Yahoo May Re-Consider Google Alliance, Rebuff Microsoft 273
anastasd writes "Reuters is reporting that Yahoo might consider a business alliance with Google as a way to top a $44.6 billion takeover proposal by Microsoft. 'Yahoo management is considering revisiting talks it held with Google several months ago on an alliance as an alternative to Microsoft's bid, that source said. At $31 a share, Yahoo believes the bid undervalues the company, two sources said. A second source close to Yahoo said it had received a procession of preliminary contacts by media, technology, telephone and financial companies. But the source said they were unaware whether any alternative bid was in the offing.'"
Re:What's in it for Google? (Score:4, Informative)
This is very different from MS doing, say, Zune or MSN. In both the MS cases these are independent strategies that have no synergy with Windows or Office (ie. Windows and Office don't really benefit from Xbox and MSN).
Yahoo is popular outside of the US (Score:5, Informative)
Yahoo is also an ISP in Japan with a rather large penetration.
Check your stats (Score:5, Informative)
Google and yahoo are neck and neck (with google slightly ahead for the last while). That gives google 1 & 3, or 50% vs 30% if you combine youtube + google.
Now look at http://finance.yahoo.com/q/bc?s=YHOO&t=2y&l=on&z=m&q=l&c=GOOG [yahoo.com]
Yahoo on the way down and Google (relatively) up.
Sure, Google could buy Yahoo for a quick rush, but in the longer term (1-2 years) yahoo will just fade by themselves unless they do something very interesting (which they have not done in a long time).
Re:Are they kidding? (Score:4, Informative)
Re:undervalues? (Score:2, Informative)
Re:What's in it for Google? (Score:1, Informative)
Re:What does Yahoo do exactly, that gives them wor (Score:3, Informative)
Remember Yahoo isn't just used in the US, it has international versions as well. There's six billion people in the world and probably over 2 billion have regular internet access by now (my guess, no source). 25% of internet users using Yahoo regularly is not a stretch of the imagination by any means.
Not really, remember the first dot-com bubble was caused by people trying to value companies that produced no profit and used business model's no one had ever tried out before. (My favorite was pets.com which insisted on selling most of its merchandise at below cost. Genius move guys!) It's been over 10 years since then and company's have figured out how to make money online, which makes valuing the price of their stock much easier.
You're right in thinking Yahoo's vision of themselves is inflated though. Remember their market cap was about 2/3 of what it is now before the bid, and that's right about were they belong given management's horrendous execution.
Re: A dose of reality indeed (Score:4, Informative)
"Most of Google's revenue is derived from advertising programs. For the 2006 fiscal year, the company reported US$10.492 billion in total advertising revenues and only US$112 million in licensing and other revenues."
-http://en.wikipedia.org/wiki/Google
So, I congratulate you on being a postgrad of competition law, but knowledge of the law doesn't mean anything if you don't understand the subject that you are trying to apply it to (IE: an advertising monopoly, NOT a tech monopoly). But what do I know? I'm just a naive and biased "techie" after all.
Re:Their (lack of) privacy policy (Score:3, Informative)
Re:Microsoft is making a mistake on this one (Score:3, Informative)
Yeah, Microsoft killed Hotmail so thoroughly that it remains nearly the biggest player in Webmail and has a market share considerably larger than Gmail.
I'd wager you are wrong. There's a lot more to Yahoo than webmail - there's groups, the financial portal, the ecommerce portal... In fact, when you look at a complete list [yahoo.com] (a lot of those single line items are actually feature rich services in their own right, don't be fooled), I see a lot of things Google simply doesn't provide. Yahoo is a portal - and a deeply and powerfully integrated one. Google isn't. Google is (largely) a collection of whatever shiny feature happened to catch their eye. Some of them are even out of beta.
Take a look at the Yahoo page I used as my browser start page [yahoo.com]... Google doesn't provide anything like it, or even close.
Re:just jacking up the price (Score:5, Informative)
Having said that, there are plenty of anti-takeover defenses. From the "Nancy Reagan defense" (just say no), to staggered boards, to poison pills (Yahoo has one). As Peoplesoft teaches, there is nothing that can stop an acquirer determined to buy at whatever price.
Now, some math to predict what's gonna happen. There are roughly 1.5B shares. 25% of the shares changed hands on Friday. You can bet that most of them, say 20%,ended up on the hands of arbitrageurs. Legg Mason, a hedge fund has 8% and 11% are in the hands of another hedge fund. That makes 40% of the shares in the hands of people in search of the highest return, and screw everybody else. Most of the institutional holders are generally sympathetic to management, but they hold roughly 50% of the company (excluding the two hedge funds I mentioned before and what they sold in these few days). MS only needs another 10%. If MS are smart, they have already accumulated at least 5% (they have 10 days to report any ownership higher than 5% to SEC). Now on Jan 29 and 30 the stock volume spiked. Just the excess volume (over average) is 10% of the shares. Any guess who may have bought those shares? Watch for MS coming out next week with a 10% ownership.
So, let's say that Yang doesn't want to sell. He's got little or no stock. Filo has 5% of the Yahoo stock. The board may be loyal to Yang, but it must be very careful because the Revlon Duties [abanet.org] have been triggered and they impose no loyalty. Once the company is in play, the CEO counts only as much as he can control the board.
So, here is what's gonna happen: if MS doesn't raise the price enough and Yahoo sells, MS (or another acquirer) and the hedge funds stay below 15% ownership to not trigger the poison pill. At the upcoming shareholders meeting (should be in May or June), a proxy fight erupts, and MS asks the poison pill to be repealed. The arbitrageurs vote yes, and somebody buys Yahoo. Most likely MS, but if somebody else has $50-60B, why not? The hedge funds don't care who wins as long as the company is sold.
Re:microyahoogle (Score:5, Informative)
Of course, that can change quickly...
Re:Yahoo is popular outside of the US (Score:5, Informative)
I'll drop my Yahoo account (Score:2, Informative)
http://help.yahoo.com/l/us/yahoo/my/general.html [yahoo.com]
I'm not that keen on Google either. I don't like the idea of my email being read, even if it is only software scanning for keywords for advertising. Several years ago on Slashdot there was an article about how Google white washed images of the Tianmamen Square Massacre out of the Chinese version of their site. I can't get the images of the real images versus the ones google used out of my head.
I guess if yahoo merges with either Microsoft or Google I will just have to go with some small third party email provider.
Re:Their (lack of) privacy policy (Score:5, Informative)
Have you ever read the Google and GMail Privacy Policies?
Some key facts (read: not a 100% complete copy/paste from the site) from the Google Privacy Policy (http://www.google.com/privacypolicy.html):
Re:Their (lack of) privacy policy (Score:3, Informative)
I don't even want to know what kind of activity you are involved in which makes you believe that the US government keeps a file on you
You do not have to do something really nasty to be tracked by the government, just Flying through (i.e, to go somewhere else) the USA will get you into their database. [wikipedia.org]
I got a first person account of that, my grandmother went to the USA in the 70s or 80s maybe, and she forgot to handle a small paper when she went out. Ten years later, a cousing went to the USA for vacation and when she was returning they stopped her and asked her where was my grandmother hiding in the USA, they were sure she had illegaly stayed (of course she had not, she lived in Mexico). How did they know she was the granmother of my cousing... we do not know.
Re:Their (lack of) privacy policy (Score:3, Informative)