Thursday, October 14, 2010

Yahoo Under Attack

Image representing Yahoo! as depicted in Crunc...Image via CrunchBase
Wall Street Journal: AOL, Private-Equity Firms Explore Bid for Yahoo: devising a bold plan to marry two big Internet brands facing steep challenges...... The discussions are preliminary and don't include Yahoo. ...... Shares of Yahoo jumped 13% ..... one of the best-performing tech stocks of the day...... A big chunk of Yahoo's current market value comes from its Alibaba stake. ..... Yahoo and AOL discussed a merger in 2008, as Yahoo weighed a $45 billion takeover offer from Microsoft Corp. Microsoft eventually pulled its bid ..... Bartz has improved Yahoo's profitability by cutting costs, but revenue hasn't grown much and the company faces other problems..... more than 600 million people use its home page, email service or other sites every month
This is Tim Armstrong trying to do the Larry Ellison thing. Larry Ellison went after PeopleSoft. I have no dog in this fight. I am just on the sidelines watching the drama. But AOL is not Oracle size. And Yahoo is not PeopleSoft size. Actually AOL and Yahoo are two similar size companies with similar problems/challenges. They both used to be number one, and now perhaps they never are going to get back the throne. Jimmy Carter also retired.

Wait, they are not similar size companies. AOL is a two billion dollar company, Yahoo is a 20 billion dollar company. Tim Armstrong has started to believe his own PR, or maybe he is reading too many of Mike Arrington's blog posts. Arrington has been quite hostile to Carol Bartz over an extended period of time.

Jerry Yang and David Filo, the founders of Yahoo!Image via WikipediaShould not the talk be of merger? But AOL did try that once. That marriage was a spectacular disaster. Buying or merging is the easy part, integrating is the hard part. Larry Ellison seems to be good at both. But then he starts with the advantage of Oracle's size and muscle. Oracle will still perhaps do the next big thing in its space. AOL and Yahoo are not even trying to do the next big thing. For now they are still figuring out what their space is.

Perhaps Tim Armstrong got too much of a boost from buying TechCrunch. The buzz got to him or something. TechCrunch might be the top tech blog, but in terms of a business it is pretty small. It is actually very small. TechCrunch is an asteroid to Yahoo's Mars.

Nothing Yahoo could have done on its own would have boosted its share price by 13%. That's a big jump. Congrats Carol. Make some more Alibaba moves. Google just went into wind farms.
Bloomberg: Yahoo Said to Hire Goldman to Handle Takeover Approaches: The private-equity funds have weighed raising $10 billion to $12 billion ..... Yahoo also owns 35 percent of Yahoo Japan Corp., operator of the nation’s most visited Web portal. ..... a reverse merger with AOL gaining managerial control .... . Time Warner CEO Jeff Bewkes said in December 2008 that talks about possible deals for AOL were under way with Yahoo, Microsoft and Google Inc. When those talks didn’t lead anywhere, Time Warner opted for a spinoff.

AllThingsD: Yahoo’s Stock Acts Like It’s in Play–Because It Kind of Is, as Predators Circle: assessing the situation aggressively ..... the key players in the growing soap opera are the execs who run Yahoo-affiliated companies in Japan and China. That would be Masayoshi Son of Yahoo Japan and Jack Ma of the Alibaba Group ..... any approach would have to be nonhostile ..... Armstrong, said sources, has not shied away from the idea of Yahoo acquiring AOL and installing him as CEO with Bartz as chairman. ...... Although AOL has also been trying to turn itself around and is in a much less powerful position than Yahoo, Wall Street likes Armstrong’s story for AOL as a modern-day media and media distribution company. ..... “At least he has a narrative that is believable,” said one big investor in both companies. “Bartz has no vision.”

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1 comment:

Steve Ballmer said...

I own Yahoo now!