Saturday, February 09, 2008

Yahoo Considers Playing a Google Defense -

Some updates on the potential Yahoo takeover :

Yahoo Considers Playing a Google Defense -
"Yahoo Inc.'s board of directors discussed its options Friday in the face of Microsoft Corp.'s unsolicited offer to buy the Internet company...Yahoo has said its board would consider the Microsoft offer and any alternatives, including keeping Yahoo independent....

Among the options Yahoo directors discussed was the possibility of abandoning its own search-advertising system, which generates significantly less ad revenue for each consumer search, and using ads from Google in return for a majority share of the revenue. Such a deal could increase Yahoo's cash flow and give it more latitude to try to thwart the Microsoft approach.

But antitrust experts say even such a pact with Google would likely raise red flags, including an advertising-outsourcing pact with Google Inc., people familiar with the matter said."
From the Financial Times:
"The flurry of activity by investment bankers that started following Microsoft’s offer to acquire Yahoo! last Friday is now subsiding with the realization being that it is simply too large of a transaction for interested rival bidders to jump in, a source familiar with the process told dealReporter....A rival bidder would have to come in with a minimum of a USD 47bn offer with Microsoft likely coming back and topping the bid, which is leading many to pass, he added. It is understood that both IBM and HP have been presented with an opportunity to look at Yahoo! and decided not to move forward, citing size as one of the reasons for the lack of interest."
And Business Week looks at how if the deal is consummated, the two companies can be successful.
"If Yahoo goes for the deal, the lesson for Ballmer is clear. Be ruthless in forcing managers to work together. Don’t let one faction torpedo another by keeping alive competing brands. Pick the winners and move on. Is Yahoo ahead in getting its services ready for mobile phones, including those running Microsoft’s operating system? Go with it. Take a very hard look at Yahoo’s Panama advertising platform and whatever Microsoft’s got cooking. Probably only room for one platform going forward, as Ballmer already alluded to in an interview with the Wall Street Journal. Maybe there are a few areas where you keep two competitors running, say Hotmail and Yahoo’s email, but not many otherwise you’re wasting resources and failing to take advantage of the scale you’ve created."

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