MS Buying Yahoo? Bad Idea, Even At a Discount

jfruhlinger writes "Nearly four years ago, Microsoft tried to buy Yahoo, but eventually withdrew the offer in the face of resistance from Yahoo's leadership. This week rumors resurfaced that Microsoft was once again bidding on the struggling Internet pioneer, this time for significantly less money. But even at a discount, it might be a pretty bad idea for Microsoft to get involved in the unfocused, money-losing Yahoo."

Comments

ballmer

[KingAlanI]

"scratch that. going to fucking kill ourselves, not google."

Leave it for Alibaba

[mark_elf]

Jack Ma wants to regain control of Alibaba http://money.cnn.com/2011/10/01/technology/alibaba_yahoo/index.htm/, makes more sense for them than for Microsoft. I wonder if the MS interest is just to drive the price up for some reason.

Who, exactly, is losing money?

[JakiChan]

Say what you want about Yahoo! but it is not "money-losing". Yahoo! is profitable. Yes, top-line growth has been a problem but management of the bottom line has driven profits UP not DOWN. Bing may be losing money hand over fist but Yahoo! is still bringing in the cash.

I bet the folks who love to keep beating on Yahoo! also kick puppies for fun...

Re:Who, exactly, is losing money?

[JakiChan]

Uhm, no. The submitted said in his submission that Yahoo! is losing money. It is not. As much fun as it may be to kick Y! I think one should at least use the facts. MICROSOFT is losing money fast, but Y! is profitable.

Re:Who, exactly, is losing money?

[airfoobar]

I haven't exactly been caring about what they've been up to, but afaik they been selling all sorts of assets and firing swathes of employees to stay profitable... and their brilliant CEO was taking $50 million salary a year... while completely eviscerating whatever was left of the company.

Re:Who, exactly, is losing money?

[Anonymous Coward]

MICROSOFT is losing money fast

You mean the company that made $23 billion last year? Nearly as much in profit as Google's revenue and 3x their profits. 65% more profits than Apple. That company? That company is losing money fast? Really?

Really?

No seriously.. really?

Re:Who, exactly, is losing money?

[LordLucless]

firing swathes of employees

Yes, that is what's known to people like the OP as "managing the bottom line"

Re:Who, exactly, is losing money?

[MicroSlut]

Dude, this is /. If you say SharePoint, they say Windows ME! If you say Dynamics, they say BSOD!, if you say Office, they say Ribbon! I suffered a decade of panics due to poorly written nix drivers and years of headaches putting up with glitches in GroupWise. If posters want to believe that Microsoft is on the brink of failure because IE is losing popularity and Bing has as much traffic as Dogpile, let them. It is the year of Linux on the desktop, for the nth year in a row and 640K should be enough. I have to go recharge my iPhone.

Re:Who, exactly, is losing money?

[Anonymous Coward]

You do know that is only for one small division of MSFT that the rest props up? Every quarter some dumbass analysts point to this and that Windows isn't growing more share as fast as it used to (which is a BS stat when a market is saturated). It's selling more copies of Windows faster than it ever has, though admittedly Apple has almost as much market share as it had in the 80s again.

Re:Who, exactly, is losing money?

[SuricouRaven]

Bing will win.

You just can't compete with the advantage of bundling. Remember that most users are not technologically literate. When they want to find something, they just type it into their address bar. They don't even know properly what an address is. That is why IE remains by a substantial margin the world's most popular browser - not because it's the best, but because it comes installed on every new computer, and most users don't see any reason to try another. In the same way, all those users who stick with IE because it's there are going to end up using Bing. Some of them might not even realise there are other search engines out there.

Re:Who, exactly, is losing money?

[Anonymous Coward]

Microsoft's Live division is a money pit. About $6B in accumulated losses so far. Microsoft even tried paying people to use Bing.

Thankfully, Microsoft sold about 400 million Windows 7 licenses, and the Office upgrade business is very strong. They can continue to throw money into the Bing bonfire, and still make huge profits.

The real problem, is that how would Microsoft make their money back if they bought Yahoo? Microsoft has proven that they don't "get" the Internet. Live Places? Hotmail? Bing? And before that Live Search? Even the transition from Windows Messenger, to MSN Messenger, to Live Messenger was a confusing mess for users.

Re:Who, exactly, is losing money?

[Hadlock]

They're a revenue stream for some hedge fund or conglomerate, sure. You can bank on them having level revenue for the next 2-5 years, but there's no growth left there. R&D got the axe years ago, and they haven't developed a noteworthy product or championed a cause that anyone can remember since free email (yahoo mail) and yahoo maps... which are third rate backwaters these days. All that is left is a bunch of degree mill MBAs looking to pump up the company to sell it to investors... same as AOL. The trade name doesn't hold the glamour or instill the brand pride it did in the first half of the 00's.
 
Sure, profits are UP, but at what cost? Employee morale must be at an all time low, they are hemorrhaging long time employees, the board of directors is directionless and they have had no CEO with a sense of direction since they kicked out Jerry Yang. The soul of the company is dead and the product they sell is a commodity; no one has faith that you could reasonably improve the shareholder value by 20% in five years.
 
They could bring back Jerry Yang, but that would involve scrubbing the entire board of directors to get him back; not likely. Yahoo is circling the drain, investors are looking for a way to cash out without alarming anyone, but nobody is buying, which only drives their stock price lower. So long, Yahoo, and thanks for all the free email!

Re:Who, exactly, is losing money?

[TheRaven64]

I think the grandparent was talking specifically about the search market. Last figures I saw showed that Bing was still losing money. Microsoft makes insane amounts on Windows and Office (and probably quite a lot on Android now, since they get $15 of profit for every Android handset sold...) which lets them make a loss in a lot of other markets without it making a dent in their bottom line. A few years ago, MSN was making a loss of $20m annually on their UK portal alone, but they were making something like $8bn each on Windows and Office, so the shareholders didn't care. They made a loss of about $700m in their online division in the last quarter. That's tiny compared to the amount of profit they made from Windows and Office, but it's still a lot of cash to be throwing away just to try to reduce Google's market share.

Re:Who, exactly, is losing money?

[Dunbal]

I bet the folks who love to keep beating on Yahoo! also kick puppies for fun...

Hey!

Re:Who, exactly, is losing money?

[Anonymous Coward]

IE remains by a substantial margin the world's most popular browser...and most users don't see any reason to try another. In the same way, all those users...are going to end up using Bing.

You aren't joking, are you? IE comes installed with Windows and MOST users go out of their way to install something else. With a 42% IE market share, how does this fit your "Bing!" theory? Windows isn't gaining market share and it's not possible for people not using Windows to install IE. Good luck with it though, Steve.

Re:Who, exactly, is losing money?

[tukang]

Let's look at their net income for the past 4 quarters:

129.60 -- 142.65 -- 210.44 -- 294.09

Their income is consistently decreasing and if they continue on the same path, it won't be long before they do start losing money. There is also no reason to believe that they will not continue on the same path they have been for the past decade.

Re:Who, exactly, is losing money?

[LordThyGod]

Sorry but the world is slowly moving past desktops. iPads don't have IE, Android devices don't have IE, etc. That's why MS is in such a panic over mobile. They have lost their leverage in those segments. They might regain some of that, if they can stop shooting themselves in the foot long enough. Desktops won't completely die for a good while, but their relevance slowly erodes.

Re:Who, exactly, is losing money?

[bmuon]

Remember that most users are not technologically literate.

That used to be true. People are getting more and more tech savvy and everyone in the tech industry is aware of it.

Re:Who, exactly, is losing money?

[thegarbz]

There is also no reason to believe that they will not continue on the same path they have been for the past decade.

What's that path? The path that saw them steadily rising since the dot com pop? Suffer through the economic crunch and then hold steady even today as the world's stock markets are plunging? Or the company which has posted an UPWARDS trend in net profits since 2009 and have had a positive trend since 2002?

Seriously let me guess, you're a global warming denier too cherry picking only the stats that suit you to make your argument.

Now let's look back at the figures:
Starting where you left off:

294 -- 213 -- 310 -- 152 -- 142 -- 141 -- 117 -303 (yes negative $303M in 2009). From 2002-2004 they were reporting lower income than now. From mid 2006-2008 they were reporting lower net income than now. Basically look at the data points on a graph and you end up with progressive increase with a few spikes since the dot com bubble collapsed.

Extrapolating is fun isn't it.

Re:Who, exactly, is losing money?

[tukang]

Everything is relative. If you compare what they've achieved since the dot-com pop against what Facebook, Google, Microsoft, Baidu, Amazon, eBay, Alibaba etc. have achieved, Yahoo simply comes up far short. As for "cherry-picking", I didn't pick some arbitrary period of quarters. I picked the most recent ones.

Seriously, what is Yahoo's future? Which areas do you see them growing in? Where are they leaders? This is why people don't want to invest in Yahoo and its stock price is performing so poorly.

Re:Who, exactly, is losing money?

[cyber-vandal]

Except for all the pro ones

Re:Who, exactly, is losing money?

[Rob Y.]

People are getting more and more tech savvy and everyone in the tech industry is aware of it.

Well, I'm pretty tech savvy, and I couldn't get a co-worker's IE to use Google as its default search engine (IE7, I think - whatever our employer allows on the machine - I run Firefox on mine, so I don't know what the IE version is). Sure, after a few non-obvious clicks, I could get to Microsoft's web page for adding a search plug-in, but it wouldn't load the Google engine. I think it said the IE version wasn't supported or something. Whatever. Whether intentional or not, it means there are a lot of PC's out there stuck with Bing as their default search engines and no easy way to swtich it.

And the user in question actively wants to use Google. She's just not using the search bar for now.

Re:Who, exactly, is losing money?

[thegarbz]

Again looking through black coloured glasses? Their stocks are reasonably steady which in the past year has been remarkable. They have trended the NASDAQ index really well and most movements in their price represent movements in the industry on the whole.

What is their future? Who knows. I don't see them growing in any areas at the moment. Mind you I didn't see Apple growing in any areas back in the days of bright fluro coloured girls computers either. That's the wonderful thing about predicting the future you can't. I certainly would not invest in their stocks right now. But at the same time I'm not naive enough to look at the last 3 income statements and use a ruler to predict the forth.

Their CEO may be running the company into the ground. They may replace their CEO overnight with a phone call and take the company in a new direction (seems to be in vogue right now). More importantly the whole topic is on MS buying Yahoo, so even if Yahoo lack vision MS may have quite reasonable plans for them.

Re:Who, exactly, is losing money?

[Oxford_Comma_Lover]

Submit a Question to MSFT technical support.

Re:Who, exactly, is losing money?

[gstrickler]

Apple net income FY 2010 (ended Sept 2010) = $14.01 Billion
Microsoft net income FY 2010 (ended June 2010 using your link above) = $18.67 Billion
18.76 / 14.01 = 1.34 (134%), so what you meant is that for FY 2010, MS was 34% more profitable than Apple, not 65%.

But wait, those aren't for the same time period, they're FYs are off by 3 months. Let's compare the 4 most recent quarters reported for each company.
Apple's July 2010-June 2011 profit = Q4'10 = $4.31B + Q1'11 = $6B + Q2'11 = $5.99B + Q3'11 = 7.31B = $23.61B (each from Apple's website)
MS July 2010-June 2011 (FY 2011) profit = $23.15B (again, from your link above)
So, what you really meant is that MS is almost as profitable as Apple.

Your point that MS is making money, lots of it, is completely valid. However, you should be more careful with your comparisons.

Re:Who, exactly, is losing money?

[LingNoi]

There are some many pro-microsoft, actual Microsoft staff and people that work with Microsoft on slashdot that your comment just looks idiotic.

I seriously doubt it.

[blackicye]

It was a bad idea then, it's no better of an idea now (and some would argue worse.)

Why not wait another year or two and buy Yahoo for an even bigger discount, something closer to free.

Re:I seriously doubt it.

[Pausanias]

Agreed. Yahoo is around only because there is a % of people who could only be bothered to "learn the internets" once, therefore they are still slaves to Yahoo Groups/Yahoo Mail/all that awful stuff. Most of these people somehow appear to wind up in my kids parent/teacher associations, basically anyone who is technically clueless but needs to organize online stuff. They looked into it once, in the 90s, and now they can't be bothered to learn any of the newer solutions.

Now, Yahoo actually did some pretty cool stuff on the other end, like Pipes is really neat (though I could never get it to work with Google Reader, funny that), and their finance site is actually still probably the best. But overall you've gotta ask yourself, what is Yahoo actually about.

Re:I seriously doubt it.

[EdZep]

I belong to a club that uses Yahoo Groups for organizing. The members like that it functions as a mailing list. And, one feature we haven't been able to find elsewhere, is that events on the calendar can be set up to do periodic auto-notifications via email. We do see weaknesses in Yahoo Groups, and would appreciate suggestions.

Re:"MS Buying Yahoo!" rumor time: Here we go again

[blackicye]

Lots of pontificating about how terrible the very idea is from fat and clueless basement dwellers.

Must be that time of year once more.

How are your Yahoo shares doing? regretting your board's incredibly stupid decision to not sell when they could huh?

Are we talking about the same Microsoft?

[Required Snark]

"a pretty bad idea for Microsoft to get involved in the unfocused, money-losing Yahoo."

Am I wrong, or is the phrase "unfocused, money-losing" pretty much the definition of the stuff that Microsoft is rolling out these days? SilverLight, Bing, Zune, .NET languages, ...

Re:Are we talking about the same Microsoft?

[Anonymous Coward]

Microsoft has always been a software company, with a focus on languages (remember, their first product was BASIC). Silverlight is a development platform and .NET languages are, well, languages. Those make perfect sense for a software company to produce.

Where do Bing and Zune fit in? Probably nowhere. But keep in mind that in order to be have successful products, you have take risks. Most of those risks will turn out to be unprofitable, but you don't know which ones will turn out to be profitable beforehand so you have to throw many things against the wall to see what sticks.

Do you want a good example of unfocused and money-losing? Have a look at http://www.google.com/intl/en/about/products/index.html! How many of those things are part of an overall strategy? How many are making money?

dom

Re:Are we talking about the same Microsoft?

[Alex Belits]

I typically make applications/daemons on a POSIX platform, but I always prototype in .net

No, you don't.

Re:Are we talking about the same Microsoft?

[darthdavid]

All of them fit. Google's strategy is to offer a crapload of 'free' services to end users. I put free in quotes because, while the users don't pay Googlef any money to use their stuff, Google does make money off every user. How? By collecting information about them and using it to sell targeted advertising to a bunch of different people. Every service they offer is one more reason for people to stay where Google can track them, which gives them more information to use, which makes their targeted advertising more valuable.

And I'm not really against that as an end user either. Google's generally pretty good about not actually giving identifying information out to 3rd parties and I get plenty of neat stuff without having to pay any money for it. And if there's something I really want to remain private, well I generally don't put it on the internet at all, but if I did I'd certainly avoid putting it up through any of Google's services if there was any choice about it. That's only common sense...

Re:Are we talking about the same Microsoft?

[sydneyfong]

Perhaps he runs the apps/daemons in Mono. Hah.

Seriously, that sentence alone is worthy of a +5 funny IMHO...

Re:Are we talking about the same Microsoft?

[TheRaven64]

It's difficult to determine which of Google's services are actually making money. Google is in the market of harvesting huge amounts of data about people and using that to present them with targeted adverts. Anything that gives the more data about users or more places to put adverts contributes to this, but the profits will most likely show up elsewhere. This is especially true for some of their mobile services. Google Maps Mobile, for example, lets them track where a user goes, but doesn't show any ads directly. This improves the information that they use for targeting adverts, but the revenue will show up in the place where the advert is displayed.

Re:Are we talking about the same Microsoft?

[c]

> Am I wrong, or is the phrase "unfocused, money-losing" pretty much
> the definition of the stuff that Microsoft is rolling out these days?
> SilverLight, Bing, Zune, .NET languages, ...

No, no... those are focused on money-losing. Unless someone has a better explanation?

Re:Are we talking about the same Microsoft?

[wmac1]

Zune is a terrible product? Seriously?

Is silverlight worse than Flash?

And why Bing is terrible?

Re:Are we talking about the same Microsoft?

[DocHoncho]

In this context unprofitable probably translates roughly to not enough users

Re:Are we talking about the same Microsoft?

[Locutus]

that "focus" on languages has always been more about locking developers( and therefore software ) to their Windows platform. Silverlight is about limiting or stopping Adobe Flash because not only did Adobe become cross platform but Flash is a development platform which works across all platforms. This kind of thing is a threat to Microsoft's revenue stream( Windows ). So that's why Silverlight was created. As for MS .NET, that was in response to Java which is cross platform and the same rules apply regarding protection of the revenue stream. The kind of protectionism I talk about is evident in most all of the exposed emails from court cases which made public internal Microsoft email and depositions.

Because Microsoft's entire revenue base is tied to the Windows OS and it is a substantial revenue stream, protecting it at all costs( in the billions annually ) is business as usual and has worked for them for 20 something years. The funny thing is, they never had to compete in the portable space( disconnected mains power ) much and it never was much of a threat to the desktop or server. Apple changed that with the iPod/iTunes and how it showed great usability outside of the Microsoft ecosystem. It also expanded the Apple brand and sold desktops. Along came the iPhone and the Vista crapware and people really started taking non-Microsoft platforms seriously. GNU/Linux on the server side was doing quite well too. Zune was an attempt to curb the iPod craze but nobody fell for it since the Apple brand meant more than the Microsoft brand and you were not cool if you were Zuned. BING is Microsoft's attempt to limit Google's growth and brand and it too is failing and costing Microsoft billions. long story.

LoB

Re:Are we talking about the same Microsoft?

[hedwards]

I'm not sure about Bing or Zune, but I'm pretty sure that .NET and SilverLight are best seen as products there to protect Windows marketshare.

Re:Are we talking about the same Microsoft?

[cyber-vandal]

I hate to break it to you but .NET, especially ASP.NET is hugely successful and wildly popular. This leads to sales of Visual Studio, Windows Server and SQL Server which makes Microsoft a not insignificant amount of money.

Re:Are we talking about the same Microsoft?

[Riceballsan]

I actually liked the zune, my fiance's zune survived longer then any ipod I know of, however while I never thought I'd hear myself saying it, microsoft released a better product, but completely failed in the marketing.

Silverlight on the other hand yes it is worse then flash

Flash: An all platform inclusive slow buggy security hole ridden way to easily make programs for the web

Silverlight: A platform limited slow buggy security hole ridden way to easily make programs for the web

Basically the 2 are equally bad, but silverlight fails significantly in one category. People put things on the web to be accessible by everyone, whether they are using a windows PC, a MAC, an android etc...

Bing it is in general so pathetic that it can't even dent the market with MS's extremely determined marketing, auto bundling it with every PC, making the quantity of hurdles to set any other search engine default in IE etc...

Why?

[unixisc]

But they already have their own search engine Bing, or is that worse than Yahoo? Why would they be interested in Yahoo @ all? The only company that could make a good case for buying them is Apple, so that they can use something other than Google for their native search services on the iPad and others. Alternately, whoever buys WebOS can also buy Yahoo, so that they'd not have to enrich Google despite people choosing a non-Google tablet or phone.

Re:Why?

[teg]

But they already have their own search engine Bing, or is that worse than Yahoo? Why would they be interested in Yahoo @ all? The only company that could make a good case for buying them is Apple, so that they can use something other than Google for their native search services on the iPad and others.

Yahoo! has stopped doing search themselves, search has been handled by Microsoft for a couple of years now. So there is no value there... the value would be in yahoo.com, Flickr and various other web services.

Re:Why?

[Hadlock]

To further your point, within a week of installing the new CEO at Yahoo, they signed on Microsoft to do both their search and advertising for them. This is snarky to say, but it's true - Microsoft already owns them. Yahoo is a revenue stream for Microsoft, without any of the risk involved for Microsoft's share price or litigious liability. Next to installing their own executive at Nokia last year, this was the ultimate un-acquisition. All of the benefits with no downsides and zero long term liability.

Yahoo is just a website

[satuon]

I think of google as a search engine that happens to have a web page which you can use if you don't have a search bar in your browser. But when I go to yahoo's page, it looks more like a news site than a search portal. To me it looks like an ordinary website, not much different from cnn.com.

Re:Yahoo is just a website

[msobkow]

Very true. I have an email account at Yahoo (had it for years), but other than that I've never knowingly used any of their services since Google beat them at the search game. They're a good news aggregator, but if they disappeared there would still be hundreds of sites filling that niche. In fact, the only reason I end up reading their news is that I get taken to the page when I log out of my email account.

But I wouldn't say they're "unfocused" as the summary says, and it's been made clear that the summary is completely wrong about them losing money. Like most web-based companies, they're constantly on the lookout for "the next big thing." Their big problem is they've never really found "the next big thing", though they've developed and deployed a lot of "me too" services.

Despite that, they're a far more recognizable brand than "Bing", and unlike Bing, their search results seem to be on-topic (just checked a couple queries.) Apparently Yahoo still has a few tricks in their search engine that they could teach Microsoft.

Re:Yahoo is just a website

[formfeed]

But when I go to yahoo's page, it looks more like a news site than a search portal.

Yes, back in the day, before web 2.0 the buzzword for this used to be "Portal". Not a search portal, just "portal": Kind of a news aggregator, search portal, and customizable start page in one. The theory was, that whoever could offer the coolest portal and convince users to make it their default startpage would control the internet.

That was before tabbed browsing, session savers, and social websites. But the idea somehow still lingers on. Google still has the personalized start page, and facebook tries to become the one stop internet shop. Yahoo used to be bundled with some ISP services, has groups and email, and offered many services that fulfill some of the same functions users get through google. For many "elderly" web users, yahoo remained the default start page. Microsoft might be going after this market.

Re:Yahoo is just a website

[msobkow]

Then Bing has improved their accuracy considereably since I last used them.

Re:Yahoo is just a website

[NarcoTraficante]

I thought Yahoo search was now powered by Bing, so there shouldn't be any major differences in queries: http://arstechnica.com/microsoft/news/2010/08/yahoo-transition-to-bing-finalized-in-us-canada.ars

Money-losing!?!

[Dahamma]

I know Yahoo isn't particularly trendy right now, but their 2010 EPS was 0.88 and they have made a profit so far every quarter on 2011.

Calling them "money-losing" in a slashdot post isn't only completely incorrect and horrible journalism (thanks, Timothy), but lesser publications and individuals have been sued for libel for this sort of thing when it affects the stock price...

Re:Money-losing!?!

[Anonymous Coward]

AOL used to make loads of money too.
There's a bunch of things that's pretty obvious.
1. They don't own the coretech of what drives their business.
2. Customer loyalty and satisfaction arent what it used to be. No new features or comparitives. Exactly why use google?
3. No real presence in the app space. their apps are the worst in iOS.
4. No real presence in social. twitter, faceboock, google+
5. CEO musical chairs.
6. Large pockets of yahoo talent disappearing.

Let's say they have make black. I think their trending down. I don't think they have what it takes to pull to black when they do hit red either. They are just too far behind.

Re:Money-losing!?!

[Dahamma]

I'm not saying, it's right, but I guarantee you posters on financial sites have been sued many times in the past - ironically several times on Yahoo Finance boards...

Re:Money-losing!?!

[Dahamma]

Actually, I agree with everything you said (other than the horrible grammar) - but it doesn't really have anything to do with my post :) Regardless of all the ways they can and should fail, they are making a profit, and stating otherwise is incorrect.

Re:Money-losing!?!

[bloodhawk]

but lesser publications and individuals have been sued for libel for this sort of thing when it affects the stock price...

umm lesser publications? what could possibly pass as a lesser publication when it comes to financial information than /.? seriously if anything EVER said on here was used for stock decisions then the moron making said decisions was going to lose his money from the next guy that tried to sell him a bridge anyway.

Re:Money-losing!?!

[Hadlock]

Reading that, I don't think you understand the market Yahoo is in, or whoever told you about them was lying to you. Or you have significant interests in Yahoo's stock price.
 
Looking at their quarterly statistics without looking at their product and the market as a whole is pretty short sighted. I don't think they've been "trendy" for quite a while, and I think this reflects on the fact that they haven't innovated in a market that for the last 10 years has been expected to drive bleeding edge web technologies. Google keeps pressing on with innovations in social networking despite failing spectacularly at it by my count at least twice, Wave and Buzz; Google+ seems to be sticking in comparison. Microsoft is presenting at TED talks. Where is Yahoo in all this? You get email, news, and games. I can't remember the last time someone showed me printed directions from yahoo maps. Is there even a yahoo maps app for the android and iphone? This is what I'm getting at. Yahoo is firmly grounded in 2003. They're almost a decade behind Google and Microsoft, and they dismantled their R&D departments. This is not something healthy tech companies do. Apple has retail stores. Sony keeps reinventing theirs. Google announced a retail store in Europe. Microsoft has been selling computer accessories since I was a child. Yahoo is a name. They sell advertising, but have contracted out the search and advertising(!) to Microsoft. They will have a steady revenue stream for the foreseeable future, but without an R&D department (where their profits came from!) and a budget to fund it, their baby-boomer user base is going to lose interest eventually, and I don't think the younger generation (6-21) values their name brand any more than ask jeeves or alta vista at this point.
 
This isn't a retail sector where you can slash prices, hire a new spokesmodel, introduce a redesigned product lineup and buy some ad time on national TV and see sales spike through the roof for your mall retail stores. For a car analogy, Google and Microsoft are building (at a profit) mass-production hybrid hatchback vehicles that get 55mpg and have prototype fully electric plugin cars on the road. By comparison, Yahoo no longer makes cars and still only builds trucks and SUBS that only run on leaded gas, need their carburetors adjusted regularly and don't have emissions controls; the only way their cars are still sold are through government lobbying to ease emissions controls and an act of congress to give their customers tax breaks.

Re:Money-losing!?!

[bryan1945]

Spot on. Even my 65 year old mom tells me to "Google xyz" when she calls me to find out some obscure info (the last one being why the Seattle Mariner's mascot was a moose).

Re:Money-losing!?!

[Mana Mana]

> [If] anything EVER said on here was used for stock
> decisions then the moron [...]

was you, babe. Groupon was critiqued here about 8 months ago. The leaders', not the artsy theatrical founder hipsters types, but the 2 guys calling the shots, past were analyzed, and lo and behold their serial-invariant-pump-and-dump behavior over the past _decade_ was exposed.

I heard of Groupon through the NY Times 2 summers ago, at any rate it was then that I stopped and said, WTF is this site about? Honestly, I was underwhelmed. I said WTF? Am I doing this wrong? I enter my location in NYC; WTF, why can't I just enter my fucking Zip Code for deals? And, Manhattan is not NYC, yet all deals are in fucking Manhattan (dood, I'm not from fucking Nebraska or Staten Island, and my name isn't "Sha"(ron), nor am I a goofy chick, The City is not Manhattan).

And those deals are like one or two deals when I checked. 1, TWO---WTF! I was expecting deals left and right for Ferrari sized guys (5'10"), who love sashimi, in Kensington, Brooklyn, who are left handed, with thick hair, who love 356 Porsches, who love natural blondes, hate dye jobs, like big boobs, curvaceously assed women, BMW mechanic fanatic, is a motorcycle rider, a reader, multilingual, internationalist, and on and on. TWO fucking deals!

Groupon is a fad, I thought, then and there, when I researched them two summers ago. But then I thought, what am I missing, maybe it's me! This kind of shiz happens, one does get myopic. "It's gots to be mes."

Then the /. article from ~8 months ago, and I thought hold on. It's not just me, there's something there. Thanks /.! A lot!

Guess what?: That NY Time's article from two summers ago was breathy, alluring, hyperbolic---yes no one's immune, not even the Times. But on 1 Oct 2011 The New York Times tone has changed severely.

* ``the Internet coupon fad is shrinking faster than fat from a weight-loss laser.''

* ``Just a few months ago, daily deal coupons were the new big thing. The biggest deal maker, Groupon, was preparing to go public at a valuation as high as $30 billion, which would have been a record amount for a start-up less than three years old. Hundreds of copycat coupon sites sprung up in Grouponâ(TM)s wake, including DoubleTakeDeals, YourBestDeals, DealFind, DoodleDeals, DealOn, DealSwarm and GoDailyDeals. Deal sites were widely praised as a replacement for local advertising. ''

* ``Now coupon fatigue is setting in. Grouponâ(TM)s public offering has repeatedly been put off amid stock market turmoil and internal missteps; the company says it is back on track, but some analysts say it may never happen. Dozens of copycats are closing, reformulating or merging, including Local Twist in San Diego, RelishNYC and Crowd Cut in Atlanta. Facebook and Yelp, two powerhouse Internet firms that had big plans for deals, quickly backed off. ''

* ``Some entrepreneurs are questioning the entire premise of the industry. Jasper Malcolmson, co-founder of the deal site Bloomspot, compares the basic deal offer with lendersâ(TM) marketing subprime loans during the housing boom. ''

* ``Last December, Google offered $6 billion for Groupon. That was astonishing enough, but then Groupon snubbed the search giant, a declaration that it was really worth much more. Its valuation began to rise by about a billion dollars a week. Deal mania commenced, a boom within the larger Internet boom. If a bunch of part-time artists could do it, so could everyone. All you needed was a desk and a deal to present to the world.

âoeA lot of people saw an opportunity to get rich quickly,â said the Forrester analyst Sucharita Mulpuru. âoeIt was a very 1999 mentality.â ''

* ``Thirty billion dollars suddenly seemed a stretch. âoeTheyâ(TM)re in over their heads,â Ms. Mulpuru said.''

* ``Deal mania commenced, a boom within the larger Internet boom. If a bunch of part-time artists could do it, so could everyone. All you needed was a desk and a deal to present to the world. ''

In you, a healthy skepticism has been transformed into a corrosive cynicism. Get it together.

Re:Money-losing!?!

[Mana Mana]

http://www.nytimes.com/2011/10/02/business/deal-sites-have-fading-allure-for-merchants.html?_r=1

Re:Money-losing!?!

[Dahamma]

That part was sarcasm ;) But seriously, there have been a number of lawsuits over posts in Yahoo Finance forums in recent years...

Re:Money-losing!?!

[Dahamma]

What? Did you read my post? It was only two sentences, and stated two unarguable facts - the summary said Yahoo loses money, and the truth is they make a (small) profit.

Personally I don't disagree with you that Yahoo is screwed in the long term, but my post has absolutely NOTHING to do with my understanding of their market. It was a simple statement of "a profit is not a loss" and nothing more. To post as much as you did in response to that, I think you must be the one with the agenda :)

Better idea

[Anonymous Coward]

Earth to Microsoft: Yahoo! is not worth $44 billion.
You could buy General Motors lock, stock, and barrel for $14 billion, name all the cars "Google Sucks,"
and get more bang for the buck. Heck, you'd have enough left over to buy Ford for around $16 billion,
and you could name all those cars "Google Sucks More" and still have $14 billion left over for a big party

-stolen from a post here a long while ago the first time this came around. still true-

pioneed?

[justforgetme]

what's a pioneed? a pioneer in need?

Why?

[Skywolfblue]

Why would MS really want to buy Yahoo at this stage?

I thought last time around it was to try and sink it so MSN wouldn't have competition. But now with facebook and google and whatnot being much bigger players, that doesn't seem like a very workable plan.

Or make some hybrid bastard child of MSN and Yahoo and turn into into the worst social networking site they possibly can and trumpet it as the "new facebook"?

I just don't see it being ~all~ that attractive to MS. Yahoo runs a slightly (well, maybe upgrade that to "a fair bit" because MSN is pretty abysmal) better version of much the same stuff as MSN, but it's not like it's a groundbreaking change.

Well ...

[lennier1]

Depends on the motivation. Would they want to continue it or simply take their patent portfolio, some assets (datacenters, key employees, ...) and nuke the rest sky high?

Re:Hey Guys! This is For YOU!

[thunderclap]

Those women who are on this site would buy that type of handbag from your site. And Guys, honestly, why would we want a handbag?

Re:Hey Guys ! This is For YOU!

[thunderclap]

I will never understand why people think this works. Its the internet equivalent of panhandling with a cardboard sign.

I completely understand Microsoft.

[stefaanh]

Lately there has been a rumour that the Chinese were after Yahoo!

My guess is, "Yahoo!" is something is see Ballmer yell on stage, jumping around. "Bing!" is sounding like chinese to announce on stage.
They are just trading the names.

Just wait and Google.

Why not?

[HangingChad]

The makers of the Zune and Windows Mobile teamed up with biggest second-rate mess on the internet. Makes perfect sense to me.

Re:Why not?

[bryan1945]

Yep, if you're going to screw something up, go big. Oh, the songs they will write....

Re:Why not?

[LordThyGod]

Agreed. Losing large sums of money online is a Microsoft forte. They do it well. They do it right. Its all part of a grand plan.

Search Engine???

[Cruciform]

You guys keep talking like MS is buying them for tech.
Yahoo is like Google and Facebook. Their product is the user. The loyal, 15 year, highly profiled, user.

Data centers and the like are mostly just a nice bonus on top.

Non-linear dynamics

[Gimbal]

I'm sure it's all a part of a very complex non-linear algorithm, no doubt developed by the infallible Bill Gates over a scone and a cup of Earl Grey, as he meditated about the profitability of a butterfly in China. Or, it's all they've got. Maybe both!

Cheers.

If not MS, who will fix Yahoo?

[tunghoy]

Yahoo is so technically inept, it's embarrassing. Every try to log into Flickr, since Yahoo bought it? Frakking impossible.

he said bing, not ms

[nazsco]

He said Bing, not MS. And you had the trouble of changing his quoted text.

Not sure if trolling or just can't read.

Re:he said bing, not ms

[drawfour]

I'm not sure if you're just trolling or you just can't read. Here is the full text from the reply, fully quoted:

Uhm, no. The submitted said in his submission that Yahoo! is losing money. It is not. As much fun as it may be to kick Y! I think one should at least use the facts. MICROSOFT is losing money fast, but Y! is profitable.

Please, please buy them, McSoftware

[sgt_doom]

Definitely, after all the losses MS has incurred over the past decade, they SHOULD definitely buy Yahooooooo!

!

[This message was brought to you by the Bill and Meldina Gates Foundation, promoting the global adoption of Monsanto's GMOs, the privatization (monopolization and destruction) of education, further securitized debt globally, and mercenary armies in Africa.]

The 6,269,361 patent

[shagie]

There was an article a couple of years ago that looked into the history of one of the patents. Patent 6,269,361 that covers bid for advertisement placement in search results was developed by a company named Overture. Gates wanted it, but Yahoo bought the company in '03 for $1.63 billion. Microsoft started licensing the patent from Yahoo. There was also a settlement between Google and Yahoo over the patent. This could be the key that Microsoft wants to go after Google's ad words and keep any other competitors out of the market.

Buy Yahoo and rename Bing to....

[hardeep1singh]

Buy Yahoo and rename Bing to....Yahoo! Then they'll have a big name search engine going head to head with Google.