$ Worth of Yahoo

I have never none ER but I am baffeled as to how a company like Yahoo could be worth so much to another company. I mean 41.6 Billion!!! What assets do they have that come close to arriving at this amount. They have their search engine technology…sure and of course name recognition. But what does Yahoo have that MS doesn’t own already? Couldn’t they instead use that cash to shore up their own internet operations (advertising, strategic partnerships).

maybe an established client base (users and advertisers), a few loyal users, name recognition, and saving of unncessity of wasting time escalating cost to build a massive project from scratch. not to mention, a workforce that knows the systems and how it works without having to inject new employees into a project and having them to go through a lengthy learning process.

Microsoft is conceding that MSN will never catch up to Google. Everyone knows Steve Balmer hates Google more than anything and buying Yahoo (if I remember has about 4-5x greater search engine market share) will put Microsoft in a position to compete better. From reading, Yahoo is superior in display advertising and maybe Microsoft can expand this segment of Yahoo to where its worthwhile. Plus, Yahoo was over $33 a share a few months back, so this offer was merely a timing issue and hopefully the board will be able to negotiate an offer in the high 30s.

Globally, Yahoo is very hard to replicate. I don’t have the exact figure in front of me, but I would imagine that more people (including ISP) have Yahoo as their Home Page than any other site (not google.com and not msn.com) in the world. I don’t know of any site that can match Yahoo’s extensive collection of topics (sports, business, weather, movies, etc.). Within each topic, Yahoo has a very strong position. There’s tons of financial sites out there but everyone still uses Yahoo Finance. Yahoo Sports is pretty strong as well (likely #2 behind ESPN in the U.S.). It wouldn’t surprised me if Yahoo’s Job site matches Monster in the coming years. Sure, Google has a better search engine and MSFT might have more mass, but Yahoo Portal is still King in that area. The marriage of Google/Yahoo would be absolutely Frightening (possibility of that happening would be low). Can you imagine Google plugging in Youtube on the Yahoo Portal? or its various applications (Gmail, Excel, etc).

Do you think Microsoft is pursuing this whole search engine and pursuit of a portion of internet advertising revenue a bit over the top, and almost like a desperate grasp for survival in something that they have no chance in? Even if they do get Yahoo, they will be still well below the radar of Google. Although Google did try to block the merger, do you think they even care that much if it happens? If anything, i think Google is more concern with taking over China’s Search Engine market, if it can. So … do you think Microsoft should dump their pursuit for a search engine, and move solidifying their other business. Like their relatively successful Xbox, Windows, etc. Even those are falling to competition all around.

I think Microsoft has solidified other businesses and/or reach its maximum potential. There is a ceiling as to what they can do with the Windows Line and the embedded growth in that market. With Xbox, I think most shareholders would be happier if Microsoft actually left that market. It’s cut throat price competition and volatile, which are the exact opposite characteristics of a software company. Unless they start rolling up software companies on the enterprise side, I don’t really see a strong secular growth catalyst for the company beyond search/online platform.

This just sounds like AOL/Time Warner. Microsoft will never catch Google in the business Google does. Why can’t Microsoft just accept that? What’s the best (realistic) case scenario for MS with this merger?

It might be that the AOL/Time Warner thing was a near miss (which turned into a debacle, of course). AOL was the market leader prior to the merger and if they had just gotten their acts together, they could have been what Google is now. Instead there was this dumb idea that Time Warner was going to distribute the stuff it owned on AOL. Sure. The wave of the future, watching old movies on the Internet.

Yea i think i agree with you negativefcf. But Microsoft is going to have to do something to raise their max potent and that something isn’t dumping money on the first random project, or preventing one of their dieing business to fall. I think it gets to a point in which a company has become too established and structured their ability to innovate just isnt there anymore. The best realistic would be a merger, and microsoft utilizing Yahoo’s other functions rather then the search, and use yahoo for what it’s good for as described by negativefcf. Finance Yahoo is a pretty good site, their groups/games/sports also have a nice market that Google doesn’t. I see Microsoft doing better running on a seperate path then Yahoo, then trying to slay the dragon. But eventually they’ll have to, maybe they’ll be more capable to do so later then aggressively going after Google now.