Hindsight is always 20/20, and that Microsoft acquisition offer for Yahoo earlier this year is looking sweeter by the moment looking in the rear view mirror. Too bad Yahoo rejected the $31 per share offer, because their stock has plummeted to $13 a share this week.
To be fair, some of the drop is due to the greater markets. Even Google is down to the mid-$300s after being up around $580 earlier this year. Another major factor is that Google and Yahoo have delayed the implementation of their search advertising deal.
Yesterday, Brian Sullivan at Fox Business was asking “Where’s the shareholder outrage?” While the markets are offering plenty of outlets for a variety of shareholder outrage, at least one Yahoo investor, Mithras Capital, is proposing a new Microsoft-Yahoo deal.
The deal would have Microsoft buying Yahoo for $22 a share. We know why the investor wants this: They want to recoup some of their losses.
But at this point, what’s in it for Microsoft? Yahoo continues to lose search market share and seems to be more concerned with securing the proving grounds of executives than building a business model based on users.
We know by now that banks, Fannie Mae and Freddie Mac were structuring their businesses to benefit executive bonuses. We also know that Yahoo did the same thing to throw a wrench into the Microsoft deal.
Is their really any faith left that Yahoo is on the mend? The Google advertising partnership only works if Yahoo starts regaining market share. But without innovation in search, that’s not going to happen.
I firmly believe that there are plenty of bright minds at Yahoo, but like far too many companies, management gets in the way.
A merger with AOL still might be a good idea though. Yahoo has strong portal properties, including Sports and Finance. AOL’s Platform-A consistently performs as the top ad network. AOL has also been making tiny gains in search. If you put their strengths together, you just might have something worth saving.
For the time being, though, it looks like investors should have sold their stock long ago. Microsoft has to be prepared for tough economic times, and I’m not sure throwing billions away on Yahoo’s flailing search product is a wise investment at this point.
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