Yahoo Buys Overture for $1.63 Billion

securitas writes "Today Yahoo announced it plans to buy search technology company Overture for $1.63 Billion. The move is seen as a way to compete with rivals like Google and MSN, especally in the paid search and advertising category. This takeover occurs following this article about Google and Overture's race to secure partners for its paid search advertising. Other reoprts at CNN Money, ZDNet/CNet, AP via the Washington Post, Reuters, Bloomberg and Dow Jones via Yahoo. Press release at Overture and Yahoo."

Comments

yahoo??

[SuperDuG]

Didn't yahoo just recently buy inkotomi? I mean geeze it's insane that a college project would even have the ability to pop 1.83 billion at another company.

Anyways I remember with Yahoo was "partnered" with altavista and it became big enough to be it's own search, hell I remember there being a "search more..." that would link to hotbot and other search engines of the day. Then there was the "partnership" with google, who became big and started to innovate after yahoo promoted them.

I think Yahoo needs to decide if it wants to be a portal or a search engine, because it's trying to be a one-stop-shop. You got games, music, movies, stock, travel, auctions, email, directions, and the kitchen sink. Is ad revenue really that big for these companies?

I stopped using yahoo when I realized that google found what I needed quicker with more precise search words. In essence I switched from yahoo to google because google was better.

Innovate don't just buy out the small fish, that practice is really old and sort of annoying.

Re:yahoo??

[DeusExLibris]

> I think Yahoo needs to decide if it wants to be a portal or a search engine, because it's trying to be a one-stop-shop.

I think you miss the point of diversification. Yahoo doesn't target the techno-literate as a primary customer base. If you ask your mother or uncle where they get their information, though, chances are good that Yahoo is still their home page. Consequently, it makes perfect sense for them to try to be "everything for everybody", even if they aren't the best at any of them.

[snip]

> Is ad revenue really that big for these companies?

Yes. Take a look at this. Yahoo reported almost $200MM in ad related revenue in 1Q03. Notice also, that they attribute some of that (although they don't say how much) to a deal with Overture for paid listings. My take is that Yahoo did this because it is cheaper in the long run to assimilate the partner than to continue to pay them a slice of your profit year after year. On top of this, it gives them some control over competitors that currently use Overture.

This looks to be a shrewd business move to me.

This isn't what Yahoo needs

[Shinzaburo]

Yahoo should have saved its pennies. Sure, buying Overture improves its position in the paid placement portion of the search market, but what Yahoo really needs is a search function that is on par with Google. People have been defecting from using Yahoo as their primary search engine for years, and they're not about to come back unless Yahoo can offer search results that are comparable to Google.

This acquisition isn't likely to help Yahoo do what it needs most: better searching. Until they achieve better search results, people are going to continue to defect to Google and its brethren.

Re:This isn't what Yahoo needs

[nelsonal]

While Yahoo is using some of its cash, most of this transaction is stock, which is pretty cheap currency. It dilutes your current owners position, but they generally don't seem to mind. Tyco made a business out of doing little more than buying companies and issuing stock for almost a decade. This probably has pretty good cash returns, Overture pulled in about $50 million in cash last year, and Yahoo is only spending $300 million in cash, which is a heck of a lot beter than the 1%-2% money market returns Yahoo was getting on the cash.
Also this is only about half their cash hoard, so they easily have enough to survive a very extended downturn. Their only major cash use is acquisitions, the core business generates cash.

The part I always find funny?

[Corvaith]

I don't really use Google because it returns better results. I mean, it returns pretty good results. I manage to find what I need. But I really use Google because, while they do have advertising, their advertising is not obnoxious. It doesn't pop-up, blink, animate, or pretend to be legitimate search results or articles. It *does* occasionally actually pertain to what I'm looking for, as opposed to Yahoo's continued insistance that I need to lose weight and find a man... using, of course, the insanely-expensive Ediets and Yahoo! Personals.

So, in the end, Google would win even if it took me a few minutes longer to find what I wanted, because I can *bear* spending a few minutes on Google. Ten seconds on Yahoo, and my eyes are bleeding.

Here we go again...

[mnmlst]

According to this morning's Wall Street Journal, what we are seeing right now with the NASDAQ is consistent with previous boom and bust investment cycles. It seems that there is a big runup, a big fall, and about 2.5 to 3 years later, a revisiting of the now-despised investments. Eventually, that residual boom dies off too. The expert they cited in the story figures the NASDAQ will peak at around 2400, well above its current 1750-ish level.

Before this is modded offtopic, what this means is that Yahoo!, which has enjoyed a tremendous runup in this recent boom now has some cash to invest. Looks like they are trying to do some expansion like back in the good ol' days when we had AOL buying Time Warner. Look for some other mergers and acquistions unless or until this boomlet ends.

The tide is turning

[TopShelf]

This is the latest in a series of buyout announcements that have come along in the last few weeks. It looks like the business community is preparing for economic recovery and these deals are meant to position themselves all the better for it. Most significantly, these deals are coming from several different industries:

Peoplesoft & JD Edwards (software)
Oracle & Peoplesoft (software)
Lehman Brothers & Neuberger Berman (finance)
Yellow Freight & Roadway (trucking)
Boise Cascade & Office Max (office products)

Let's see what the next few months bring, but the mood is definitely shifting.

Re:Yahoo is mad

[arkanes]

I never heard anyone who wasn't in a Yahoo commercial use Yahoo as a verb. Ever.

I use Google...

[henriksh]

mainly because they have the usenet archives. There's just so much information there, that you can't get anywhere else.

Also, it really helps that they don't have irritating ads, and that it renders great in lynx.

How on earth is Yahoo!'s gonna compete with that? Seriously, I'd like to know. By using a state-of-the-art search engine? That's not going to cut it, not by a long shot.

It's just the right time

[chia_monkey]

It's not too late at all. First, consider how the different search engines changed in popularity over the years. Lycos was big for a while, Alta Vista...no need to list them. I remember getting an email from a friend..."Google has over a million pages indexed!". That was the big news, then I started using it. As have many others. Times can change. And they will. Just because Google is number one now doesn't mean they'll stay entrenched in that spot. It's not like buying software for your computer and then not wanting to switch because you'll have to buy new stuff. Plus, you can always TRY another search engine, and if it's better, then you switch and tell your friends.

This is also interesting because of how all the different engines depend on each other in one way or another for their rankings.

Think about how many web developers, designers, consultants, etc are all bragging about their search engine placement capabilities. Obviously it's the next thing to make money on. The big boys want to make sure they're in there as more and more people are relying on search engines for business.

Re:Oh, great.

[DeepRedux]

This IPO decision is more in the hands of their venture capital backers (Kleiner Perkins Caufield & Byers and Sequoia Capital) than in the hands of the founders. A VC wants to cash out at some time, not hold forever. Once the market for tech IPOs picks up, Google will go public.

Good Move by Yahoo.

[sirrube]

I currently use overture to advertise one of my online products. The fact is it would take so long to get my page up on the search rankings that I would miss loads potential revenue for people doing a search for my product. Using overture it costs me $.10 - 1.50 per click depending on the search but the coverage is really good. I pop up on sites I didnt even know existed and I get more downloads then I expected. It is a sad fact but this is the direction the web is going to go. You will have to pay to be seen on the internet or hope that you get the 20,000+ hits to your website to even start to rank in the search list.

Re:Yahoo -- Overture

[miratrix]

I think the real question is what will Yahoo! do with all the search engines it now has. If I remember correctly, Yahoo! bought Inktomi not too long ago. Add Overture + FAST/Alltheweb + AltaVisa...

It seems like the market is consolidating into Google vs. Yahoo! vs. Microsoft (There have been rumours of Microsoft developing its own algorithm-based search engine) and couple of other players like AskJeeves.