Yahoo May Re-Consider Google Alliance, Rebuff Microsoft

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.'"

I'd be sad if Microhoo goes ahead

[_merlin]

Do I like Yahoo? Not really. But I don't really like Google or MS either. The less of these online service providers there are, the worse it will be for consumers. I hope Yahoo continues to exist in some form or another just so there are more players in the marketplace. That means more choice, more competition and a better experience for users.

undervalues?

[larry bagina]

Last I checked, $31 is greater than $12.

Re:undervalues?

[_merlin]

Well, they obviously don't believe the share price represents the value of the company. No-one accepts a takeover at the current market price for shares. But think about it this way: suppose you had shares in Yahoo: you could take $31 for them now, or hold on to them so you can profit from shareholder dividends, and possibly sell them for much more later, too.

What's in it for Google?

[EmbeddedJanitor]

Google has 4 times the search hits of yahoo and is growing. Why spend 45bn on a sinking enemy? Just wait a year or two and yahoo will be no more anyway. MS + yahoo are individually sinking in the service space and together they'll just sink faster. Sure Google must make some anti-trust grumblings, but in reality they must love the sight of their worst competitors sinking eachother.

Google can use the 45bn in far better ways by cutting into new markets & technologies (eg. Android).

Re:undervalues?

[Vvaghel1]

first of all, stock prices are a measure of a company's future profitability, or i should say expected profitability. Second of all, measuring expected future profitability is a judgement call, not an exact science i'm not surprised, i figured this was somewhat the case when i heard the story

just jacking up the price

[wannasleep]

They are just jacking up the price. The company will be sold. Once a company is in play, it is very hard to take it off the market.
Once the directors receive an offer, it is their duty to figure out whether their shareholders are better off with Yahoo alone or not. If they figure out that it is better selling (I am sure they did already), it is their obligation under current Delaware law to auction the company. That's exactly what they are doing. There isn't a single transaction that closes at the starting price.
If the directors decide that it is better going alone, it will end up with a Proxy fight and a lot of lawsuits (those will happen anyway)
Right now, arbitrageurs are going long on Yahoo and short on MS.

Re:What's in it for Google?

[Amorymeltzer]

Yahoo is ANYTHING but sinking. Yahoo.com is still the number one most visited site on the web (check alexa [alexa.com]). Now, Google happens to be number two, followed by youtube. Who in their right mind wouldn't want the top three websites? I'D shell out $45B if I had it.

Not that it would happen, but imagine if Google acquired Yahoo. They'd have vast resources of hardware and user accounts at their dispense - two things that Google especially wouldn't mind having. A merger between Yahoo and Google groups? News? Oh, and did I mention they're the number one site on the web?!

A more likely option, avoiding the anti-trust nonsense, would be Google purchasing some stock in Yahoo, or the two coming to some sort of mutual agreement such that Yahoo can consolidate and focus funds and Google gets some new toy.

By no means is it a dumb idea for either of them. The only person who loses is Microsoft, and I think everyone can agree that's an acceptable loss.

Hype on something unlikely to happen...

[webword]

From the article...

"Few natural bidders exist beside Google
that could engage in a bidding war, and
Google would be unlikely to win approval
from antitrust regulators, some Wall Street
analysts said on Friday."

So, um, it's not likely to happen.

** Yawn **

It's safe to move along.

Re:What does Yahoo do exactly, that gives them wor

[protohiro1]

500 million users. $3.75 billion a year in profit. Market cap of $40 billion.

Re:undervalues?

[Joe Decker]

Well, they obviously don't believe the share price represents the value of the company.

So, they could buy the stock for $12, thought it was worth more than $31, and weren't buying more?

I find their lack of faith ... or honesty ... or something ... disturbing.

Re:What does Yahoo do exactly, that gives them wor

[timmarhy]

i have to wonder about figures like that. 500 million users might be every account ever created, i bet there's 1/50 of those that are active.

i have a sneaking suspicion there is another smaller .com bubble forming. especially when yahoo start talking about being under valued at 44 billion.

Re:Yeah Yeah Yeah Just trying to get the bid up

[Jeff DeMaagd]

Google + Yahoo! wouldn't fly with the antitrust regulators.

And they would automatically let Yahoo! + MS through?

Re:microyahoogle

[Penguinisto]

At first blush, your post is plausible... but I wouldn't be so certain ab't Yahoo's future prospects. This is the same company that managed to survive the dot-bust in spite of really not being supposed to.

They're #3, but like Google, they came by that position honestly (MSN got to its slot by 'dint of default'). It may be anecdotal, but Yahoo has a lot of income that comes in from places that you and I may find unlikely. They also have a rather solid set of services that 1) doesn't require Windows or a Passport Account, and 2) is relatively uncluttered and straightforward when compared to MSN. When it comes to non-search functions, Yahoo is actually IMHO better than Google in a lot of areas, simply because those areas don't have that 'beta' feel to it that Google sometimes does, or that 'we require possession of your soul before installing this' feel that the MSN does (e.g. messenger services*).

While I pretty much use Google for most of my stuff nowadays, There is still Yahoo Finance, among a bucket of little things that make it useful to me.

This is just anecdotal, but I know I'm not alone, and Yahoo does have a large and loyal following. I could see them diminish over time perhaps, but not necessarily die off.

/P

* I use Pidgin everywhere now, but long ago, my Mac wound up with MSN and Yahoo Messenger on it due to social and work demands... and GAIM wasn't IMHO a viable option there.

Re:some other company

[OakLEE]

Oh you mean like this [cnn.com]? Yah I think we've seen that one played out before and it didn't end well for the big media company. And just remember, AOL merged at its peak, Yahoo has clearly seen better days.

A dose of reality

[wonderdogger]

You know - the thing that bugs me most about the tech crowd is when I compare what I hear the real world's opinion of the competitive framework with what users on rags like Slashdot have to say. It is an incredibly huge gulf. It makes the tech community look hopelessly naive and biased.

I am a postgrad of competition law right now so I know quite a lot about it. Firstly, the real world doesn't believe Microsoft is any more or less evil than any other monopoly - past or present. In fact the opposite is more likely to be true. All of the conduct ultimately condemned by the courts (primarily restrictive licensing practices) were instigated by people who have since left the company. Further, Microsoft is now under close scrutiny by the US and EU authorities.

Google on the other hand is not.

One thing the shapers of modern competition law understood (yes these issues were thought about long before any of us were born) was that lasting unregulated monopolies are inevitably harmful to consumers. Google might have the right spirit of innovation and openness at the moment but one day working for Google won't be sexy anymore, an innovative culture will be harder to nurture and Google shareholders will still demand that Google returns a profit. The next best thing to innovation is infrastructural lock-in like what Microsoft (and Bell, IBM etc) have achieved. Which means the company can earn ongoing monopoly rents with minimal ongoing investment.

Best way to prevent this inevitable evil? Force the infrastructure to become a shared resource of multiple companies by making it economically less efficient for all of them not to inter-operate. If competition doesn't achieve this, the regulators will and history has shown that regulation of monopolies often leads to even worse effects than the alternative.

Re:Yahoo Need Microsoft

[Amorymeltzer]

As ars [arstechnica.com] said, "Combining two companies that are losing market share doesn't guarantee that the trend will be reversed." Yahoo needs a better game plan, and a way to generate money from their portal. That they can do all on their own.

Microsoft is making a mistake on this one

[Christianfreak]

MSN is the default on new computers so the only people that use it are the ones that don't know any better. On the other hand pretty much everyone who uses Yahoo does so because they chose to do so. Microsoft has too much hubris to keep Yahoo's technology, they're going to change it all to Windows and .NET and just like what happened with Hotmail it will suck in then end.

Where are those users going to go? I'd wager the vast majority of them will go straight to Google.

Google doesn't need to buy Yahoo, they're going to get the users anyway

Re:A dose of reality

[ZombieRoboNinja]

>>Best way to prevent this inevitable evil? Force the infrastructure to become a shared resource of multiple companies by making it economically less efficient for all of them not to inter-operate.

Fortunately, part of Google's current "sexiness" comes from them embracing various standards and open-source projects that allow them to "interoperate", whereas Microsoft famously tries to hold on to its "infrastructural lock-in" with stuff like MS Office document formats and file-system formats.

Re:What does Yahoo do exactly, that gives them wor

[Telvin_3d]

Well, I'd agree that many of those accounts are no longer active. On the other hand, I suspect that all that personal information sitting in those dead accounts is worth quite a bit to some people. Page views is not the only way to make money.

Re:I'd be sad if Microhoo goes ahead

[milsoRgen]

Well yes, there's already a reason to dislike the dominant player in any given field. People root for the under dogs you know?

Re:Check your stats

[Lehk228]

remember, those numbers are not "of the internet population" it's "of the internet population infected with alexa toolbar"

and the more savvy uninfected users are more likely to do serious business over the internet.

Re:Their (lack of) privacy policy

[slyn]

I've always wondered, what exactly does/would Google get out of doing that? I use Gmail. If Google data mined my mail, they would get nothing. I don't use email with my friends (i'm in the age bracket that doesn't use email according to that one semi-recent /. article) so all my mail is either from colleges or "click this link" forum activation mail. In theory, the real data worth mining would be either of my parent's as both of them run their own businesses. However, what can they do with the data? Mine it so they can show targeted ad's to them for Quickbooks or Lexus-Nexus or whatever? Oh wait, they already do. Seriously, unless your dating Larry/Sergey/Eric's Ex, why would they ever care to look through your mail?

Re:Their (lack of) privacy policy

[cheater512]

But then its not really infringing on my privacy at all.
I become a statistic in their models and anonymous.

It happens everywhere.
I'd rather it be Google than another company.

Errr

[EmbeddedJanitor]

Nobody goes to Google to view pages. When Google is working really well, you find what you're looking for on the first page of hits and you get redirected else elsewhere. That's a big thing about Google is that its value piggy-backs on other sites and thus its value and usage don't get well represented by traffic and hits. Most people's perception of info is "I read it on Google" or "I found it on Google", when Google actually just handled the first order search and they found the info they were looking for on some other site. By comparison, yahoo does far less redirecting. On yahoo you're far more likely to read news etc while staying on yahoo.

Don't look at historical data (3 months to a year old), look at the trend since then. Yahoo is flatline and Google is on the up.

Re:Their (lack of) privacy policy

[Enderandrew]

Really?

Is that why when the US government was demanding search data, that Google was the only company willing to butt heads with the government to protect privacy, while Yahoo, AOL and Microsoft all volunteered private data?

To say that Google lacks a privacy policy is pure fiction. http://www.google.com/privacypolicy.html [google.com]

Next time check your facts.

Re:What's in it for Google?

[DerekLyons]

Android is not really a seperate venture. It mainly facilitates extending their core business into mobile space so that your whole Google existance can fit in your pocket meaning more searches and uses of Google services --> more Google business.

Google doesn't want you to use more Google services. They want you to see more Google served advertising.

Time to bury the Yahoo beats Google myth

[Hynee]

Yes yahoo.com edges google.com in Alexa stats, but both "sites" run on multiple domains internationally. Google in particular puts a lot of effort into directing people to their home countries page.

In the Alexa top 100 [alexa.com], Yahoo! only has two domains, .com and .co.jp. Google has 10 domains in only the top 50, from .com to .co.in. I'm not counting sister sites like Flickr or Orkut here, just the search front pages in the various localizations.

If you total Yahoo!'s top 100 (just the two) you get 29.41% reach (3 month average), but Google's domains total to 44.42%, and that's only the top 50. So in reality, Google's search front end has 50% greater reach than Yahoo!'s search front.

So, amiright?!?

Um.

[Estanislao Martínez]

Your threat is empty. Yahoo's management doesn't make the decision whether to merge with Microsoft. There are two ways it can happen:

1. Yahoo's board (not the management!) agrees to a buyout offer from Microsoft. This is called "friendly takeover."
2. Microsoft, without approval from Yahoo's board, buys enough Yahoo stock in the open market so as to be able to kick out the current board, and choose their own replacement. This is called a "hostile takeover."

So yeah, don't waste your time barking up the wrong tree.

Delusions of Grandeur

[EmagGeek]

Microsoft offers 40% more than the stock is worth, and Yahoo MGT says that "undervalues the company."

Riiiiiiight.

A lot of people made a shitload of money on the news last week, but I guess that wasn't enough for these greedy folks.

Re:Their (lack of) privacy policy

[xtracto]

I have used web based email service sine hotmail 1995 or so. I have gone into hotmail, linuxmail, latinmail, hotmail again and lastly gmail. I have never found client based mail systems (like outlook or thunderbird or eudora, or whatever) useful as you have to actually configure and do lots of things just to check your inbox.

That being said, some months ago I was talking with an American guy who is working in my office (he is doing his second PhD in London and working here part time) and he told me that the reason he does not have one of those web mail accounts is not for what they do *now* for the information, but because you do not know what they can do in the future. Once your information is public, it remains public forever. And you may think it is not public giving it to any of those companies, but it really is, the only thing that makes it non public is that nobody cares about it. But if in the future you had some issue that made *someone* important care about you, I am pretty shure they will find means to obtain that information.

I keep using gmail to this date, but I am really sure the American government has plenty of information about me by now. Fortunately, I plan to keep out of the USA and keep in a country where they have no real place of invading.

I hope it goes through

[nguy]

Microsoft spending $44bn on Yahoo! is such a bad idea for Microsoft that I really hope the deal goes through. I feel a little sad for Yahoo!, but I think they're in trouble anyway, and they are getting plenty of money out of it. And I don't think the deal "undervalues" Yahoo!; I think it's pretty much downhill from here on for Yahoo! no matter what.

Re:Their (lack of) privacy policy

[flappinbooger]

I'm fairly certain that Google is:

a) Not typical

b) Not all that predictable

Rationale: How many other Google's are there? They've become a part of our LANGUAGE, that is not typical. Also - Everyone was predicting what the gPhone would be. They were wrong, it wasn't a "phone" it was a phone platform. Who predicted Google would be going after the 700MHz spectrum? Where is the Google OS?

Not typical, not predictable. Is that good? Or bad? I don't know.

I know I'm a hater, but...

[R3d Jack]

In a way, I'd love to see M$ sink 40+ billion into Yahoo! And I do mean sink. What possible value does M$ intend to gain from this transaction? This reminds me of AMD's recent acquisition of ATI, which they are still struggling to digest. On the other hand, while I want to see M$ face a lot more competition, if only so they'll improve their products, having them make a huge mistake could have serious consequences. Or maybe they'll finally give up on Chairman Bill's megalomaniac business model, stick to what they are good at (relatively speaking), and actually produce quality software in the desktop PC and server spaces. I said I was a hater...

Re:Their (lack of) privacy policy

[MightyYar]

If your American buddy is so paranoid, then he should stay away from the internet altogether. All email is sent unencrypted, so can be read just by sniffing, even if you run your own mail server. Every time that you visit a web page, you leave a trail in more than one place. You do a DNS lookup request which your ISP can then log and save as a record of which sites you visit. You then connect to an external server, which itself logs your IP, referring page, time, date, etc.

And that's just what you leave behind without any kind of active searching going on by a third party. Most traffic isn't encrypted, so an interested third party could record just about every little nugget of information that you pass along. An interested third party might be able to bust into your box, get your cookie information, or gather information in other ways.

Even TOR won't keep you safe as you don't know who is monitoring the exit nodes.

In short, if you are afraid that someone will find out that you sometimes surf for midget porn, then don't surf for midget porn - or take the same types of precautions that you would in the real world, which the internet is unfortunately (fortunately?) part of.

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 :)

Re:What's in it for Google?

[Jurily]

No, they want more profit.

Re:Their (lack of) privacy policy

[Idiomatik]

And you care why? Honestly data-mining isn't a bad thing. I'd rather be spammed about things vaguely relevant to me than random shit. Better to get video game and tv show ads than gay porn and viagra... and breast enhancement ads. I fail to see the harm in giving out information which can't be traced back to me. Its just an algorithm its not like anyone will be reading your emails.