Acts Of Desperation: Potential Google – Yahoo! Deal
18th April 2008
The Wall Street Journal reported yesterday that Yahoo! and Google are in talks to moved a step further, with regards to their search advertising deal. The 2-week test where Yahoo! Search results showed Google AdSense ads is supposedly looking so encouraging that both companies are already talking about extending the deal.
Needless to say, if this deal does go through, it would help Yahoo! avoid Microsoft’s bid to buy them over. The benefits of such a deal for Yahoo! in the long run, though, are extremely limited. Yahoo! would be handing over control of its most important asset – Yahoo! Search Marketing – to Google and would turn into a sitting duck in the future.
Shareholders should be worried about the competency of Yahoo!’s board of directors if this information is true. They are either taking desperate measures to avoid being acquired by Microsoft at all costs or are trying some really poor tactics to get Microsoft to raise their bid. Either way, their actions seem puerile and selfish with little or no thought to raising shareholder value.
Analysts have reported that a Google-Yahoo! deal would increase Yahoo!’s revenues by about 33% and Yahoo! shares would likely gain $5. Such a deal could raise an additional $1 billion for Yahoo! annually, according to Citigroup Global markets analyst Mark Mahaney. However Microsoft’s offer of $45 billion might seem far more enticing to shareholders.
It is almost certain that if such a deal were to take place, Microsoft would make its displeasure known by invoking antitrust laws. Microsoft’s top lawyer Brad Smith has said, “Any definitive agreement between Yahoo! and Google would consolidate over 90 percent of the search advertising market, in Google’s hands. This would make the market far less competitive, in contrast to our own proposal to Yahoo.” Smith further mentioned that Microsoft would closely assess all its options.
ValleyWag suggests that in order to avoid antitrust issues, Yahoo could set up an ‘open market place’ and invite both Google and Microsoft to make bids for advertising there. This system could work well if Google were really interested in keeping Yahoo! out of Microsoft’s clutches which seems like a reasonable belief.
Tags: google, google-adsense, mergers-and-acquisitions, microsoft, pay-per-click, search-advertising, yahoo
5 Responses to “Acts Of Desperation: Potential Google – Yahoo! Deal”
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Microsoft Withdraws Yahoo! Offer | AccuraCast Search Daily News : 6 May 2008 at 5:35 pm
[...] In his letter to Jerry Yang, CEO and founder of Yahoo!, Steve Ballmer, CEO of Microsoft, clearly mentions that Yaho!’s deal with Google would mean harming the effectiveness of Yahoo! Search Marketing’s paid search platform, Panama. It would make it difficult to retain Yahoo!’s talented engineers, and also give complete dominance to Google, with regard to search advertising rates. [...]
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Yahoo! Board Threatened As Icahn Supporters Rally | AccuraCast Search Daily News : 27 May 2008 at 11:48 am
[...] Yahoo! is trying to fend of Icahn’s advances to replace the board by delaying their 3 July 2008 shareholders meeting to the end of the month. In the meantime the current board of directors at Yahoo! need to either fix an alternative deal with Microsoft buying only part of the company or an advertising agreement with Google that could inject $1 billion revenue per year. [...]
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Yahoo! Actions Not In The Best Interest Of Shareholders | AccuraCast Search Daily News : 4 June 2008 at 6:30 pm
[...] This fact was revealed following a complaint, filed by lawyers representing shareholders of Yahoo!, alleging that the board of directors at Yahoo! purposefully acted to discourage the Microsoft offer. In fact, the papers reveal that even as far back as January 2007, the then CEO, Terry Semel, had rejected Microsoft’s offer of $40 per share! [...]
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I think the idea of open marketing bidding for advertising on Yahoo! is a good idea.
Pay Per Click search engines are an effective way to attract cheap, targeted traffic to your website. Search engine enables you to list your site at the top of the search results according to the keyword bid.