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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."
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!
moox. for a new generation.
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.
moox. for a new generation.