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Friday, February 01, 2008

YHOO + MSFT = Overture 2.0?

MSFT offers to buy YHOO. Wow! Details:
Microsoft Corp. is offering $44.6 billion in cash and stock for search engine operator Yahoo Inc. in a move to boost its competitive edge in the online services market.

The unexpected announcement Friday comes as Microsoft, the world's biggest software company, seeks new ways to compete more efrfectively against the search and online advertising powerhouse Google Inc.

In a letter to Yahoo's board of directors, Microsoft Chief Executive Steve Ballmer said the company will bid $31 per share, representing a 62 percent premium to Yahoo's closing stock price Thursday, and emphasized that the deal isn't subject to financing.
microsoft yahoo overtureThis is big news for those of us in the search engine advertising industry. Remember when Overture supplied PPC ads to both Yahoo and Microsoft? I'm still holding some YHOO shares I have via the Overture acquisition in 2003. Today might be a good day to exit that position. ;-)

I wonder if MSFT is a subscriber to Analytical Investing (a client). The MSFT offer is $31 per share which is awfully close to the $30.74 intrinsic value from the Analytical Investing stock valuation model. Nice call:

yhoo value investing

Related Posts:
Yahoo! Should NOT Be For Sale
Microsoft to Buy Yahoo! to Battle Google?

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Blogger JezC said...

I wonder if it was so unexpected. Google's being nicer to advertisers. That always worries me - GOOG treats advertisers as a resource, not as valuable as searchers (which is probably about right - the advertisers wouldn't be present if the searchers went elsewhere).

IMO, Google gets nicer to advertisers the greater the perceived competition. I even mumbled (not very presciently, as it happens) about MS and Yahoo threats to Google, in a recent article. I can see a combined entity offering some real revenue dent to Google, if they can get their joint act together (Yahoo search results, Microsoft's advertising interface, joint volume is respectable).

Fri Feb 01, 01:59:00 PM EST  
Blogger Richard said...

It's a bit ironic that Yahoo's purchase of Overture paved the way for Google to dominate the search advertising space. Not sure if YHOO and MSFT can combine cultures to create the viable competitor to AdWords/AdSense that Overture could have been. IOW, not sure that 2 tortoises together are any better of a match for a single hare. ;-)

Mon Feb 04, 01:17:00 PM EST  
Anonymous seo freelance said...

it will be very difficult to combine this two. If the purpose of merging is to compete with google, i think they have to talk about it first.

Mon Mar 10, 12:55:00 AM EDT  

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