Yahoo Woes
Thursday, June 26th, 2008I know I’m late blogging about this issue but better late than never I guess.
I’m sure most of you have heard the news about Microsoft’s now withdrawn offer to purchase Yahoo. It was an ongoing adventure over the past year and a half. In May of 2008, Microsoft put in a formal bid to purchase Yahoo outright for $47.5 Billion, or $33 per share, looking to expand their online advertising presence and compete with Google.
I know if I owned shares in Yahoo (YHOO) I would have been a little upset. Especially considering they were trading at between $26 and $28 per share at the time of the bid. Yahoo played a little too hard to get in this relationship, as senior executives rejected the offer believing the company was worth more around the range of $37 per share. After a few more weeks of negotiations, the announcement was made that Yahoo and Microsoft were no longer talking.
You may also have heard that, Yahoo, now hurt from the break up with Microsoft, crawled into bed with Google. A rebound relationship that has many questioning Yahoo’s actions. Yahoo and Google announced the deal on the same day that talks with Microsoft ceased. Yahoo has outsourced some of its paid search ad business to Google. Although the deal is still undergoing the loop holes required to be approved, it won’t surprise me when it gets approved.
Now at this point you may be asking yourself, “why do you care?” Ahh good question. As mentioned, I don’t own shares in Yahoo so the fact that they are now trading 30% less than Microsoft’s offer doesn’t keep me awake at night, or the fact that they dropped more than 15% since the acquisition fell through. What I do care about is what will now happen to online advertising, and the future of Yahoo. I see people removing their Yahoo ads, and instead investing more into their Google advertising since their ads will still display on both Google and Yahoo sites because of the deal.
I like Google. They’ve definitely done some great things and continue to amaze me all the time. But the competition from a Yahoo-Microsoft merge would have been nice to see in the online advertising industry.