return for about 20% of the combined entity. Time Warner would keep AOL's Internet access business, which Time Warner CEO Bewkes has already said he intends to spin off or sell.[4]
"So much for the Internet being completely different from everything else." The prospect of diminished competition is raising concern on Capitol Hill, where the top members of both parties on the House Judiciary Committee pledged more hearings on competition in online advertising. Investors and analysts said the most likely scenario remained Microsoft winning Yahoo, with the Internet giant's deal talks probably forcing Microsoft to raise its price. Microsoft's cash and stock offer was worth about $42 billion Thursday, when its shares rose 22 cents to $29.11 and Yahoo shares jumped 82 cents to $28.59.[5] Yahoo has said Microsoft's original bid of $31 per share, or $44.6 billion, undervalued the company. In a letter this week, Yahoo Chief Executive Jerry Yang told his Microsoft counterpart, Steve Ballmer, that he wasn't opposed to a deal, at the right price. In a letter Saturday, Ballmer gave Yahoo a three-week deadline for reaching a deal, suggesting that Microsoft might reduce its offer price if it is forced to attempt a hostile takeover.[14] Microsoft Chief Executive Steve Ballmer gave Yahoo three weeks to accept a bid of $31 per share or face a hostile takeover at a lower price. Yahoo Chief Executive Jerry Yang and Chairman Roy Bostock responded they would consider a deal only at a higher price.[27]
Observers say the net effect is that Microsoft needs the deal - and if Yahoo is successful, it won't go cheaply. "We believe the Street will weigh this news more toward providing negotiating leverage for Yahoo to get Microsoft to raise their bid price than as a credible tool for Yahoo to garner shareholder support to pass on Microsoft's offer," wrote Merrill Lynch analyst Justin Post. The fact that Yahoo may be able to work another offer, as inelegant as it may be, suggests Microsoft now has to tinker with its offer. This might be enough, said the money manager "for Yahoo to get them to make it an all-cash offer, since there's no certainty about what would happen to Microsoft's share price."[23] In a statement Smith said, "Any definitive agreement between Yahoo and Google would consolidate over 90% of the search advertising market in Google's hands. This would make the market far less competitive, in sharp contrast to our own proposal to acquire Yahoo." He then added, "We will assess closely all of our options. Our proposal remains the only alternative put forward that offers Yahoo shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers and consumers." Over the weekend Microsoft delivered an ultimatum to Yahoo giving it until April 26 to come to terms or suffer a proxy fight for control of its board. Microsoft also threatened to lower its bid.[17] The Sunnyvale, Calif. -based Internet portal has been working to strengthen itself against Microsoft's acquisition bid, hoping to evade or sweeten the offer. The news began Wednesday with Yahoo's announcement that it would run a limited test of Google's advertising system alongside results from its own search engine, as part of a short-term agreement with Google.[14]
Yahoo said it would display some Web search advertising links sold by Google Inc. The talks with AOL and Google, owner of the most-used Internet search engine, indicate that Yang, 39, is making progress two months after telling investors that the company is seeking alternatives to Microsoft's bid.[28]
Microsoft obviously wants to absorb Yahoo to mount a more formidable challenge to Google in search engine advertising, as well as take a larger share of the search budgets of advertisers. That's a good thing, advertisers say, because a united Yahoo-Microsoft could help make pricing more competitive. It remains unclear to companies that advertise with Google whether a Yahoo-Microsoft combination would change their spending. One ad executive at a major agency, who asked to remain anonymous, said a Yahoo-Microsoft alliance wouldn't take away from how much money he spends with Google, nor potentially how little he spends with Yahoo or MSN. The executive admitted that advertisers like him have likely contributed to the anticompetitive climate that exists today, giving Google the edge in ads and traffic. When asked whether a Yahoo-Microsoft merger might cause his agency to spend more with the combined entity, he said "maybe." Another advertising industry observer took a more negative attitude when it came to a Yahoo-Microsoft alliance. "With Yahoo and Microsoft, you're taking two companies who are spending all their time copying each other's ideas--the company that created Yahoo Answers and the company who ripped them off by creating Live Q&A.; Why does that change my ad budget?" asked Chris Tacy, chief innovation officer at Method, a branding company in San Francisco.[29] More than half of the $41 billion online advertising market comes from Internet search ads, according to Piper Jaffray & Co. Google captured 77 percent of spending in the fourth quarter, compared with Yahoo's 18 percent and Microsoft's 5 percent, said Efficient Frontier Inc., a Mountain View, California-based company that manages online ad campaigns.[20] Google accounted for 59.2 percent of Internet queries in February, according to Reston, Virginia-based researcher ComScore Inc. Yahoo had 21.6 percent, followed by Microsoft with 9.6 percent. Ballmer is interested in Yahoo because it would boost his company's slice of the online advertising market, which Microsoft said may nearly double to $80 billion by 2010.[30]
Bloomberg News and others have reported that AOL, which ranks just after Yahoo among the most-used U.S. search sites, may combine with the company to thwart Microsoft. This story line wouldn't be much of a stretch. Time Warner CEO Jeffrey Bewkes said last month that he wouldn't rule out an AOL transaction. Two months ago, Bewkes said the New York-based company would split off the unit's Internet-access service. Now another character has been added to the mix: News Corp.' s Rupert Murdoch, fresh off his New York-based company's $5 billion acquisition of Dow Jones & Co., the publisher of the Wall Street Journal. [22] The three media giants are attempting to get a head start on what could become a Web consolidation frenzy, or at least to avoid winding up the odd player out. To whom will Yahoo! say "I do"? Most on Wall Street are still betting on Microsoft, the first suitor to tip its intentions. Rupert Murdoch's News Corp. would bring its online assets, including social networking juggernaut MySpace, to the union. Should those scenarios fail to play out, Time Warner's AOL could step in.[6]
The flirtations and betrayals among Internet giants would steam up even the hottest afternoon soap opera. In the latest round, the News Corporation, which had been playing footsie with Yahoo, has jumped into the arms of Microsoft in an effort to break up the pending union of Yahoo and Time Warner's estranged wife, AOL. Oh yes, Google, which everyone envies, is prodding all this on to keep its rivals in a state of confusion. What does all this mean? It shows that Jeff Bewkes, the chief executive of Time Warner, is now more open to leaving AOL than in the past.[31]
In a flurry of possible deal-making talks, Yahoo Inc. and Time Warner Inc.' s AOL unit are discussing a possible consolidation, while News Corp. is talking with Microsoft Corp. about making a joint bid for Yahoo.[18] According to a report in The New York Times, Microsoft is in talks to make a joint bid with News Corp. ( NWS ). Under that scenario, Microsoft would combine its Internet operations with Yahoo and News Corp.' s MySpace social network. Of course, Microsoft could surprise analysts by withdrawing its offer, even temporarily.[26] The New York Times has reported that Microsoft is talking with Journal publisher News Corp. about a joint bid for Yahoo. Yahoo's fate "will come down to what its shareholders want to accept," RBC Capital Markets analyst Ross Sandler said in a note to investors. Sandler noted that Yahoo's management owns less than 10 percent of the company, and said it is "doing the right thing by entertaining (or proposing) all these ideas for shareholders in an effort to extract more value."[32] Hours later, the worlds largest software company appeared to trump Yahoos announcement as the New York Times reported that Rupert Murdochs News Corp was in talks to join Microsofts $42.3 billion (21 billion pounds) bid for the Web pioneer.[8] This shift is coming at a time when Microsoft Corp. is aggressively seeking to bolster its online presence by acquiring Yahoo in a deal originally valued at $44.6 billion. Microsoft, meanwhile, is reportedly in discussions with Rupert Murdoch's News Corp., owner of MySpace.com, to join its bid for Yahoo.[19] Microsoft and News Corp are seriously considering pairing up for a joint run at Yahoo, according to both the Wall Street Journal and the New York Times. News Corp could kick in the Fox Interactive Media unit along with MySpace and some cash and Microsoft would throw in MSN. Such a deal would let Microsoft raise its bid for Yahoo, the Times said.[17] Even once a deal is made, it will be years before anyone reaps a reward from what could turn out to be an unwieldy mega-merger. May 2006: Some of the earliest rumors that Microsoft is considering an offer to buy Yahoo appear in the New York Post and The Wall Street Journal; at the time such a deal is considered far-fetched, so the rumors are dismissed fairly quickly.[16]
As Yahoo! (nasdaq: YHOO - news - people ) blows hot and cold -- more cold -- about teaming up with Microsoft and casts around for other partners, the outlook is getting increasingly unclear. "This is the first time that we have seen real feasible alternatives that could derail the Microsoft deal," said analyst Jeffrey Lindsay of Sanford C. Bernstein. Microsoft's chief operating officer said at a news conference in Mumbai that his company had made a fair offer to Yahoo! and that no matter what happened with the deal, the company was determined to grow in online advertising capabilities.[33] "A Yahoo-AOL merger does not provide Yahoo shareholders value equivalent to the existing Microsoft bid." A Piper Jaffray & Co. survey of 20 shareholders indicated a majority would favor Microsoft's cash-and-stock offer to no deal, analyst Gene Munster said in a note this week.[34] Boca Raton, Florida-based Moran advises investors to hold on to Yahoo shares. A Piper Jaffray & Co. survey of 20 shareholders indicated a majority would favor Microsoft's cash and stock offer to no deal, analyst Gene Munster said in a note this week.[30]
Google's legal chief, David Drummond, publicly attacked the deal when it was announced. "Could the acquisition of Yahoo allow Microsoft - despite its legacy of serious legal and regulatory offences - to extend unfair practices from browsers and operating systems to the internet?" said Drummond. His answer, unsurprisingly, was "yes". Next week Yahoo will release its latest financial figures. Some analysts believe that Yang is delaying a decision on Microsoft in the hope that the results will reassure shareholders that the company can go it alone, or at least put pressure on Ballmer to increase his bid.[3] Yahoo's test of Google's ad system is "a shrewd move that could significantly complicate Microsoft's unsolicited bid" for the company, Jeffrey Lindsay, senior analyst for Sanford C. Bernstein & Co. in New York, wrote in a note to clients. If Microsoft objects to a formal agreement between them, "The regulatory review process" could easily drag out to over a year -- greatly diminishing Yahoo's attractiveness as an acquisition candidate, he wrote.[14]
Yahoo, based in Sunnyvale, California, fell 25 cents to $28.34 in Nasdaq Stock Market trading at 4 p.m. New York time. The stock has gained 22 percent this year. Microsoft shares fell 83 cents to $28.28 and have declined 21 percent this year. Yahoo spokeswoman Tracy Schmaler declined to comment, saying the company doesn't confirm when its board meets.[30] The investment also would let Yahoo buy back billions of dollars in stock, said the person, who asked not to be identified because the talks aren't public. ''The AOL-Yahoo thing reminds me of two men drowning, both grabbing on to each other,'' said Mike Holland, who oversees more than $4 billion at Holland & Co. in New York, including Microsoft shares. ''It usually doesn't end in a pretty way or a smart way or an effective way.'' Separately, Capital World Investors, a unit of Los Angeles mutual-fund manager Capital Research & Management Co., almost doubled its stake in Yahoo to 10.1 percent.[28]
The new Yahoo would then buy back some shares at more than $30 per share, exceeding the value of Microsoft's approximately $29 per share offer. That would presumably incentivize shareholders to reject Microsoft's bid, which the tech giant has threatened to turn hostile after it was rejected by Yahoo's board.[4] According to the rumor mill, Yahoo is now looking for closer to $40 a share because the value of the company has risen since the offer. Feb. 12: Microsoft for the first time publicly hints in a letter to Yahoo that it is willing to get hostile in its takeover, saying it "reserves the right to pursue all necessary steps to ensure that Yahoo's shareholders are provided with the opportunity to realize the value inherent in our proposal."[16]
"We have every intention of being a significant player in search, and paid search is an important part of our business.'' Amid criticism that Yahoo's efforts have fallen short in wringing more money from Internet search ads, Decker and Chief Executive Officer Jerry Yang agreed this week to try Google's software as they negotiate alternatives to Microsoft Corp.' s $44.6 billion takeover offer.[20] Yahoo says the Google test will apply only to traffic from yahoo.com in the U.S., last up to two weeks and be limited to no more than 3% of Yahoo search queries. Yahoo and Google trotted out such a scheme as a possible hidey-hole for Yahoo to crawl into to avoid takeover by Microsoft right after Microsoft went public with its offer two months ago. It was dismissed as impossible because of the antitrust issues.[17]
The changes are part of Yahoo's overhauled search ad system, called Panama, which has enabled a series of changes over the last year and a half. One change was the ability for Yahoo to assign a quality ranking to each advertiser based on factors such as how often users click on their ads. Another was discounts to the price advertisers pay when users click on ads hosted on non-premier sites that use Yahoo for serving up ads. Yahoo has been trying to improve its search-ad results to boost its business, attract more advertising, and better compete against leader Google. Google has been adding refinements of its own, changes that yielded fewer clicks on ads but more revenue per click. The competition has been going on for years, but it's under more intense scrutiny with Microsoft's attempt to acquire Yahoo. The seriousness of the situation for Yahoo was spotlighted earlier this week when Yahoo announced a limited test of Google's search-ad delivery system alongside Panama. Google makes more money per click on its search ads than Yahoo, so using Google's ads could theoretically increase Yahoo revenue depending on how the proceeds were divided.[35] ' In a major poke at Microsoft, Yahoo announced recently it will begin running Google's search ads alongside some of Yahoo's search results. Yahoo said it will conduct a limited test on up to 3 percent of its search queries, lasting as long as two weeks. Yahoo hopes to evaluate the potential of a more extensive agreement with Google, in which it would outsource all its search advertising to Google. Wall Street analysts believe Yahoo could significantly improve its profitability by doing so because its Mountain View, Calif., rival makes so much more money for each search.[27] The original negotiations, which pre-date Microsoft's bid, were about outsourcing search advertising in Europe to Google. It's been estimated that Yahoo could increase its cash flow 25% by outsourcing all its search ads to Google. Yahoo said Wednesday that it's exploring strategic alternatives to maximize shareholder value and that "the testing does not necessarily mean that Yahoo will join the AdSense for Search program or that any further commercial relationship with Google will result." It also said it "would not comment on the nature or timing of any potential relationship."[17] Analysts believe the rivals will either broker a friendly transaction before the end of the month or wrestle for the allegiance of Yahoo's shareholders in a prickly showdown that could drag into the summer. A new twist emerged Wednesday as Yahoo surrendered some of its advertising space to Internet search leader Google Inc. in a test that appears designed to frustrate Microsoft.[36]
Yahoo! held a board meeting yesterday to review how far its discussions with Time Warner about a white knight rescue were progressing, although any agreement is still thought to be a fortnight away. Yahoo! is also hoping that its newly announced deal with Google, in which Google will provide it with search engine advertising, could materially boost the valuation of Yahoo! Google is only working with Yahoo! on a trial but analysts believe that a tie-up, were it approved by regulators, could boost Yahoo!'s cashflows by $1 billion a year.[37] Yahoos two-week test of Googles search advertising technology could lead to a broader deal. Citigroup analysts Mark Mahaney and Brent Thill estimated a full search outsourcing deal could generate more than $1 billion in cash flow to Yahoo, though they also say a Microsoft deal is the "most likely outcome."[8]
An AOL-Yahoo deal, with AOL retaining its Google search relationship, could rival Microsoft's initial $31-a-share buyout bid for Yahoo, according to Charles Di Bona, a research analyst at Sanford C. Bernstein. That was one of three scenarios Di Bona laid out in a research note on Friday, and his favorite.[10] The merge-with-AOL threat isn't particularly potent as an alternative--although Yahoo or Microsoft should certainly buy AOL--but the Google search deal could deliver immediate, permanent economic value to Yahoo. This should make it easier to persuade Microsoft to pay a bit more, in part because Microsoft will then be able to fire Google and use its own search technology. Unfortunately, there is still at least some risk that this melodrama will end by Microsoft walking--in which case Yahoo's stock will drop to $20.[38] Lindsay said a deal outsourcing search advertising to Google could raise Yahoo's stock price to between $39 and $45. That could make Yahoo too expensive, even for Microsoft.[27]
On Wednesday the Internet company said it is testing Google's AdSense for Search service, acting as one of the Web publishers that carry pay-per-click text ads from Google. The move opens up the possibility that eventually Yahoo may outsource its paid-search business to Google, which might provide a way out of having to make a deal with Microsoft.[16] In a letter signed by Chairman Roy Bostock and CEO Jerry Yang, the company calls Microsoft's threat of a proxy battle "unproductive," and says it would consider a deal if Microsoft was willing to pony up more dough. April 9: Yahoo says it is testing the display of Google search ads in a small number of its search-engine queries, a move seen as a way to stave off Microsoft's advances.[16]
Apart from search, a Microsoft-Yahoo marriage could make the two more forceful in content and brand advertising, an area of weakness for Google. The search giant is trying to break into brand advertising with video on YouTube and graphical ads on its ad network. So far, Microsoft hasn't pitched the advertising community on why a Microsoft-Yahoo deal would be strategically interesting for their advertisers. Grant McDougall, executive vice president at advertising agency Carat--which plans media buys for Ecostar, the Gap and Pfizer, among others--said Microsoft could bring more discipline to Yahoo in terms of improving its marketing-analytics tools, but he has yet to hear the reasoning from Microsoft.[29]
"What will it do for budgets? In the short term, probably nothing," McDougall said. What's more intriguing to advertisers are the possibilities of partnerships between Yahoo and News Corp. (and its MySpace.com social network) or Yahoo and AOL. Many advertising executives say it's easier to see deals for long-term creative advertising across Yahoo and MySpace, or across Yahoo and Time Warner's AOL. Combining brand advertising, targeted behavioral ads, and search ads seems appealing to the advertising community.[29] "Given the market value for (Time Warner) and (Time Warner Cable) and our estimated fair value for Time Warner Content, the market is implicitly assigning nearly ZERO equity value to AOL," noted Bernstein Research in a new report. Despite such downbeat assessments of AOL's future, the deal under discussion with Yahoo values AOL at about $10 billion. Owning 20% of a separate public company that could be the cure Time Warner's long-festering AOL problem, as it would take responsibility for its performance off of the hands of Bewkes and his lieutenants.[4] Someone whispered in the Journal's ear that Yahoo and AOL are on the threshold of a deal that would fold AOL into Yahoo and see Time Warner make a cash investment in the combined entity in return for about 20% of the place. AOL, without its dwindling dial-up business, would be valued at about $10 billion and Google, of course, owns 5% of AOL.[17]
A deal with Time Warner and AOL would be part of a multi-pronged strategy by Yahoo in which it would outsource Web search advertising operations to Google Inc, the source said.[39] In the middle of the week, Yahoo said it will begin a limited two-week test of rival Google Inc.' s AdSense for Search service, through which some Yahoo search results will show Google ads. The experimental alliance could lead to a broader partnership, and, according to a Wall Street Journal report, Yahoo is looking into combining its Web operations with those of Time Warner Inc.' s struggling AOL unit.[32]
And, as Fortune's Yi-Wyn Yen confirmed, the company has talked about a combination with AOL. From the Yahoo board's perspective, this is a very good development, said one money manager who asked not to be named. "It gets them off the hook for legal liabilities after they rejected Microsoft's bid," the money manager said. "It also throws the ball back into Microsoft's court." Wall Street analysts seemed to applaud Time Warner's ability to use Yahoo's weak position as an opportunity to park its AOL unit on someone else's lot.[23] The Wall Street Journal called the talks "serious". Yahoos talks with Time Warner are growing closer over a deal that would fold AOLs business, excluding its legacy dial-up Internet access operations, into a combined Yahoo company, a person familiar with the talks said.[9] In a deal with AOL, Yahoo would gain control of the Internet company, receive an investment from Time Warner, and give up a 20 percent stake in the combined entity, said a person with knowledge of the talks.[28]
The agreement expected to be announced on Monday, an AOL executive said, comes amid Time Warner's ongoing talks to combine AOL with Yahoo Inc to rival Microsoft Corp's estimated $42 billion offer to buy Yahoo.[40] Yahoo has courted Time Warner Inc.' s AOL and is testing advertisements from Google Inc. to thwart Microsoft's offer.[30]
Founder Jerry Yang took back the helm at Yahoo last summer after the departure of veteran media executive Terry Semel. Yang is a tech genius but few thought he had the corporate savvy to shake off Ballmer. Last week he made his most concerted effort to wriggle free by reaching out to Time Warner's AOL and to Google, Microsoft's arch enemy.[3] A Yahoo board meeting Friday authorized talks with both Microsoft and Time Warner (AOL) next week.[41] Microsoft, News Corp, Time Warner and Yahoo all declined to comment on talks.[9] Later came two unconfirmed reports: Yahoo is considering absorbing AOL in exchange for a big investment from AOL parent Time Warner, and Microsoft might get some help from News Corp. to acquire Yahoo, a move that could provide acquisition funding and add News Corp.' s MySpace.com into the mix.[42] NEW YORK Yahoo! might not be the most desirable bride, but that hasn't stopped Microsoft, News Corp. and Time Warner from trying to lead it to the altar.[6] Spokesmen for Microsoft, News Corp, Time Warner and Yahoo were not immediately available to comment.[15]
Unofficial word has spread that Yahoo is also nearing a deal with Time Warner's America Online to combine the two struggling companies' Internet operations and thwart Microsoft's takeover effort.[43] The Associated Press called it a "last-ditch effort" to prevent a Microsoft takeover at all costs. Not willing to sit idly by and still determined to bring Yahoo into its portfolio, Microsoft is also hashing out a potential deal with an online giant, News Corp. The media conglomerate owns a ton of Internet entities under its Fox Interactive Media brand.[44] Benioff thinks Yahoo "is probably talking to News Corp. without Microsoft." No matter who ends up with Yahoo, "the people involved are not innovators," he said. "They are followers. This is not a deal about the future of the Internet. It's about the problems of not executing in the past against Google."[19]
"But does that change the direction of the Web at all?" asked Brian Bolan, an analyst at Chicago's Jackson Securities who follows major tech companies. "Putting some blocks next to other blocks, does that it make a new bridge? Putting these companies together doesn't really solve anything. "When the venture capitalists get together to discuss a new company, they ask to see what problem it solves," he said. "The only thing this solves is that Jerry Yang really doesn't want to be a Microsoft employee." Bolan still thinks Microsoft will end up with Yahoo, but because the Internet is changing so rapidly he sees it lagging Google significantly.[19] Internet trends have shifted, and some analysts say the likes of Yahoo, AOL and Microsoft's MSN are no longer vital. They see the Web as transforming into a place where content is distributed to those who want it: Think of the school PTA Web site, for example, where a calendar from Google can be embedded into the page for any user to access.[19]
Google, plus AOL and Ask.com, represent 70 percent of the U.S. Web search audience, according to comScore. Were Yahoo to throw its search business to its competitor, Googles share of the U.S. Web search market would top 90 percent. Since Google is better at turning search traffic into ad dollars than Yahoo and Microsoft, its actual share of revenue in this business is underestimated by search statistics.[12] According to estimates from eMarketer, Google's share of the American market jumped to 28.4% last year from 13.1% in 2004. As the online ad market matures and big brands shift more of their campaigns online, display advertising, such as banner ads and video ads, are expected to be the next growth area. Yahoo makes an attractive partner because of its huge audience - 137m American visitors in February - ahead of Google, Microsoft, AOL and MySpace. As a solo business Yahoo is beginning to look old-fashioned and faces increased competition from social networks such as Facebook and video sites like YouTube.[3] Search insiders who spoke with Online Media Daily agreed that a long-term strategic partnership between Yahoo and Google would have a negative impact on the search industry, and to a lesser extent, online advertising as a whole. "This is a fast way to make a lot of revenue, so on the surface it looks like a good business deal for Yahoo and its shareholders," said Chris Silver Smith, lead strategist at Netconcepts. "It would also reduce some administrative costs because we could increase distribution while using one platform to manage the majority of a client's ads. I don't know that it's very good in the long run, because it reduces competition by making Yahoo increasingly dependent on Google." Smith added that a lengthy search partnership between the two giants could eventually lead to higher CPCs for advertisers--particularly if Yahoo extended the deal to its content network. "It would increase Google's ad distribution power considerably, because they'd have all of these Yahoo properties that they could deliver some percentage of search ads to," Smith said. "And it's kind of nice to have alternatives to Google's distribution." According to Brian Wiener, CEO of 360i, it's more than nice to have an alternative to Google with search--it's a necessity. "It would give Google a near-total monopoly over the search market, and that's dangerous for the industry," Wiener said. "It's unhealthy for marketers and for the digital economy.[24] While Yahoo is seeking a business partnership with Google -- unlike the outright merger that Microsoft wants -- legal experts say any deal between the world's two largest Internet search services will draw heavy scrutiny from U.S. and European competition regulators.[21] Microsoft Corp.' s takeover bid for Yahoo Inc. has yet to succeed, but that hasn't stopped preparations for what would be the next step - the regulatory battle. Both Microsoft and rival Google Inc. have started opposing campaigns to woo Washington public interest groups, as part of a broader lobbying effort aimed at knifing each other in the back. Center for Digital Democracy and Consumers Union, two organizations that often pressure antitrust regulators to block mergers, have held a number of discussions with both companies. "They'll do anything to attempt to undermine each other," said Jeff Chester, executive director of the Center for Digital Democracy. It's a window into how competition plays out in Washington, where gaining allies or muting criticism is an important part of corporate strategy. The gamesmanship can help sabotage a challenger's plans or limit them. With its bid for Yahoo, Microsoft hopes to bolster its online business by creating an Internet colossus.[45]
Every time something happens that makes a Microsoft takeover less likely--a merger with AOL, for example--Microsoft's stock goes up. Why? Because, on balance, Microsoft shareholders don't like this deal, or at least don't like how much Microsoft is paying for Yahoo.[38] Other than that AOL deal is pretty much junk compared to what a ms-yahoo synergy. I would be all for a three way deal of ms-yahoo-aol if it doesnt take a toll on financial aspects of ms, though this would be a long shot by all means. If Yahoo decides to merge with AOL, I'm definitely shorting their stocks, it just brings back memories from AOL merger with Time Warner. For years, the Time Warner execs have been trying to get rid of this money pit to no avail and what better ways to get rid of their problem by leeching off Yahoo assets.[41]
Yahoo and Time Warner are said to be working on a deal to combine the operations of Yahoo with AOL and shut out Microsoft completely.[25]
The NYT notes, for example, that the board "authorized" the AOL and Yahoo meetings, phrasing that was probably designed to blunt the criticism in Steve Ballmer's letter that the board hadn't even authorized the company to negotiate with Microsoft. The Microsoft meeting could be a sign that Yahoo is finally ready to negotiate, but more likely is intended to demonstrate that Yahoo's board is acting reasonably and "exploring all its options." The AOL meeting, meanwhile, serves the dual purpose of allowing Yahoo to continue to explore an AOL deal while also showing Microsoft that it's serious about exploring one. The AOL deal terms in this story remain the same as the early ones: AOL's portal and ad network businesses valued at about $10 billion, in exchange for 20% of Yahoo.[46] The source close to Microsoft said the company's preference all along has been to retain the original deal structure that would involve paying $31 per share in cash and stock to acquire Yahoo.[15] Consequently a deal in terms of the value to yahoo shareholders realized over that time (unless purely 100% cash), whether immediately seen as more favorable than MSFT's initial proposal or of lesser value than the current value of $15.50 plus.47545 shares of MSFT stock (just not too much lesser), might in only a short time be looked back upon as having relatively little consequences from an argument over a "couple of bucks."[38] Of course, the question is, will the market concur and will the market bolster the share price in response? Because at the end of the day, that's really the only thing that matters. It doesn't matter what one block of major shareholders thinks; it really matters what the entire market thinks. So far, since the deal was announced, the market has pretty much yawned and driven the stock value down, because they continue to not have confidence that the company on its own will be a viable, long-term concern. At the end of the day, shareholder value is really the only thing that matters, and thus far, Yahoo as an independent company hasn't sent those broad-based messages to the market that it's capable of bolstering and improving that value proposition over time.[47]
Google would lose the MySpace account, Yahoo would flounder and face shareholder lawsuits up the yazoo, and while AOL wouldn't provide the punch that YHOO would, with YHOO reeling MSFT could conceivably swoop in and pick up the pieces. I think a deal will be done, however, with some manipulation of the numbers to allow YHOO to save face while mindful that MSFT stockholders aren't happy with this to begin with, and won't stand for a large premium on top of the one already on the table. I agree YHOO-MSFT is a done deal - they are just haggling over price. If MSFT does drop their bid I don'''t see YHOO'''s stock falling very far.[38]
"The structure of the AOL deal is likely to be less appealing to Yahoo shareholders than the straight-forward Microsoft bid," Jefferies Co analyst Youssef Squali said.[8]
Charles J. Di Bona, an analyst for Sanford C. Bernstein, wrote the obvious question here in a note Thursday: If AOL and News Corporation are willing to deal, why does Microsoft need Yahoo at all. YHOO would truly be left on its own as even an outsourcing deal with GOOG would be immediately challenged on antitrust deal and the uncertainty of what is likely to be a prolonged review could significantly impair YHOO's business in the interim regardless of the ultimate outcome.[31] On Thursday a report surfaced that Microsoft is exploring an alliance with News Corporation owned by Rupert Murdoch. Terms of a possible deal include News Corp. contributing cash to help Microsoft buy Yahoo, and then adding its popular social networking website MySpace to the resulting Internet entity. Such an alliance would be an abrupt change of sides for News Corp., which was among possible "white knights" that Yahoo reached out to for salvation after Microsoft came on strong with a 44.6-billion-dollar offer February 1.[43] What do you get when you put, Microsoft, Yahoo, AOL and News Corp. together? A company that makes software that isn't suited for todays's computing needs, a mediocre search engine and second class ad network, the world's largest collection of dial up Internet users and a news organization that appeals to Dick Cheney.[31] AOL's value is in the ad companies it owns - some of which Yahoo has gaps in. Why is Yahoo in trouble to begin with? They have become too large and lost their agility which is what it takes to succeed in the space they are in. Management knows this and realize that getting married to Microsoft, an even less agile company, is not going to do the trick and restore Yahoo to it's former glory. Merging with AOL won't do the trick either but it might buy them time and at least they would still be the boss. Unfortunately they are thinking for themselves and not their shareholders.[41] As any modern general knows, victory is not a solution to problems; it's the start of them. When I hear all the talk about Yahoo!, Microsoft, Google, AOL and NewsCorp, I think of generals discussing strategy: We'll invade -- I mean, buy -- such and such a territory. We'll annex this part, split that one off, create a special zone for such and such a minority business line, merge the two online divisions.[48] SCOTT FULTON: I would think their major shareholders have a monetary investment in the technologies that Yahoo is developing, and all the stuff that they've acquired, including the Right Media Exchange and all these new properties -- all that stuff would fall by the wayside if Microsoft got a hold of it. want that. They just want the employees and they want Yahoo out of the way. I would think that these major shareholders would say, "Well, if I'm not going to see any return on our investment after all these years of working on Panama and Right Media and these other projects, then I'm gonna vote it down." Now, here's a scenario where at least most of these things can stay alive. Would the Yahoo brand, and so would its independent stake as a competitor against both Google and MSN. I would think that major and minor shareholders would be overjoyed by this.[47]
Yahoo's resistance to Microsoft's offer of $31 per Yahoo! share, made on Feb. 1, recently took a turn when Google (nyse: GOOG - news - people ) it announced a two-week "trial advertising" partnership with Yahoo![33] Yahoo! is offering to accept AOL in return for a stake of about 20 per cent, valuing AOL at around $10 billion. Yahoo! has rejected Microsoft's hostile bid but its share price remains just below the offer level at $28.35, down 24 cents.[37] Microsoft doesn't appear to be backing off yet. It has said it may lower its bid _ which was initially valued at $44.6 billion, or $31 per share _ if Yahoo doesn't accept the offer by April 26.[32]
"If I were Microsoft, I would increase the bid and make a deal that Yahoo cannot refuse." Many analysts are now betting that Microsoft could raise its bid to as much as $35 a share. Yang's actions, they say, prove Yahoo had more strategic options than anyone--especially Microsoft--had previously believed.[26] Haverty said $35 a share is a fair value for Yahoo. His firm managed about $31 billion in assets as of Dec. 31, including shares of Microsoft and Yahoo. His estimate is 20 percent more than the implied value of the half-cash, half-stock deal.[28]
Shares of Yahoo rose 12 cents to $27.82, Microsoft was up 15 cents to $28.90, and Google shares fell 0.5 percent to $465.00, all on Nasdaq.[49] Yahoo, owner of the most-visited U.S. Web site, rose 82 cents, or 3 percent, to close at $28.59 trading on the Nasdaq Stock Market. Microsoft rose 22 cents to $29.11, valuing its offer at about $29.34 a share.[28] Microsoft's offer was 62 percent higher than Yahoo's closing price the previous day. ''They're delay tactics,'' Laura Martin, an analyst at New York-based Soleil Securities Corp., said of Yahoo's actions. She rates Yahoo shares ''hold'' and doesn't own any. ''They're just going to irritate Microsoft and accelerate a proxy fight.''[28] Yahoo may finally get an offer from Microsoft that it can't refuse--unless that offer comes too late. News Corp. is negotiating with Microsoft to help the software giant raise its asking price for Yahoo, the New York Times says.[25] Yahoo talked with News Corp. about a combination to block Microsoft's offer, a person with knowledge of the discussions told Bloomberg News in February. He may throw his weight behind the bid, the New York Times reported yesterday.[22] Separately, The New York Times reported that Microsoft and Rupert Murdochs News Corp are in negotiations on making a joint bid for Yahoo. That merger would join Yahoo, Microsoft Corps MSN and News Corps MySpace, the paper said.[39] The talks with News Corp, which previously had discussed working with Yahoo as a counter to Microsofts unsolicited bid, are at a sensitive stage, the New York Times said.[9] Talks with News Corp, which earlier had discussed working with Yahoo as a counter to Microsoft, are at a sensitive stage, the New York Times said. The Wall Street Journal called those talks "serious."[8]
News Corp., which at one time discussed a merger with Yahoo, is reportedly now in talks with Redmond, Wash. -based Microsoft (NASDAQ: MSFT) about a joint effort, which could mean an even higher offer.[18] In the wake of Yahoo's move came a truckload of wild speculation, including the notion that Microsoft could go so far as to elicit the help of News Corp. to mount a joint takeover of Yahoo. This morning, AOL -- now considered Yahoo's prospective alternate merger partner -- went so far as to fuel the speculation engine even further, with its CEO bringing the subject up in a publicly-leaked memo by way of saying he couldn't talk about it further. and just before talking about it further.[47] Microsoft immediately attacks that notion as anticompetitive and says it would never pass regulatory approval. April 10: News Corp. is said to be in talks with Microsoft to join forces to buy Yahoo, seen by many as a way that Microsoft can raise its offer without spending any more money.[16]
SEATTLE/NEW YORK (Reuters) - Microsoft Corp wants to stick with its original takeover offer for Yahoo Inc, but is not ruling out News Corp joining its bid or other options, a source close to the company said on Friday.[15] Yahoo Inc.' s directors met Friday to consider Microsoft Corp.' s $44.6 billion bid for the Internet company, Bloomberg News reported, citing a person familiar with the situation.[34] April 11 (Bloomberg) -- Yahoo! Inc. directors meet today to consider Microsoft Corp.' s $44.6 billion bid for the Internet company, a person familiar with the talks said.[30]
Yahoo's directors met yesterday to consider the bid, a person familiar with the talks said. Yahoo spent more than $2 billion on acquisitions to build its own search engine, and released a program last year called Project Panama to make search ads more relevant and more likely to be clicked by users.[20] Yahoo has traditionally led in graphical display ads, a more fragmented business. Google derived almost all its $16.6 billion in revenue last year from small text ads alongside Web search results on its sites and affiliated partner sites such as AOL and Ask.com.[12] Even the advertising growth is still far behind that of red hot competitors like Google. Yahoo has also had its problems but is still performing better than AOL in most categories and could boost its performance and significantly reduce costs. The two overlap in a number of traditional Web content areas, from movies to news to music, but would bring a few individual strengths such as AOL's popular instant messenger and Bebo, along with Yahoo's search technology. Together they would likely dominate the portal business, driven by display advertising, and possibly pose a stronger threat to Google and Facebook.[4]
In a statement, Microsoft General Counsel Brad Smith said Yahoo and Google would consolidate over 90 percent of the search advertising market in Googles hands. Smith added that Microsoft was assessing all of its options. His comments responded to Yahoos announcement earlier on Wednesday that it will carry Web search advertising from Google in a test.[50] "Any definitive agreement between Yahoo and Google would consolidate over 90 percent of the search advertising market in Google's hands,'' Microsoft General Counsel Brad Smith said in an April 9 statement. "This would make the market far less competitive.'' Conducting the test with Google doesn't necessarily mean the companies will strike a formal partnership, Decker said in her memo.[20]
Microsoft General Counsel Brad Smith said Yahoo and Google would consolidate more than 90 percent of the search ad market in Googles hands. Herb Kohl, the Democratic head of the U.S. Senate antitrust subcommittee, chimed in to say he was watching Yahoos deal closely to "ensure it does not harm competition."[12] Microsoft fired back saying that a deal between Yahoo and Google would make the market for Web search less competitive -- turning the tables on Google, which has charged Microsoft with anti-competitive practices in the past. Microsoft would face tough scrutiny of its own from regulators if it buys Yahoo.[12] More Narrowly Tailored Ad Networks Gain Favor Apr 11, 7:00 AM Despite a recent backlash, three-quarters of brand advertisers and direct marketers plan to spend more on. Yahoo/Google Search: A Temporary Fix Or A Long-Term Problem? Apr 11, 7:00 AM With Yahoo's directors meeting today to discuss alternatives to a Microsoft takeover, many insiders still. AOL Launches Technology Hub Apr 11, 7:00 AM As part of a larger effort to align its disparate Web assets, AOL has launched a. Play Ball: Yahoo Strikes Deal With MLB.com Apr 11, 7:00 AM In the midst of its furious takeover fight with Microsoft, Yahoo continues to churn out.[24]
"There's so much going on in the space--from a possible AOL deal, to News Corp.' s renewed involvement--that I'd much rather wait to get more info before any red flags come up." Lee said that what was clear was Yahoo's intention of exploring as many ways to bulk up shareholders' wallets (and their confidence) as possible. "It seems like Yahoo is trying to get a sense of any upside in search monetization they might be able to get through alternatives to Panama," he said "It's fair that they do, and it's the ideal time to do it before they make any substantial moves."[24] "We believe that a clean acquisition of Yahoo by Microsoft is still the most likely scenario." UBS analyst Heather Bellini agreed that Yahoo management would have a difficult time convincing its shareholders that its alternative deal was worth more than Microsofts offer.[8] Microsoft Chief Executive Officer Steven Ballmer added some tension to the plot last weekend by demanding that Yahoo, based in Sunnyvale, California, accept a deal by April 29. Otherwise, the Redmond, Washington-based company might make a lower offer directly to shareholders, Ballmer wrote in a letter.[22] "If we have not concluded an agreement within the next three weeks, we will take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors," Ballmer wrote. Then he threatened to reduce Microsoft's offer if Yahoo failed to meet the deadline: "That action will have an undesirable impact on the value of your company from our perspective, which will be reflected in the terms of our proposal."[3]
Yahoo is weighing its options to accept a buyout by Microsoft or consider tie-ups with other companies, in particular a reported plan to join forces with AOL, as a way to stave off the software giant's advances. The possibilities for the ending to the story that begin on Feb. 1, when Microsoft made its US$44.6 billion offer for Yahoo, have become dizzying, with rumors cropping up almost daily in the past week about what the ultimate outcome might be.[16] Bruce McDonald, an antitrust partner at JonesDay, said combining Google and Yahoo in any significant way "would raise a lot of red flags. My gut reaction is that this is going to get a pretty intensive investigation," said McDonald, an ex-deputy assistant attorney general at the U.S. Justice Department. Yahoo faces a three-week deadline issued by Microsoft Chief Executive Steve Ballmer in a letter to Yahoo on Saturday for Yahoo to agree to its offer or risk seeing the bid lowered and Microsoft starting a proxy battle to take over the board.[12] In the case of Yahoo, for example, some analysts said it may simply be positioning itself to extract a higher bid from Microsoft. Yahoo said its arrangement with Google is only a trial, lasting no more than two weeks, applying to no more 3 percent of queries conducted through its site, and not necessarily signaling a broader advertising relationship.[14] Jefferies & Co. analyst Youssef Squali argues that Yahoo! is mainly using the two big entertainment industry suitors to ultimately get a bigger ring from Microsoft. "While we view agreements with both AOL and Google as "hairy," we believe they eventually force a Microsoft bid raise," he said.[6]
Analysts noted that with some combination of Yahoo, Microsoft and Google looking likely, AOL and News Corp.' s Fox Interactive Media are eager to not be left out.[4] A joint Microsoft-News Corp bid could create a more formidable competitor to Google by uniting three of the biggest Web site publishers: Yahoo, Microsofts MSN and News Corps MySpace social network.[8] None of the principals are talking, but News Corp. also is reportedly considering joining Microsoft in a bid for Yahoo! Wall Street is skeptical of such an arrangement however, suggesting that it would only be a matter of time until one of the three felt it was being given short shrift.[6] The Times also quoted a "person briefed on the discussions" between News Corp and Microsoft for the former to join the bid for Yahoo as describing the discussions as being only "conceptual.suggesting that a joint bid was unlikely."[41]
According to a New York Times report quoting sources, Yahoo's board met to evaluate Microsoft'''s takeover bid and other alternatives but did not make a formal decision on which option to pursue.[41]
Yahoo would reportedly use the cash to buy back shares from some of the very stockholders Microsoft is threatening to woo in an effort to have Yahoo's board of directors ousted and replaced with people amenable to the takeover. Silicon Valley analyst Rob Enderle agrees that Google benefits while its two closest rivals duel but says that Google might have reason to worry.[43] A graph of the share of Internet advertising revenue sold by the four big players is a stark map to the current merger mating game: Google is heading higher while AOL, Yahoo and Microsoft sink.[31] In recent years AOL, Microsoft's MSN and Yahoo have all lost market share to Google.[3] What I claim is that. Google is not at risk of regulatory anti-trust restriction even if it were to attain 100% market share in paid search, even if an acquisition of Yahoo gave them the balance of the 100% (it wouldn't but it would approximate 80% or more and Microsoft would be left with the largest remaining share at 5% approximate). -- This is an open invitation to all readers.[46] Google held a 59.2 percent share of the U.S. Web search market in February, compared with Yahoo's 21.6 percent and Microsoft's 9.6 percent, according to research firm comScore.[21] Yahoo shares rose 7 cents to close at $27.77, Microsoft gained 14 cents to $28.89, and Google fell 0.8 percent to $464.19.[12]
Jeffrey Lindsay, an analyst with Sanford Bernstein & Co., said a deal with Google "has a real chance of saving Yahoo." In a research note published in September 2007, Lindsay calculated Yahoo could boost its operating income by $565 million in 2008, or as much as 33 percent, if it handed over search advertising to Google.[27] The deal, which will include no more than 3 percent of search queries during a trial lasting as long as two weeks, may be another way for Yahoo to bolster revenue as an independent company. Lawmakers already have said they would examine a Yahoo- Google tie-up if it were made permanent, throwing doubt on whether that is a long-term solution for Yahoo investors.[30] Yahoo is not opposed to doing an eventual deal with Microsoft at a higher price, said a source familiar with Yahoos thinking. A Google deal would represent a short-term measure to help the company shore up its own revenue.[12] None reported, to my knowledge. As you know, Microsoft did this and they've still got an approximate 90-plus% monopoly in op/desktop. Why aren't they being broken up by regulators even now, if you're fearful that Google might be restricted from a deal with Yahoo? The reason they haven't been broken up is because the benefit to society of allowing their monopoly, from standardization and the efficiency of their products, outweighs their monopolistic threat. Is Google making contractual demands to either consumers or their advertising vendors under threats of taking coercive actions? in other avenues of their business dealings with them or any related third parties?[46] The Verizon deal is viewed as a coup for AOL's Platform-A advertising unit, as deal makers at Microsoft, Yahoo and AOL jostle to take a bigger stake in the business of selling display advertisements.[40]
What if Microsoft dropped its bid for Yahoo and bought AOL and MySpace instead? One analyst says that may be a better deal than a target that doesn't want to merge.[31] The latest sign of the Web industry's maturation, Microsoft's unsolicited bid for Yahoo, is likely to result in less choice for advertisers and reduce competition for e-mail, Web search and other online services, analysts and consumer advocates said Thursday.[5] SAN FRANCISCO (AFP) — Microsoft's unwanted courtship of Yahoo is spinning into a dramatic soap opera that analysts say is playing into the hands of Internet search king Google. While the U.S. software giant says Google's dominance online is the reason it is eager to buy Yahoo, the California firm's efforts to stave off Microsoft leave Google free to concentrate on strengthening its grip on the market.[43] The first big surprise was news that Yahoo is trying out search advertisements from Google, Yahoo's largest rival and, for that matter, Microsoft's, too--at least when it comes to online aspirations.[42]
Suprisingly, advertising hasn't figured it out. From the intial annoying pop-ups, to targeted links, it seems that ad agencies and google are trying to reach consumers along a different path than consumers trying to find products and information they want. (Some online stores are better than others.) When it comes down to it, who cares about yahoo, microsoft and aol? I don't think they get it. If they did, I could select the ads and commercial content to support the free TV, Newspaper, and Novels I really want.[31] Advertising executives on Madison Avenue, who have always liked to watch a good fight, are more bemused by the Yahoo-Microsoft action than concerned by which company wins. Ad firms have a big influence on the future of Google, Yahoo, MSN, AOL, and News Corp. by deciding on behalf of clients how much of their budgets to spend with each company, if at all. While the players are important, advertisers don't really seem to care which teams are aligned, as long as they can provide the audience, the ad space, and the return on investment for clients.[29] No matter what happens when the dust settles and rumors become reality -- or not -- one thing is quite likely: combining the infrastructure for the Internet businesses of Yahoo and Microsoft, or Yahoo and AOL, or Yahoo and Microsoft and News Corp., is going to be a logistical headache.[16] Bolan called Microsoft's interest in bringing News Corp. to the talks, which could not be confirmed, as "very cagey." "I would imagine Microsoft would like to learn a lot from News Corp. about how well MySpace is really doing," he said, "and under the guise of this deal, I'm sure they can get some of that information. I would say it's a savvy move. "But I don't see a deal other than Microsoft for Yahoo, where this started."[19] Separately, a source familiar with the matter said News Corp continues to talk directly with Yahoo on reaching a deal without Microsoft.[15]
During the week, Microsoft also held talks with Rupert Murdoch's News Corp about possibly joining forces in a bid for Yahoo! A person briefed on the discussions described those conversations as "conceptual", suggesting a joint bid was unlikely.[11] If successful it would create a new internet giant. Executives close to the talks described them as "fluid" but pointed out that News Corp had held on-off talks with Yahoo as well as Microsoft.[3]
Terms of the proposed Microsoft-News Corp union are still being worked out, the New York Times said. News Corp would likely contribute its Fox Interactive Media unit, which owns MySpace, and possibly cash to a partnership with Microsoft as part of a Yahoo acquisition, the newspaper said.[9] At this time last week, Yahoo was said to have reached the end of its rope. It didn't appear very viable on its own, and certainly no one would be crazy enough to try to top Microsoft's cash offer. Seven days later, and it's a different world.[47] A source familiar with the boards activities told Reuters that Yahoo directors meet to discuss the Microsoft offer and alternatives to it as many as three times a week.[8]
The meeting followed a flurry of activity around Yahoo! that began last Saturday with a threat by Microsoft's chief executive, Steven Ballmer, to begin a proxy fight to oust the board unless the companies reached a negotiated merger agreement by April 26. On April 7, Yahoo! said it was not opposed to a deal with Microsoft but reiterated its belief that the software giant's offer undervalued Yahoo![11] With that hovering around Microsoft, the company is trying to buy Yahoo, forcing an apparent Yahoo board meeting Thursday to discuss the merger -- and other options that so far seem more smoke than fire. Great, fast-growing companies certainly make acquisitions, but they generally buy smaller companies that get absorbed into the bigger entity and add a key business or technology.[51]
The Wall Street Journal reported Friday that Yahoo's board was meeting to discuss the company's options, which to many seem limited to one: accepting Microsoft's current offer. In between the rumors and speculation, Yahoo has been making some of its own moves to avoid being subsumed by Microsoft.[16] Turner was there to unveil Microsoft's strategic initiatives with the region's HCL Infosystems. "We believe we've made a very fair offer to Yahoo's board of directors," Turner said, noting that a Yahoo acquisition would fit with the software giant's strategy to increase its market share with consumers via search.[10] The meatiest role goes to Microsoft, the world's largest software maker, which got the action rolling 10 weeks ago with a $31-a-share offer for Yahoo, the second-most-popular U.S. search engine.[22] Feb. 1, 2008: In the shot heard 'round the Internet, Microsoft makes a formal purchase offer of US$44.6 billion based on Yahoo's stock price of $19.18; Yahoo's stock price starts rising.[16] Feb. 11: Yahoo rejects Microsoft's offer as too low; Yahoo stock price closes at $29.87.[16]
SAN FRANCISCO ''' Brushing aside the threat of a disruptive takeover battle that could batter its shaky stock, Internet pioneer Yahoo Inc. reiterated its refusal to sell to Microsoft Corp. for less than $45 billion.[36]
Platform A is the centerpiece of a restructuring of the once great Internet division responsible for generations of first time Internet surfers. Reports of Time Warner's discussions to combine Yahoo and AOL values AOL, excluding its dial-up Internet access business at around $10 billion. That is a far cry from the zero value ascribed to AOL within Time Warner's current valuation, according to analyst estimates.[40] The newspaper's Web site cited unnamed sources as saying that Time Warner had been expecting Yahoo's board to move closer to backing an AOL deal and that Yahoo's delays suggested that the company was hesitant to proceed.[15] "The deal would allow Time Warner to hand off the management of AOL to Yahoo, which we would view as a positive," wrote Cowen analyst Doug Creutz in a note Thursday.[23] October 2006: Rumors begin to swirl that Yahoo has approached Time Warner about purchasing AOL, a notion that is somewhat more believable than a Microsoft-Yahoo deal.[16]
Sources say the test is part of a planned three-way alliance to combine Yahoo with Time Warners AOL instead of Microsoft.[8] As an alternative, Yahoo is considering a three-way partnership with Google and Time Warner's AOL that would keep the Sunnyvale Web portal independent.[45] The board will likely also weigh a possible pact with Time Warner ( TWX, Fortune 500 ), Fortune's and CNNMoney's parent. This arrangement would swap Time Warner's AOL unit for a 20% equity stake in Yahoo, and a big pile of cash to buyback shares in the event of a sell off.[23] The rivals have joined up for a two-week advertising trial. AOL The company recently bought Bebo.com but is not loved by its parent Time Warner, which would fold AOL into Yahoo in return for a stake.[3] Time Warner would reportedly merge AOL into Yahoo and pay for a 20 percent ownership of the combined company.[43]
Sanford C. Bernstein's Charles Di Bona surmised in a research note that a Yahoo-AOL deal could give investors more money than the Microsoft deal if AOL's parent company, Time Warner, were to contribute some cash to it.[16] NEW YORK (Reuters) - Time Warner Inc's AOL landed one of its biggest advertising deals since the division's restructuring as the sole representative of telephone company Verizon Communications Inc's online advertising inventory.[40]
Time Warner, the world's largest media company, rose 18 cents to $14.61 in New York Stock Exchange composite trading. Shares of the New York company have declined 12 percent this year.[28] A deal would value AOL at $10 billion, with Time Warner kicking in some cash in exchange for 20 percent of the combined unit.[8] The source confirmed a Wall Street Journal story saying Yahoo would receive a cash investment from Time Warner in exchange for a 20 percent stake in the combined Yahoo-AOL business.[39]
Yahoo CEO Jerry Yang responded by demanding a higher bid instead. Time Warner Inc.' s AOL unit, down on its heels after thriving along with Yahoo in the 1990s, is another prominent cast member.[22] Yahoo also is still in talks with Time Warner Incs AOL about a potential tie-up, the person said.[49] Then came the rumored dance partners, with reports swirling of Yahoo! in talks with AOL, and Microsoft warming up with MySpace. What kept all of these potential suitors so disinterested until now? They certainly had enough time to jump into the fray.[52] In an effort to avoid a hostile takeover from Microsoft, Yahoo has reportedly begun talks with AOL, but some executives dislike the idea. "We have enough problems without getting theirs, which are much worse," said one. Technology business writer Kara Swisher wrote in her blog that she talked with a handful of high-profile sources at Yahoo, all speaking with anonymity. "It is a very dangerous game of chicken, and Yahoo has never really been good at that," said one executive.[44]
In its efforts to stay out of Microsoft's grasp, Yahoo is now in "serious" talks to acquire AOL. Yet the Internet is changing so quickly that some wonder if doubling down on an aging Web media model is the way to go.[19]
CARMI LEVY: Exactly, because the transition away from the PC-based paradigm of computing toward the Internet-based paradigm is well under way, and so there is widespread recognition that Microsoft represents the vision of yesterday, while Google represents the vision of today and tomorrow. While Microsoft today still has multiple revenue streams on which it can rely, it's also faced with the cold, cruel reality that its legacy streams of revenue are going to slowly dry up over the next few years, and either it gets its Internet strategy/act together, or it too will find itself in straits similar to what Yahoo finds itself in today -- namely on the receiving end of a bidding war.[47] Soon, said Collins Stewart internet analyst Sandeep Aggarwal, "there will be three - Google, Baidu and some combination of Microsoft and Yahoo". Yahoo's board members are weighing up their options after meeting on Friday. Whatever they decide, by the end of the month the internet landscape looks bound to undergo a decisive change.[3] Well, Irk. it would not surprise me. Google takes back a percentage ownership in the combo (maybe even the controlling stake). shuts down their paid search technology and does all of their search for a fee. deprives Yahoo's eyeballs from MSFT. gets an entry into Alibaba and China, and Japan (I think), for a search presence they don't have now. gets access to Yahoo's engineers and platforms for distribution of their myriad apps. builds an instantaneous portal presence and powers up its email share. gets access to Yahoo's banner ad platform. and clears the groundwork for going right after MSFT's throat with Internet-based op systems and legacy desktop. You're an irksome fellow, Irk.[46]
SCOTT FULTON: Well, let's face it, isn't it the fact that Yahoo isn't the market leader it used to be, with maybe an exception that it has an eyeballs lead in terms of portals, due to the evolution of the Internet in general? We're not talking about a landscape where you can really have one dominant player; let's face it, there are 18 or 19 dominant players. CARMI LEVY: Right, but I think this is a case where Yahoo's leadership failed to properly lead how the market and how the Internet was transforming itself, and while they were focused on being the dominant Web presence on the Internet, that over time became less and less relevant as monetized search became the engine of growth that Google capitalized on. Yahoo has the traffic and Yahoo has the eyeballs, but they increasingly lagged Google in terms of converting all that traffic into bottom-line profits.[47] Yahoo could monetize search traffic at a dollar per user today, but with the Google deal, the Web giant could start earning $1.50 per user. Although the deal only represents a fraction of their search traffic, Zlotin said that Yahoo could use the stats to extrapolate what would happen if they revved up monetization across the entire network. "They'd be able to say: 'Look how much better we monetize than the industry thinks we do. You're undervaluing us, and we want more,'" he said. Zlotin believes that we're seeing high-powered corporate negotiation at its finest. "This move has created lots of interesting drama and it will probably be written about for years to come," he said.[24]
Yahoo and Google have partnered for Internet search software before. In 2000, Yahoo chose Google as its default search engine. That lasted until 2004, when Yahoo switched to technology based on the acquisitions of Inktomi Corp. and Overture Services Inc. Lindsay says outsourcing search ads to Google, a move he's recommended since September, could boost Yahoo's stock to as much as $45.[20] The investment also would let Yahoo buy back billions of dollars in stock, the person said. Yang, 39, also forged an agreement this week to run some of Google's advertisements alongside Yahoo's Internet search results.[30]
Brad Smith, Microsoft's general counsel, issued a statement saying: "Any definitive agreement between Yahoo and Google would consolidate over 90% of the search advertising market in Google's hands. This would make the market far less competitive, in sharp contrast to our own proposal to acquire Yahoo."[3] While Google dominates search advertising, Microsoft and Yahoo dominate in e-mail.[27] Microsoft, third in search advertising, wants second-place Yahoo to better compete against Google, the runaway leader in search-based advertising.[19]
As media coverage of Microsoft'''s recent bid to acquire Yahoo piles up and debate among industry pundits over what each company stands to gain or lose should Microsoft succeed reaches a near-deafening pitch, little-to-no thought or attention is being given to how the merging of the 2nd (Yahoo) and 3rd (Microsoft/Live Search) largest search engines will impact the average consumer, according to Edward Mandel, founder and chief executive officer of NeXplore Corporation (OTC: NXPC). Said Mandel: '''Right now, search is dominated by a handful of players locked in a war of attrition, but their back-end battle for computational brawn and algorithmic complexity has done little to advance search over the past few years. They are so myopically focused on what the other is doing that they'''ve lost sight of making the search experience easier, more enjoyable and more productive for the average consumer.[31] WASHINGTON (Reuters) - Yahoo Inc's attempt to form an alliance with Google Inc to stave off Microsoft Corp could run into more trouble with antitrust regulators than Microsoft's unwelcome takeover bid.[21] Yahoo on Monday rejected a three-week deadline from Microsoft to accept the takeover but said it is open to a sweetened bid from the software giant or another bidder. "I think this is inevitable," Baker said of a Microsoft takeover of Yahoo.[43]
NEW YORK -- Yahoo Inc. and Microsoft Corp. captured the tech sector's attention yet again this week, as the ailing Internet icon continued efforts to avoid a takeover by the world's largest software maker.[32] A new partner may help Chief Executive Officer Jerry Yang turn around investor confidence in Yahoo. Less than a week ago, his options appeared limited after Microsoft CEO Steve Ballmer threatened to cut his bid if the board refused to give in.[28] Nine weeks after Microsoft ( MSFT, Fortune 500 )'s unsolicited $31-a-share, or $42 billion, cash-and-stock bid, Yahoo ( YHOO, Fortune 500 ) still lacks a superior bid from any other large suitors.[23] Investors barely reacted to what was seen as Yahoos latest effort to force Microsoft to raise its $42 billion bid.[12]
To counter that dominance, Microsoft offered in January to buy Yahoo in a cash-and-stock deal now valued at $42 billion.[21] Ali was surprised that Microsoft had let the proposed deal drag on for so long. "If they upped their offer, this would all be over," he said. AS the internet's biggest players circle Yahoo, each appears to be exploring its options.[3] House Judiciary Committee Chairman John Conyers, D-Mich., said Thursday that the potential deals underscore the need for a hearing about competition on the Internet and online advertising. Chris Murray, senior counsel for Consumers Union, said his discussions, with both Microsoft and Google, will help him decide what position to take on a merger or its parts. Although both sides seek his support or to limit his criticism, the talks also save a lot of time in terms of getting basic information about a proposed deal.[45] Left unsaid is that Google's position as the leader in online advertising could also face a serious challenge, particularly in what's known as display advertising, which is the equivalent of online billboards. Chester said he has spoken to Microsoft's lobbyists by phone and in person a number of times, as they try to win his support for the merger or, at least, diffuse any opposition. They explained, as they have publicly, that combining forces would create a more serious competitor to Google's juggernaut. Google's pitch, Chester said, came at an event it hosted two weeks ago about privacy at its Washington office, after a dinner of filet mignon, with a few dozen people. A Google political strategist pulled him aside and asked that he help to scuttle the deal, Chester said.[45]
A News Corp deal with Microsoft could be further complicated by the fact that Google has a $900m exclusive ad deal with MySpace that runs until 2010. [3] Even when a congressman says (prphrz) '''We'''ll pay close attention to any potential long-term deal between Google and Yahoo,''' it doesn'''t mean much. He'''d have to make the same case I'''ve challenged you with and prove it, and he can'''t. Ma Bell wasn'''t broken up until a little company, MCI, complained because AT&T; was attempting to restrict their access to markets using a new and innovative way to do business and serve the public.[46] " I did not mean in that statement that MSFT had attempted to restrict any other company's search algorithms, but rather that they have employed predatory tactics in the past to penalize their partners for conducting business with Microsoft's competitors. That's what gets the regulators interested, Walter. It's when a company uses predatory practices to suppress their competition when in fact the regulators deem that competition to be in the best interests of the public. http://en.wikipedia.org/wiki/Criticism_of_Microsoft#Government_anti-trust_suits http://www.businessweek.com/1997/48/b3555115.htm But anyway, MSFT's case is old news and I'm not attempting to beat a dead horse. My focus is on Google and my claims that they are not so much at threat for anti-trust actions because of the market share they have in paid search.[46] Yahoo! investor Larry Haverty has newfound respect for the man who runs the company whose shares he owns. Yahoo ( YHOO ) CEO Jerry Yang earned those props after Apr. 9 reports showed his company has been hard at work crafting alternatives to the Microsoft ( MSFT ) takeover attempt that it has rebuffed.[26] Yang's alternatives may look less appealing to shareholders than a Microsoft takeover. Investors would get cash and stock up front in exchange for their stakes in Yahoo, whose revenue growth has slid.[30] "Moreover, News Corp. interests more aligned with Yahoo!'s shareholders who seem to prefer cash and stock to pro-forma projections" in the AOL-Yahoo! deal scenario, Bazinet said.[6] The paper described the talks as being at "a sensitive stage" and a ways away from anything definite. News Corp could of course always turn around and do a deal of its own with Yahoo.[17]
Murdoch fits into the narrative because News Corp. owns MySpace, the most-popular Web site for social networking. Yahoo and Microsoft aren't heavy hitters in this area.[22] Under one plan, News Corp could combine MySpace with Microsoft's MSN and make a joint bid for Yahoo.[3] With AOL in the fray, a better price is possible, and the New York Times said Thursday that News Corp. may join Microsoft's offer. ''Microsoft, if it wants to stay in the game, is going to have to increase its bid,'' Larry Haverty, associate portfolio manager at Gamco Investors Inc., said in an interview with Bloomberg Television.[28] Analysts including UBS AG's Heather Bellini in New York suggested that Microsoft might even switch to an all- cash offer or raise the bid.[30]
"The whole situation seems to be very unstable," said Sanford C. Bernstein analyst Jeffrey Lindsay, adding that Microsofts bid for Yahoo precipitated a cascade of offers.[9]
Last Friday. I'm waiting in a lobby and I'm overhearing the TV next door, and they're watching CNBC. And these analysts are saying Yahoo has no choice now; they basically have to face the music, come down off their soapbox, accept the Microsoft bid, take it for what it's worth. and move on to be part of history. They failed, at this point.[47] Constantia holds Microsoft shares and no Yahoo stock. ''Microsoft will have to raise its bid.''[28] Lindsay predicts Yahoo shares will perform in line with the rest of the market. He doesn't own stock in Microsoft or Yahoo.[30]
By now I think clear that search is a natural monopoly. Panama worth less and less as query share drops, and ultimately Yahoo can probably make more taking a cut of higher Google click prices than getting 100% of its own (and paying dev costs). Henry, we're splitting hairs but a receptive (neutralizing) statement leaked to the press would dramatically improve the spirit of cooperation of their subsequent meeting next week, and not lessen their ability to negotiate one iota.[46] Now, Yahoo is acknowledging that Google still does it better, said Canaccord Adams analyst Colin Gillis. "What does this actually prove except to show how much Panama is lagging?'' said New York-based Gillis, who recommends buying Google and Yahoo shares and doesn't own them. "They're going to have some nice hard data into how much they're behind.''[20]
Analysts agree that a significant alliance between Google and Yahoo would be squashed by U.S. regulators because the companies combined would control some 90 percent of the online search ad market. "The company that would clearly want to come to the rescue is Google but they know the regulators would just go nuclear if they did that," Gartner analyst Van Baker said.[43] The experiment will allow Google to place ads tied to about 3 percent of the queries made in the United States through Yahoo's search engine ''' the Internet's second largest after Google's.[36] Last year, Yahoo introduced an ad platform, called Panama, designed to make search ads more relevant and more likely to be clicked. In a presentation to investors last month, Yahoo said it had reduced the gap in revenue per search between its own engine and Google's in the United States by 30 percent in the first nine months of 2007.[28]
"I'm just very concerned Microsoft will screw it up and we will end up with Google controlling 90 percent of the ad business anyway and that Yahoo culture is going to evaporate."[43] "Microsoft should look at itself as a platform, it has the ability to do that," Jarvis said. "It's better to give the content away and sell ads." Microsoft's pursuit of Yahoo to bolster its ad offerings, reflects "at a high level that Microsoft has failed," said Marc Benioff, chief executive for Salesforce.com, the San Francisco firm that pioneered the software-as-services business. "Microsoft has over-relied on their control of software on the machine. They have not innovated. "Google has shown Microsoft how vulnerable it has become," he said. "Their only weapon left is cash."[19]
Google is the most popular, attracting 59.2 percent of queries in February, according to Reston, Va. -based researcher ComScore Inc. Yahoo had 21.6 percent, followed by Microsoft with 9.6 percent and AOL with 4.9 percent.[28] By the same token, the move could push Yahoo further into the arms of Google or AOL. Either scenario could cost Microsoft more in the long run than a few billion dollars now.[26] Get it? The industry at the upper echelons that include Microsoft, Google, Yahoo, NWS, AOL/TW and maybe a double handful of others will over time organize itself into an oligopoly that competes with uniform standards, similar to the automobile industry. The quasi-monopolistic tendencies of the oligopoly participants will be offset by the efficiencies and reduction in overall costs of providing their services to the public.[46] "Our big take-away now is that as the situation gets more muddled with more participants and more uncertainty, it seems to solidify Google's standing in the industry," Cantor Fitzgerald analyst Derek Brown told AFP. A series of Yahoo maneuvers aimed at rebuffing Microsoft were announced or leaked this week, while the software giant may also be upping its game.[43] In a week marked by a dizzying barrage of news on the future of Yahoo and its suitors, industry watchers were left mostly scratching their heads. and waiting for more scraps of information to chew on. On the heels of Microsoft threatening Yahoo with three weeks to accept its acquisition offer --or else face a proxy fight and lower price--some radical scenarios swept across the so-called Microhoo landscape this week.[42] It is more than two months since Microsoft sprang its takeover offer on Yahoo, and relations have soured by the week.[3] April 11 (Bloomberg) -- Microsoft Corp.' s takeover offer for Yahoo! Inc. is degenerating into a corporate soap opera, whose cast includes many of the Internet's biggest players.[22]
Yahoo has rejected Microsofts unsolicited offer to buy it as insufficient and has been seeking alternatives to a Microsoft takeover.[50]
Tellingly, Yahoo's shares have stayed stubbornly below Microsoft's $31 offer.[3] Yahoo shares rose nearly 3 percent on Thursday to close at $28.59, while Microsoft rose 0.8 percent to $29.11.[8] Some took on the question of whether Microsoft's $31 per share price undervalues Yahoo. Others wondered if Yahoo's Jerry Yang can dance with the heavyweight champ from Redmond.[42] Gamco managed about $31 billion in assets as of Dec. 31, including shares of Microsoft and Yahoo.[30]
Yahoo would have to persuade shareholders the arrangement would not be blocked by regulators and that it would create more long-term value than an immediate sale to Microsoft. This could be a hard sell, as a significant portion of Yahoo's shares are held by arbitrage firms who are counting on a quick profit.[27] "A Yahoo-AOL merger does not provide Yahoo shareholders value equivalent to the existing Microsoft bid.''[30] Microsoft did not provide a spokesman for an interview. In a letter to members of Congress just after its bid for Yahoo, it cast the merger as "pro-competitive" and a boon to online advertisers and publishers.[45] Microsoft declined to comment. It's not uncommon for one acquisition bid to spark a wave of industry consolidation, said Marc Edelman, a New York Law School professor. What's unusual about this situation, he said, is the array of companies and markets involved in the possible alliances -- including online services, Internet ads and social networking markets. "The net effect of all of this is going to be very complicated, and something presumably the Department of Justice, as well as possibly the Federal Trade Commission, is going to need to take a very close look at," he said. "It's going to take very detailed economic analysis -- more so than your traditional two-companies-into-one merger."[14] Word of the complex alliance emerged Wednesday, adding a layer of intrigue to the two-month merger drama. Microsoft has its own options, including some discussions to make a joint bid with News Corp., owner of the MySpace social-networking site. Despite the talks, analysts said Microsoft will probably forge ahead alone and will likely prevail in its acquisition effort.[45]
The talks between Microsoft and News Corp., reported Wednesday by the New York Times, are one of the more puzzling elements of the recent news. Analysts said it's not completely clear how much Microsoft would gain by striking an agreement with News Corp.[1]
The board agreed to additional meetings, probably next week, with Microsoft and Time Warner, the New York Times reported, citing people briefed on the board's discussion.[20] At least two decisions were made at Yahoo's board meeting yesterday, say the NYT's Andrew Ross Sorkin and Miguel Helft: Yahoo (YHOO) will meet with both Microsft (MSFT) and Time Warner (TWX) next week.[46]
Citi Investment Research analyst Jason Bazinet suggested that "News Corp. has better prospects than Time Warner," because it brings a missing piece that Yahoo! could capitalize upon -- a robust social network.[6] An 11th hour cavalry charge from Time Warner may save Yahoo, Pope on Demand, Couric could be on the way out and more news items.[25]
A source familiar with the situation was unwilling to confirm to Reuters the Journal's characterization of Time Warner's thinking, but said that talks continue between Time Warner and Yahoo.[15]
IN 2001 Rafat Ali, publisher of the new media website Paid Content, used four search engines to find something on the web. "I was using Yahoo, AltaVista, Ask Jeeves and Excite and was frustrated with all of them," he said. Then he switched to Google - and hasn't looked back. [3] Yahoo has recorded eight straight quarters of declining profit as Google took market share and advertising dollars in the online search engine market.[30] Yahoo announced Wednesday it will launch a limited, two-week test of Google's AdSense for Search service, which essentially means it will be checking how much better Google is at generating cash from online advertising.[43] Yahoo's defiance marked the latest in a tug-of-war pitting two high-tech icons trying to mount a more formidable challenge to online search and advertising leader Google Inc.[36]
Any Yahoo partnership with Google for search advertising beyond a current two-week test and an alliance with AOL would also likely be reviewed.[45] April 12 (Bloomberg) -- Yahoo! Inc., after agreeing to test Internet search advertising technology from chief rival Google Inc., insists the trial run is just that.[20] Yahoo, meanwhile, is apparently seeking help from longtime rival Google, whose dominance in Internet advertising is among the reasons Yahoo's share of the market have been eroding.[43]
There's one last player that's near and dear to all the parties involved without being directly tied to the dealmaking. That would be Google Inc., this decade's answer to Yahoo, AOL and all the other Internet success stories of the '90s.[22] "The Justice Department would certainly want to take a serious look at that because it would mean that a firm that would want to take advertisements or to place advertisements (online) would have only one place to go," said Aaron Edlin, who teaches law and economics at the University of California at Berkeley. In recent years, Web search services have taken over from once popular portals or home pages, such as AOL, MSN or Yahoo's own home page, as the primary starting point for many consumers seeking information on the Internet.[21] The two-week test with Web search leader Google would involve Yahoo targeting Google Web search advertisements at 3 percent of the users of Yahoos own search services.[12] Yahoo announced on Wednesday a test to outsource Web search advertising to Google.[8] Google The world's No1 search engine and market leader in search advertising is attracted by Yahoo's audience - it has 137m American visitors a month.[3] Its initial in-principle opposition to the software giant has softened to the point where Yahoo! is justifying its rejection solely on the grounds of price. Google is using his newly created firm Qatalyst to advise it on the Yahoo! situation, although the number one search engine faces regulatory barriers if it tries to get directly involved in the bid battle.[37]
CARMI LEVY, Senior Vice President for Strategic Consulting, AR Communications: Clearly what precipitated this uptick in activity between Microsoft and Yahoo is the fact that their combined position in the market has continued to weaken since Microsoft first announced its bid. With Yahoo expected to report later this month much weaker results, that's only going to put Yahoo on an even slipperier slope. The clock is certainly ticking for Microsoft to consummate a deal; and at some point, it doesn't matter what form it takes, it needs to close this off and move on. Otherwise that window of salvation for Yahoo is ultimately going to close.[47] Microsoft Corp.' s bid to acquire Yahoo Inc. has suddenly become a lot more competitive, or at least a lot more crowded. Several giants of the Internet were revealed to be exploring separate partnerships, combinations and alliances Wednesday in a dizzying series of events that could reshape the online world -- if they ultimately happen.[14] In that event, investors hoping for a higher Microsoft bid would likely respond by selling the stock, weakening Yahoo's future bargaining position.[26] Haverty doesn't think either plan will keep Yahoo out of Microsoft's clutches. They will, in Haverty's view, force Microsoft to hike its bid.[26] Myspace also fails immensely vs Facebook, I would imagine as more people catch on, facebook will become much bigger. Microsoft should increase their bid for yahoo and try to find a way to integrate it with their facebook stake (they should increase that as well).[31]
Yahoo's management is attracted to the AOL alternative as a way to keep the company out of Microsoft's hands.[31] Rumors that Yahoo and AOL might merge have been swirling since 2006, and one financial analyst on Friday even said it might be the only way Yahoo can avoid Microsoft's buyout.[16]
MSN's Internet-based operations were not the core of Microsoft, and Microsoft still had revenue streams from desktop operating systems, productivity software, server software, development environments. Microsoft still had a whole other viable business that was able to fund its continued growth through the decades, whereas Yahoo was not so well-diversified. SCOTT FULTON: So as some financial analysts paint this picture, Microsoft can still acquire Yahoo, continue to fail in this respect, and be buoyed by the fact that it still makes Windows and Office.[47]
"The outcome is quite easy to forecast: Microsoft will purchase all or most of Yahoo," says James Owers, professor of corporate finance at Georgia State University's Robinson College of Business, who follows media mergers.[26] Even though there was no mention of anything new or creative to be the product of the merger, doesn't mean that there won't be. Really what is stopping them from Bundling Xbox 360s with yahoo messenger or myspace, or having other Microsoft products with these features. I believe this could turn out to be a wonderful merger if something new and innovative is done.[31] My guess is that it would be another merger whose potential remains a mirage. Microsoft would likely attempt to rejigger Yahoo's corporate culture and whoever at Yahoo who is still bright and creative (if they haven't already gone to Google) would jump ship and do whatever they had to avoid the Redmond-ization of what they had known and loved. Let's call this soap opera "As the Worm Turns".[31] '''In my opinion, the average consumer would not be best served by a Microsoft ''' Yahoo merger. The last thing people need today'''and the marketers trying to reach them need'''is less choice and diversity in search, which is probably the only sure thing this mega-merger will deliver.[31]
Everyone is talking about how important are the shareholders and the market. nobody in talking about millions of users leaving Yahoo's sites (mail, search, ads. ) if Microsoft will take hold of Yahoo.[47] In a public letter to Yahoo's board, released Apr. 5, Ballmer argued that Yahoo's unwillingness to seriously negotiate with Microsoft could ultimately hurt shareholders and result in a lower offer.[26] If Yahoo really digs in here, and Microsoft's only choice is to try to get Yahoo's board fired at the shareholder meeting, it is still conceivable that Microsoft will give up and go home.[38]
Software companies, for example, might not want to advertise with Yahoo, if it means the money goes to Microsoft. "If the Yahoo-Microsoft thing happened, there's the phase of people talking about its promise, but the reality is, people hunker down, and there doesn't appear to be a hard-core defined strategy of what it means to our community," said Rob Kabus, executive vice president of strategy at Aegis, a communications holding company. "In the absence of that," Kabus said, "people get to be "show me the numbers" about their advertising buys rather than open to bigger strategic alliances." [29] Depending on whether it stays an independent company or becomes part of another, Yahoo believes it is poised to revolutionize online advertising after years of being outmaneuvered by rival Google.[7] SCOTT FULTON, BetaNews: Wednesday's move, you've got to admit, was a masterstroke on Yahoo's part: Google didn't even have to do anything. It was perfectly timed, and a great idea: Open up a little beta test for a couple of weeks, we'll throw some Google ads onto our site. CARMI LEVY: They say it's a technical or marketing effort; it has nothing to do with structural rearrangement of the company itself. SCOTT FULTON: Pay no attention to all these people behind the curtain.[47] Yahoo The company needs one or more of the above. It was once the dominant search engine, but its share has dwindled. It wants to increase its ad revenues and get a piece of the popular social networking business.[3] You can't prove that. If Yahoo's test with them were to show a dramatic improvement in the net revenue that Yahoo could derive from outsourcing search to Google, and were Yahoo to elect to contract with them for the service, then what you're suggesting would possibly deprive Yahoo of an opportunity they are just as entitled to as any other business that elects to sub-set Google search on their site.[46]
Then on Wednesday, Yahoo executed what can only be called a masterstroke, announcing a simple beta test involving Google's AdSense for Search, and explicitly telling analysts not to make anything of it, especially since Yahoo has every right to explore "strategic alternatives." Suddenly, it seemed Yahoo had a world of options available to it that weren't available the week before, including a very real chance of its brand and its executive suite surviving mostly intact.[47] Yahoo! says it's going to try offloading some ad placement to Google, experimenting with using Google's AdSense for Search service to deliver relevant Google ads alongside Yahoo's search results.[17]
Yahoo's flirtation with Google could give it more leverage as it seeks a higher price from Microsoft.[14] Microsoft is betting that by combining with Yahoo, it can gain ground on Google.[43] "Microsoft and Yahoo might not be a threat to Google, but you throw Murdoch in the mix and that is a credible threat," Enderle said.[43]
The increased jockeying for Yahoo Inc. complicates the Web portal's takeover fight with Microsoft Corp. But it also simplifies the bigger picture: The five largest draws for the Internet audience are now virtually certain to shrink to four -- maybe even three.[5] What was once a straightforward tussle between ailing Yahoo and muscle-bound Microsoft has become a takeover battle swirling with intrigue, rumour and counter-rumour.[3]
The best option is to accept the Microsoft deal," said fund manager Mike Binger at Thrivent Financial in Minneapolis, which owns small stakes in Yahoo and Microsoft.[8] The fence sitting from Yahoo provides some solace to Microsoft after a week where an AOL-Yahoo deal was said to be close at hand.[41] According to Swisher, the only person who wants a potential deal with AOL is the company's CEO Jerry Yang. This week it was reported that AOL and Yahoo could potentially create some kind of partnership.[44] Ballmer, 52, said in an April 5 letter that Yahoo has three weeks to accept a deal or become the target of the company's first hostile takeover.[28]
"A long-term deal could be the only option that allows Yahoo to remain an independent company," a source close to Google said.[12] Antitrust lawyer Evan Stewart, of Zuckerman Spaeder LLP, said a tie-up between Google and Yahoo would raise eyebrows, even if the deal was not a formal merger. He called the U.S. Justice Department an 800-pound gorilla with the power to investigate any deal it found troubling.[8] Even if a Google deal happened, it would do nothing to stem the decline in numbers of Web searchers using Yahoo.[12]
I predict Mickysaurus will eat Yahoosaurus in the end but the result will be a slow moving constipated dino, not an agile beast that can do battle with Google. All the smart engineers will leave (or have already left) Yahoo and can now do something creative, fun and new in startups or other innovative companies in the Silicon Valley instead of wasting their efforts @ Yahoo.[31] Internet advertisers can't figure out what the two companies will look like in six months, so search leader Google is set to profit from the confusion. "We find this to be a very advantageous situation for Google," Cantor Fitzgerald analyst Derek Brown said Thursday. "The longer this gets dragged out, the better for Google." He added: "The more complicated a deal gets, the more difficult it becomes to satisfy all parties, and the more complicated the integration gets, the more it favors Google."[33] MSFT would have assembled a relatively substantial Internet presence with significant traffic at what would likely be a much lower cost that the YHOO deal. This would give MSFT a better platform with which to compete with YHOO and try to beat rather than buy them. It also has the added advantage of including a poke at GOOG to the extent the AOL outsourcing deal includes change of control provisions that would allow MSFT to capture that search volume. I'm not entirely sure what Microsoft adds to this deal however.[31] Frankly, the best deal of the bunch, would be for News Corporation to buy AOL from Time Warner. That merges a portal, instant messaging system and social network together.[31] What do I know? I thought the merger of Time Warner and AOL was an ideal meeting of the old and the new.[31]
Time Warner needs an Internet play, but 20 percent of a combined Yahoo-AOL may be better than 100 percent of a still struggling AOL competing against Google and Microsoft-Yahoo.[31]
Microsoft's own Internet initiatives haven't exactly taken flight. Franchises such as MSN, formerly hotmail, and Web 2.0 initiatives such as.NET have lost a little of their shine over time. While Microsoft's highly profitable Windows desktop software continues its dominance in the PC space, the business of the computers it runs is looking a little clunky as sleeker machines and Net-based applications come along. As some tech fans might view it, it's the dawning of the Google, Research in Motion, Apple or Grimple era, and the twilight of the Windows Intel or Wintel period.[23] I just can't stand the idea of MS owning everything." Another reader opined, however, that customers don't care about a possible Microsoft acquisition because Yahoo has become irrelevant, because this will likely be the "one-two" punch to take out Microsoft, and the Internet business has become "just that, business."[42] Just days after Microsoft's February 1 bombshell that it was going after Yahoo directly, many financial analysts declared Yahoo to be headed to that great collection of defunct Internet brands in the "cloud" someplace, perhaps alongside Netscape.[47] "Bottom line, we believe that a 'clean' acquisition of Yahoo! by Microsoft is still the most likely scenario." Forrester Research analyst Shar VanBoskirk thinks that this would be a favorable outcome, but sees the latest moves by Yahoo! as the firm doing "whatever it can" to stay away from Microsoft.[6]
SEATTLE ' It's a corporate thriller, without question, but the growing drama around Microsoft's Yahoo acquisition bid has left most of the technology world guessing about which parts ' if any ' will ultimately come true.[1] The one hand I can't figure out is that of Microsoft. People involved in the deal told my colleague, Andrew Ross Sorkin, that Microsoft sees News Corporation as a way to help increase its bid. It's not that it needs the cash, but that the possibilities of a three-way combination may make enough more money to justify a higher bid.[31] "We continue to believe that deal is the most likely outcome and continue to believe that it will happen at a higher price than the initial $31 bid," wrote Citigroup ( C ) analysts Mark Mahaney and Brent Thill in a note to investors. Microsoft has proved unwilling to up its bid, which was made public Feb. 1.[26] ''We continue to believe a Microsoft-Yahoo deal is the most likely outcome and continue to believe that it will happen at a higher price than the initial $31 bid,'' Citigroup Inc. analysts Mark Mahaney and Brent Thill wrote in a report Thursday.[28]
The $31-a-share bid was 62 percent more than Yahoo's closing price Jan. 31.[30]
Yahoo would use the cash and other funds to buy back several-billion dollars in stock at a price near the middle of a range between $30 to $40 a share, a source familiar with the plans said on Thursday.[8] Since YHOO was trading at $19 before MSFT came calling, a post MSFT walk-away price of $20 for Yahoo seems awfully optimistic. Here's a scenario that's been floated by others: MSFT to buy AOL, and acquire MySpace from NewsCorp, and leave Yahoo! dangling in the wind (with a full court press on keeping them away from GOOG).[38] I've just noted something strangely coincidental to my remarks. I'm about to post these remarks under a captcha code that reads: "maims" -- BTW - Mr. Webmaster, big improvement in the captcha, thanks. There is one element of this deal that I haven't seen discussed, although I may just have overlooked it. It's that it is entirely possible for whatever deal MSFT were to close this for (at least to the "in principle price" of a definitive agreement) that the deal may be worth considerably more to Yahoo sellers by the time of the closing of such a deal. Let's not forget that MSFT still stands a reasonably good chance, in my personal opinion, of surprising favorably again at their next quarterly report.[38]
Yahoo's shares barely budged after news of the Yahoo-Google deal was reported.[27] As of December 31, Thrivent owned about 1.5 million Yahoo shares, or 0.11 percent, and about 6.3 million Microsoft shares, or 0.07 percent, according to regulatory filings.[8] Yahoos share of the U.S. Web search market has dropped more or less steadily to 21.6 percent in February from 26.9 percent in January 2007.[12]
Yahoo is looking to revive revenue growth, which has slowed for three consecutive years and dropped below 10 percent last year for the first time since 2001. Whatever happens with this effort, there are more than enough soap-opera elements to make Microsoft-Yahoo an intriguing takeover fight. The ultimate winners, and the prospects for them and their shareholders, may not count for much as it unfolds.[22] Yahoo, owner of the second most-used search engine, said in a presentation to investors last month that it narrowed the gap in the amount of revenue generated from each search query by 30 percent in the first nine months of last year.[20]
Some search experts argue that there's no way that Yahoo could be considering the deal a sustainable option. "I can't see a long-term arrangement coming from this," said Frank Lee, vice president of search at The Search Agency.[24] The proposed Yahoo deal, and other companies' efforts to thwart it, show how powerful the search leader has become.[23]
In an attempt to improve the relevance of ads attached to search results, Yahoo plans to adjust the process advertisers use to bid for placement as soon as next week.[35] Is it just me or Yahoo is not going to be sold that cheap to MS? I believe that it is good to thing for Yahoo to stand on their own but I also think that they will need something new in their advertising (new tv ads maybe?) to bring in more people.[53] CARMI LEVY: Right, and I think there's recognition that Yahoo's current leadership team has pretty much run out of options in terms of positioning the company as a market leader in the future. They've gone as far as they can go, they've done as much as they can do, and I believe that new blood is needed, and I believe that Yahoo itself recognizes that.[47]
Yang, 39, Eric Hippeau and Arthur Kern have been on the board since before Yahoo's initial public offering in April 1996. "It's quite possible that the first instinct of people who've been there from the outset would be to look to see if keeping the company independent would be viable,'' said Jeffrey Lindsay, an analyst at Sanford C. Bernstein & Co. in New York.[20] Analysts and investors had already been speculating that Microsoft CEO Steve Ballmer and his board would be forced to sweeten the company's cash-and-stock offer of $31 a share.[26] Microsoft's January 31 offer was initially valued at $U44.6 billion ($48 billion), or $US31 a share, but after a decline in Microsoft's shares, it has fallen to about $US41.6 billion, or $US28.95 a share.[11]
April 7: Yahoo again rejects Microsoft's offer on the basis that it is too low.[16] Not to be outdone, Microsoft hit back with news that it was talking about a joint offer or arrangement with News Corporation, the media group that owns The Sunday Times and MySpace, among other titles and companies.[3] Symantec CEO John Thompson kicked things off with a few predictions : that malicious software will outnumber legitimate software, increasing the need for so-called white listing; that identity management will grow "beyond the enterprise" and start to include every customer in the world; and that digital rights management will be become a reality for all content, not just music and video. Microsoft took advantage of the security crowd to release its new Stirling security suite in public beta. The Stirling security package, the next wave of its Forefront software, offers one management console, enabling administrators to push policies out across PCs, servers, and other computers that access the Internet.[42]
A takeover by Microsoft, the world's biggest software maker, is the most likely outcome, analysts and shareholders say. The board, which rejected the offer as too low, is weighing its alternatives, said the person, who declined to be named because the meeting is private.[30] As for Microsoft, it is just desperate. If it is able to pull off this stunt and purchase Y!, I expect an exodus of talented Y! employees before all is said and done (I'll be waving goodbye as well). It will succeed in killing off two companies at once. It might still succeed in that, even if it isn't able to buy Y! There are still many more obstacles ahead, including a showdown with EU regulators over antitrust concerns while weighed down by its recent antitrust setbacks, a possible Democratic administration which may provide more than a cursory glance over the application, a possible poison pill invoked by the Y! board, disgruntled shareholders of both companies, negative public opinion, an impending drop in revenues as fewer computers are sold combined with open source software eating its lunch, and a tight credit market that will make it harder for any company (including MS) from getting loans to pursue its prey.[41]
While Microsoft and Yahoo! engage in their odd mating ritual, they are benefiting the very company that is driving them to seek partners.[33] If Yahoo makes an alliance with AOL and then is bought by Microsoft, the combined resources span a formidable swath of hot websites.[43] A potential merger of AOL and Yahoo met with muted reaction from shareholders, analysts and insiders.[3] Binger said an AOL-Yahoo merger made no sense. "I just see Yahoo as a mature brand and AOL as a declining brand," he said.[8]
Debates about valuations helped create an impasse in similar discussions between Yahoo! and News Corp, where Yahoo was not willing to accept that MySpace, the News Corp social network that would have been injected into Yahoo!, was worth as much as $15 billion. [37] Ballmer is pursuing Yahoo to challenge Google's dominance of the $41 billion market for online advertisements.[28] Bolan called a combined AOL and Yahoo "crazy. They are talking about valuing AOL between $10 billion and $12 billion dollars.[19] So far, Yahoo has rebuffed the overtures, calling the offer - originally valued at $44.6 billion - inadequate.[45] The decline effectively cuts the cost of Osaka-based Takeda's $8.8 billion takeover offer for Millennium Pharmaceuticals Inc., a Cambridge, Massachusetts-based company that developed the Velcade cancer drug, and other bids.[22]
Which is why we're skeptical of the recommendation of some analysts that YHOO is a screaming "event buy" here. The stock is trading only slightly below the value of Microsoft's current bid, and if Microsoft were to suddenly increase its bid to, say, $33, the stock would likely jump 15% or more.[38]
"Microsoft remains the most motivated and best capitalised option for Yahoo," said Stanford Group analyst Clay Moran.[3] "Microsoft remains the most motivated and best capitalized alternative for Yahoo,'' Stanford Group Co. analyst Clay Moran said in a note yesterday.[30]
We know that Microsoft and Yahoo have been in talks before, rather significant ones, long before it was ever disclosed in Ballmer's letter of Feb 1.[46] Yahoo's board, seemingly less romantic, may simply want a way to force Microsoft to pay more.[31] If I were Yahoo, I'd run the other way from Microsoft as well. It isn't that Yahoo is so wonderful and that Microsoft is so bad, but just that it would a shotgun marriage between two very different corporate environments, one in Silicon Valley and the other up near Seattle.[31]
"I think Yahoo genuinely doesn't want to merge with Microsoft," Baker said. "They think it will be bad for the employees and bad for the industry, and I don't disagree with that."[43] Truly, MS is so large that what's good for the world is good for Microsoft. To be a healthy business, you don't need to solve the problems of Yahoo! or its stockholders.[48] Yahoo's board members received a letter last weekend from Microsoft's fearsome chief executive, Steve Ballmer.[3] Yahoo responded to Microsoft's threat of a proxy fight by insisting on a higher price.[28]
Yahoo spokeswomen were unavailable for comment. A Google spokesman declined to comment, saying he was not aware of the story and was not aware if the Wall Street Journal had called his company for comment.[49] Google Yahoo MSN More feeds available in our RSS feed index. Xerox spinoff company is using technology from its printer business to make better solar cells and to purify water. View this gallery.[42] Some in the industry (especially Yahoo! and Google) may despise your company, but to consumers it is mostly a familiar and reputable name. They trusted it with their Hotmail; they will trust Health Vault with their medical info. They need applications to manage and explore that information, not just for health care, but around prevention and healthy living.[48]
Through the flurry of activity, Google's competitive threat has remained constant, if not stronger and more stable. If your head is spinning, you're not alone, which is why we've at least attempted to clear things up with this visual guide to the saga, which is only likely to get more confusing. The Yahoo board, for its part, is expected to meet Friday to weigh the different scenarios. Of course, every analyst in the world--even those with more journalistic bents here at CNET News.com--has been trying to make sense of the moves.[42] The territory I'm thinking of is health care. This market is a monster, potentially much bigger than Iraq -- I mean, than Yahoo! And if you invest here, you'll be growing all along, mostly organically, rather than trying to squeeze profits out of a revenue stream by cutting costs. There are two big opportunities in health care, both well suited to you (and the second one less to Google, before you even ask).[48] My guess is that all the talent at Yahoo will find new jobs the day of the takeover.[44] Regardless of how this turns out, the technological integration for any of these players will be so substantial that in all likelihood, most of Yahoo (and/or most of AOL) will be jettisoned. All of these scenarios are ones in which the buyers are putting their competition out of their misery - they're buying out the competition and businesses on the decline.[31] Something missing in the hypothetical MSFT going for AOL and MySpace in lieu of Yahoo is technical depth. When Bill Gates said he wanted Yahoo for the engineers, he wasn't entirely diverting.[31]
Let's not forget the odd conundrum with a News Corp/MSFT/Yahoo combo given MSFT's stake in Facebook the big rival to News Corp's MySpace. Of course, Microsoft already has content deals with News Corp's Fox Sports so there's at least some precedent in the two working together but this is of course on a whole other level.[31] News Corp. also has a long-term deal with Google to host online advertising at MySpace.[43]
The Verizon ad deal, whose price was not disclosed, will give Platform A the right to represent all of Verizon's advertising space on the Internet, including premium space, the companies said. "We're all about working with Web sites to serve whatever needs they have," Lynda Clarizio, president of Platform-A. Continued.[40] "A Yahoo-News Corp. deal or a Yahoo-Time Warner deal would allow us to sync our marketing capabilities. That's really exciting," McDougall said. Other advertisers said the Microsoft-Yahoo deal might alienate the ad community in more ways than one, if Microsoft start to make a pitch on why it's important.[29] The Justice Department and a handful of congressional committees have expressed interest in reviewing any merger. Attorneys have said that such a deal would be bound to receive intense scrutiny, particularly because of Microsoft and its past run-ins with regulators over it business practices.[45] The deal would exclude AOLs fading dial-up Internet access business and value AOL at about $10 billion.[39] Why the delay, Jimbo? You take a split-second to drum up a buy or sell thesis during Mad Money's lightning round. This deal really shouldn't have taken that long. Washington Mutual (NYSE: WM ) scored a $7 billion balance sheet infusion, yet it also slashed its dividend and warned of a whopping $1.1 billion quarterly loss. I keep thinking of those WaMu commercials, with all of those bankers aghast over all of the free perks that WaMu gives its customers.[52] In more concrete matchmaking news, EMC (NYSE: EMC ) is acquiring Iomega (NYSE: IOM ) in a $213 million deal. Iomega is still publicly traded? It may be a shocker to longtime Fools, who might remember the company as an early favorite around here in the mid-1990s. Most investors forgot about Iomega after its once-revolutionary Zip drives were supplanted by CD-Rs and flash memory drives. Apparently, Iomega is still making enough backup solutions to appeal to a data-storage giant like EMC. It's just a shame that Iomega couldn't go out on top.[52]
In your calculations, you forgot that it is very cheap to go short stocks today, via CFDs for example, in which case you could profit from the deal going bad (by shorting Yahoo).[38] I'm in yours (and likely most everyone else who reads me), so you should understand it by now. Henry, I wish you'd lay hands on Sorkin and get him to flesh out the likely source of the "billions" in Yahoo stock buy-backs that might come from an AOL/TW deal.[46]
The investment would let Yahoo buy back billions of dollars in stock, the person said.[20] Yahoo's largest investor, Capital Research & Management, is betting that the increased attention results in a higher stock price. The Los Angeles-based firm expanded its Yahoo stake to 10.1% as of March 31, according to a regulatory filing Thursday.[5]
Soon, though, Yahoo will move to a variable minimum price, the company said Friday.[35] Shouldn't your risk/reward factor in the actual odds of the event happening? For instance, if my upside on "company X" is 15% but the downside of is -40% then according to your analysis the risk reward is pretty terrible. Walk??Please.Steve is measuring the windows for the drapes.He means to have Yahoo, one way or another. I still say the reason he won't pony up more money is because he needs it to pay for his Rogaine and Jenny Craig, but that's another matter.[38] Kern is an investor in several media and marketing companies, and Hippeau is managing partner of venture capital firm Softbank Capital Partners. Its parent company, Softbank Corp., helped start Yahoo's European and Japanese operations in 1996.[30] Countries and companies need to be grown, not constructed or assembled. First of all, why take on Yahoo!? Unlike the old Iraq, it's not even evil, and its weapons of mass profitability, called Panama, seem to have been mostly a figment of certain engineers' and analysts' imaginations.[48] Don't expect variable pricing to be switched on completely in one fell swoop. The change is launching in the United States and will arrive internationally later, spokeswoman Kristen Wareham said. It will begin with some keywords and eventually spread to all of them, she said. Yahoo alerted advertisers of the minimum-price change in February on its search marketing blog, and offered some answers to frequently asked questions page.[35] A combination with Yahoo would give it access to the second-biggest search engine and a huge pool of consumers.[3]
Google still made as much as 70 percent more in sales from each query at the end of 2007, Sunnyvale, California-based Yahoo said.[20] The Wall Street Journal reported the Yahoo board would meet on Friday but said no big decisions were likely until at least next week.[8] Yahoo's board is meeting today to consider options, according to a report Friday in the Wall Street Journal.[23]
The Yahoo bid was "a tactic and a strategy" toward that end, Turner said." The rest is now up to their board," he added. [33] We believe we've made a very fair offer to Yahoo's board of directors," Kevin Turner said. "Currently, it's in their hands to decide the outcome of that offer," he said.[33] "No one here, except Jerry and the board, has any enthusiasm for it," said one Yahoo executive.[44]
Yahoo was once the hottest name on the internet but years of lacklustre management have erased that lead. Now it's hot once again, caught in a tug of love between four of the biggest media and tech companies on the planet.[3] Microsoft is scared shitless about the online business apps coming from Google and other small players. I can tell you from personal experience that Microsoft doesn't have too many products, aside from their operating system, required by small companies.[38] The Microsoft chief has a reputation for being one of the most aggressive operators in the business world. Type "Ballmer" into Google and you will be directed to infamous footage of Ballmer bouncing around a stage like a gorilla shrieking: "I love this company." Subtlety is not his suit.[3]
Despite Microsoft's advertising relationship with Facebook, social networking is one of the weak links in the Redmond, Wash. -based company's online lineup, said Matt Rosoff, industry analyst at the independent Directions on Microsoft research firm.[1] Dema Zlotin, founder and vice president of strategic services at Covario, agreed. "This is not a meaningful long-term play, because it flies in the face of everything they've been trying to do to build a unified online advertising platform," Zlotin said. "It's a strategic move to get a better offer out of Microsoft."[24] The original Microhoo announcement came at the end of January. Now that Microsoft has threatened to pull its offer in a couple of weeks, time's running short. I bet you'll see some interesting developments in this story throughout April.[52]
The timing of the announcement expected on Monday is ironic as Verizon sued Time Warner Cable Inc last week accusing the majority-owned cable TV operator of false advertising related to Verizon's FiOS high speed Internet and television service.[40] Just like users of Internet Explorer. I've used AOL and Time Warners services and I'd say both are just as bad as MS for their own reasons.[44] AOL recently bought Bebo.com, Britain's biggest social network site, and remains a big draw on the web. AOL has been an albatross around Time Warner's neck since its takeover in 2000.[3] In another, the company is discussing a possible combination (BusinessWeek.com, 4/10/08) with Time Warner's ( TWX ) AOL.[26] The scramble for a prom date is an unexpected boon to Time Warner, which has grappled with what to do about AOL for years.[5]
The integration would be easier. (The biggest problem there is the historical animosity between Time Warner and News Corporation.)[31]
Microsoft representative Frank Shaw didn't return a call seeking comment, and Teri Everett, a spokeswoman for New York-based News Corp., said the company doesn't comment on ''speculation.'' [28] MM, My Google/Yahoo analysis and speculation about a merger between the two is entirely that. just speculation. It's fueled by own theorizing of what a Google/Yahoo merger would look like and what it would mean for Microsoft. It would be crushing, devastating news for Microsoft, and it's scary for them likely because they suspect, as I do, that it could be pulled off.[46]
As a 35 year tech vet this is one of the more interesting scenarios that I've seen, even surpassing the Time Warner-AOL merger which was an amazing failure. Same assets, different group of mops this time around with Levin, Parsons and Case having passed on to where ever rich, exposed CEO's go. Now we have Yang (no clue), Bewkes, Schmidt and the boy wonders from Google and Rupert Murdoch on his quest to create ???? and Monkey Man, Steve Ballmer who has shown the ability to dance badly and little else in his tenure as CEO.[31] Fact is that MSFT does not have the technology in place in time to do search, ad serving and cloud computing (largely due to using Windows servers) to compete with Google.[31] Search engines - led by Google - still dominate the way people access the web and therefore the attentions of advertisers. Not so long ago half a dozen firms competed for those searchers and the ad revenue that followed them.[3] That world of course is the Net, and Google ( GOOG, Fortune 500 )'s sustained strength in turning search and other Web-based applications into revenue has left the rest of the pack collectively wheezing and wanting to make deals to rally a defense. All this casting about for winning strategies has created several plausible moves and, as some have characterized, some desperate proposals.[23]
At the top of the agenda is a deal with Microsoft, which seems to be the consensus choice among analysts and industry observers.[23] Most analysts are now betting that Microsoft plus extra cash will win the day. "It's got to end soon, right?" enquired one media executive involved in the talks.[3] A takeover by Microsoft, the world's largest software maker, is the most likely outcome, said analysts including Stanford Group Co.' s Clay Moran in Boca Raton, Florida.[20]
The shares are little changed since surging 48 percent on Feb. 1, the day of Microsoft's bid.[20] Microsofts share is down to 9.6 percent in February from 10.4 percent in January 2007.[12]
The $14-a-share price cited in the April 8 submission by Apollo, headed by billionaire Leon Black and based in New York, was 42 percent lower than the original sale price on Aug. 8. The New York-based firm filed on behalf of its institutional holders and doesn't plan to sell new shares.[22] Fortress Investment Group LLC, the first U.S. manager to make an initial share sale, lost 31 percent. Both are based in New York.[22]
Googles U.S. share has grown to 59.2 percent in February from 52.6 percent at the start of 2007, according to Internet audience statistics from comScore Inc.[12] Google fears that a combined entity could limit user access to rival Internet products and give it too much control in e-mail and instant messaging, areas where it would hold dominant market share.[45]
There's a big difference between being the clear number one search provider and being the only provider. If they were to do a long-term partnership, Microsoft's share isn't large enough to really provide any sort of significant alternative." [24] Turner said Microsoft would "continue to drive market share from a search standpoint within the consumer space, and that's a strategy we're committed to in the long term."[33]
Because of a decline in Microsoft's shares since then, the purchase is now valued at about $29.94 a share, as of today's close.[30]
My guess is we'''ll eventually have about two or three major competitors, each with a Microsoft or Google type of nucleus. http://en.wikipedia.org/wiki/Oligopoly -- I'm not an expert on disclosure but I can tell you that there is much about discussions between two companies that doesn't have to be disclosed. [46] I still read the local paper in print (it only has 1 section), but usually read the Times everyday on the web (which is one of the few old media companies that has successfully translated to the new, and actually is an improvement on the internet.) I may or may not watch TV at night, but then moving images on the web is still in its infancy, along with storytelling in novel form.[31] At the time, it was AOL buying Time-Warner, which even then, struck me as weird. Here you had this large media company, Time-Warner, with billions in assets, including the bricks-and-mortar kind, being bought by this major Web 1.0 player, AOL, who charged ridiculously high monthly fees for basic dial-up service that you could only use inside of their walled "garden" of ho-hum Web services.[31]
Chairman Roy Bostock and Activision Inc. CEO Robert Kotick joined in 2003. Mary Wilderotter, the only woman on the board, and Vyomesh Joshi, an executive vice president at Hewlett- Packard Co., both arrived in the past three years. "It's quite possible that the first instinct of people who've been there from the outset would be to look to see if keeping the company independent would be viable,'' said Jeffrey Lindsay, a New York-based analyst for Sanford C. Bernstein & Co. "The newer members don't have the same sentiment or associations with the company.''[30] The week was eventful for struggling cell phone maker Motorola Inc. as well. Motorola settled issues over control of its board with billionaire investor Carl Icahn and named a new chairman. Motorola headed off a proxy battle with Icahn, agreeing to back two of his board director nominees _ William Hambrecht and Keith Meister _ in exchange for Icahn dropping litigation against the company. Motorola said it elected former chairman and chief executive of AT&T; Inc. David Dorman as its non-executive board chairman.[32]
Meanwhile a new breed of search and social computing company is surging through the Internet.[31] Are you aware that railroad right-of-way (yes, the ground near and under the tracks) played a significant part in up-ending Ma Bell? Is Google restricting any other company'''s search algorithms? or access to Google's own customers?[46] It is also developing a way to search on the audio within video clips. Now, Salesforce.com and Google have made it official: they're linking up to offer Google Apps integrated with Salesforce.com's CRM (customer relationship management) applications.[35] The regulators won't restrict Google just on size alone. Size is not the problem with monopolies, but rather the coercion and abuse that's often used to support them. Google has approaching a dozen competitors for search and they don'''t (to my knowledge) restrict their competition by applying coercive tactics to their advertising customers. They just beat their competitors''' brains out with a superior algorithm.[46] Now imagine 10 Googles, but that'''s easier to imagine because in the early days of search engines, that'''s about how many there were. Some of them are still around, and what do they accomplish in efficiency of search or in value to advertisers?''' Very little, or they'''d be Google instead of Google being Google.[46]
Flickr, Yahoo Finance, etc all have value that could be unlocked, but i'm not sure how. Maybe they should buy up the remenants of stage6 and integrate it with silverlight and flickr, and whatever their music offering is to create a super media and content delivery network. [31] Steve Case, the head of AOL, was being hailed as a genius. His compensation for the deal proved that, at least financially, he was a genius. All this stuff about who may buy whom remains a mystery to me.[31] AOL deal is totally a crazy idea. AOL has so much problem that no one is crazy enough to buy them.[44]
Wiener also acknowledged a potential pricing impact. "In theory, a deal like this should make no difference in terms of click prices because the search market operates via auction," he said.[24]
VanBoskirk doesn't see a Yahoo!-AOL alliance as being particularly fruitful. While they would give each a bigger footprint in the online arena, their overall capabilities are so similar that a deal wouldn't provide either with a new competitive advantage, she said.[6] Well, it does. What's your favorite commercial of all time? Does it not trouble you that it's from 1984 or earlier? How about the new marketing offerings online? Or as I like to call it these days, "traditional interactive." Do you know a denim dad? He is one of nine multidimensional consumer types that shed light on evolving attitudes and represent some of the key behaviors shaping tomorrow's consumer landscape.[6] From print to online advertising trends, advertising professionals can read all about the latest advertising news at Adweek.[6]
Microsoft has already taken my former 4-secretary office and turned into one lonely trooper over the last 15 years. About all that'''s left for her to do is check the snail mail, answer the phone, do some minor administration, cut checks and fill out the few forms I don'''t fill out myself. [38] Analysts consider a long-term partnership between the two to be highly unlikely, however, and consider it more as a way to fend off Microsoft by showing it has alternative options.[4] The prospect of a deeper ad-revenue partnership with Google alone is enough to scare a few more dollars from the company, analysts say.[26] "Google doesn't want to own content," said Jeff Jarvis, a media analyst who writes the BuzzMachine blog. "They want to be a platform for everyone to use." This week's announcement between Google and the Chicago Transit Authority is one example of this philosophy: For trip planning purposes, Google allows the CTA, for free, to tap into its database of maps and images to create a more vibrant and rich guide to get around Chicago.[19] Henry, I invite you to take my claim and lift it to its own topic. It's as good a time as any to debate the anti-trust implications, if any, of Google's business.[46] Much of the drama revolves around the coveted search marketing business, which Google dominates.[29]
Google's structure is the one some analysts think best matches the future of the Internet.[19] Generations coming online now and in the future are infinitely more Internet savvy and will be much more discerning than present-day consumers. They will effortlessly break or sidestep old search habits. I believe consumers will demand more variety, immediacy, personalization, and rich-media in their search and social computing experience, and will disdain anything that comes close to a walled garden.''' For its part, NeXplore Corporation recently launched NeXplore Search (www.NeXplore.com), an innovative Web 2.0 search engine optimized for a superior end-user experience, rich-media display and social network integration.[31] A combination with AOL would bring together the second and fourth most-used Internet search engines in the United States.[28]
For several reasons, I MUST have, at minimum, one clerical person''' so she'''ll for sure be there the next time I paint the place. That won'''t be true for other clerical types that the ever-marching of technological change will send to the new-claims lines. Were MSFT to get this issue settled to the point that it's a matter of Wall Street beginning the process of discounting the pro-forma EBITDA that is anticipated from this merger, then MSFT's stock could move up pretty significantly over the period of the next, say, 18 months or so, given they can continue the earnings momentum of the last few quarters. [38] Microsoft chief Steve Ballmer threatened a proxy fight in about two weeks if the board didn't give in.[30]
SOURCES
1. Yahoo leaves many guessing in acquisition drama | Chron.com - Houston Chronicle
2. Yahoo board OKs meetings with suitors
3. Who's next, Yahoo? - Times Online
4. AOL could benefit in Yahoo deal - Entertainment News, Business News, Media - Variety
5. Fight over Yahoo would limit online choices - Los Angeles Times
6. Street Mulls Prospects for Yahoo! Deal
7. Short Circuits | courier-journal | The Courier-Journal
8. Microsoft seen as winner for Yahoo - International Herald Tribune
9. News Corp and Microsoft seen discussing joint Yahoo bid - International Herald Tribune
10. Analyst: Yahoo-AOL merger is a viable option | Tech news blog - CNET News.com
11. Yahoo board still searching for the right answer - BizTech - Technology
12. Yahoo to test Google ads as defence vs. Microsoft - International Herald Tribune
13. Free Preview - WSJ.com
14. Other Web Giants Crowd Microsoft's Bid For Yahoo - HispanicBusiness.com
15. Microsoft prefers own Yahoo bid among options: source | Reuters
16. PC World - Business Center: Yahoo Weighs Options as Microsoft Drama Continues
17. Now Yahoo's Doing a Deal with AOL as Microsoft-News Corp Plot Joint @ SEARCH JOURNAL
18. Flurry of deal talks reported over Yahoo - Atlanta Business Chronicle:
19. Is Yahoo deal set up for failure? -- chicagotribune.com
20. Bloomberg.com: U.S.
21. Higher antitrust bar for Yahoo-Google than Microsoft | Reuters
22. Bloomberg.com: Opinion
23. Google's dominance forcing rivals' hands - Apr. 10, 2008
24. MediaPost Publications - Yahoo/Google Search: A Temporary Fix Or A Long-Term Problem? - 04/11/2008
25. Yahoo Circled by News Corp., Microsoft :: Cable360
26. Microsoft-Yahoo: Motivated Buyer Yet?
27. Yahoo, Google enter into search ad deal: Times Argus Online
28. AOL interest good for leverage -- themorningcall.com
29. L'affaire Yahoo is tres banale to Madison Ave. | Tech news blog - CNET News.com
30. Bloomberg.com: U.S.
31. Is Yahoo the Odd Man Out? - Bits - Technology - New York Times Blog
32. Tech Roundup: 'Microhoo' Saga Heats Up | Chron.com - Houston Chronicle
33. Micro Who? Google Rules The Ad Roost - Forbes.com
34. Yahoo considers options | ajc.com
35. Yahoo refining search-ad bidding process | Tech news blog - CNET News.com
36. Microsoft-Yahoo takeover battle adds new twist with Google ads : Markets : Ventura County Star
37. Yahoo! holds council of war on Microsoft plan - Times Online
38. "Yahoo-Microsoft Done Deal, Only Question is Price." Unless MSFT Walks - Silicon Alley Insider
39. Yahoo, Time Warner closing in on AOL deal - International Herald Tribune
40. AOL lands Verizon advertising deal | Reuters
41. Yahoo Fence Sitting, Will Meet With Microsoft And AOL Next Week
42. Week in review: Microhoo, Yahoogle, and Microspace, oh my! - CNET News.com
43. AFP: Google gains from Yahoo-Microsoft takeover drama: analysts
44. TG Daily - Yahoo morale down, unexcited about AOL talks
45. Fierce battle rages over Yahoo/Microsoft deal
46. Yahoo To Meet With Microsoft Next Week (And AOL) - Silicon Alley Insider
47. BetaNews | Carmi Levy: Yahoo's options, now that it appears to have some
48. Esther Dyson: Release 0.9: Steve, to Your Health! - Business on The Huffington Post
49. Yahoo in talks to use Google search ads - International Herald Tribune
50. Microsoft says Yahoo/Google deal anti-competitive - International Herald Tribune
51. Does Microsoft Need Yahoo More Than It Lets On? - Seeking Alpha
52. A Fool Looks Back
53. Video Recap of Weekly Search Buzz :: April 13, 2008
GENERATE A MULTI-SOURCE SUMMARY ON THIS SUBJECT:
Please WAIT 10-20 sec for the new window to open...
You might want to EDIT the default search query below:
Get more info on AOL lands Verizon advertising deal by using the iResearch Reporter tool from Power Text Solutions.
 |
|  |
|
