Microsoft Should Buy Out Yahoo Pronto: 10 Reasons Why
Microsoft Should Buy Out Yahoo Pronto: 10 Reasons Why
The management and business turmoil surrounding Yahoo has continued unabated for years. The company fired former CEO Carol Bartz, back in September, 2011 and then took months to find a new CEO, Scott Thompson. In just months, Thompson is out as a result of serious personal credibility issues after it was revealed that his resume falsely claimed that he received a computer science degree, even though he didnt.
It was yet another black mark on the once-dominant search engine and Web portal. If Yahoo cant soon find a bonafide turnaround genius to take the helm and work miracles, it may soon find itself drifting rudderless into oblivion.
But there might be another story to tell for Yahoo. Years ago, Microsoft had every intention of acquiring the online company and was willing to pay a major premium on its share price to make the deal happen. After the attempted buyout fell through, Microsoft and Yahoo formed a search deal, which did little to improve Yahoos fortunes. But now, Yahoo likely can be had for cheap compared to the original offer. Furthermore, it appears that Yahoos reorganized Board of Directors will look for ways to maximize shareholder value, which is investor-speak for finding a buyer that will pay a decent price.
1. Its cheap
One of the nicest things about acquiring Yahoo now is that it can be had on the cheap. In fact, the companys shares are trading today at $15.52far below the $31 Microsoft was willing to hand over years ago when it tried the first time. Considering Microsoft has billions of dollars in cash on hand, it shouldnt have any trouble matching (and even offering a premium on) Yahoos $19 billion market cap.
2. The board wants out of the turmoil
Yahoos board has grown tired of all the turmoil. From the trouble with Jerry Yang to Carol Bartz failing to turn the company around to Third Points Daniel Loeb being a constant headache, the board of directors seems more willing than ever to accept a buyout offer. Loeb, who is now on the Yahoo board, has made it clear that a sale of Yahoo as a whole or in pieces could unlock value to Yahoos shareholders. Why not listen to him?
3. Remember Google
Although some might say that Yahoo is a sinking ship, to Microsoft, its an opportunity to take on Google far more effectively than it has so far. Yahoo might not be as big as Google and the company has lost its fight with the search giant, but with Microsofts cash and backing, the company might just be able to take the fight to Google.
4. Advertising could be huge
Although Google gets much of the attention in the online-advertising space, Yahoo is also a major player there. Microsoft, thanks to its aQuantive acquisition years ago, also competes well in the online ad market. By joining forces, Yahoo and Microsoft could attract more Website owners, deliver more relevant ads and ultimately, start gaining more market share.
Yahoo’s Content, Global Web Presence Still Highly Valuable
5. Content is still king
Yahoo is perhaps best known for its search and applications, such as email, but the company is also one of the Web's top publishers of content. From sports to general news, Yahoo covers it all. It still does it quite effectively and retains the attention of hundreds of millions of Web users. Microsoft, meanwhile, has no comparable presence in that lucrative space. Maybe a Yahoo buy would help it establish that presence.
6. Consolidation against Gmail
Googles Gmail platform continues to gain in popularity as Yahoo Mail and Windows Live Mail start to lose out. One of the nicest combinations in the online world would be Yahoo Mail with Windows Live Mail. Both platforms do some things quite well, but neither one of them do things perfectly. Wouldnt it be nice if they each borrowed nice features to deliver the best value in the email space?
7. The engineering team is top-notch
Although Yahoos many Web products arent as popular as they once were, the company still has hundreds of engineers that do an exceedingly fine job of delivering high-quality Web applications. Microsoft has its bases covered on the software side, but its engineering team could use a boost on the Web side. What better way to get that than with a Yahoo buy?
8. Consider the international side
Yahoo has a strong international presence. The company has loyal followings in many countries around the world and its search is still hanging on to the top spot in some places. Microsoft, which has an international presence with Windows and Office, could still stand to build up its global Web presence. There appears to be some synergy there.
9. The infrastructure is there for the cloud
The future of computing (and perhaps even Windows) will reside in the cloud. Although Microsoft has invested heavily in the cloud in the last several years, Yahoo has a built-in infrastructure ready to go. The companys servers, Web infrastructure and everything else related to the online world might just come in handy if Microsoft wants to increase its cloud focus in the coming years.
10. It might be an investment
All of this talk about a potential Yahoo buy anticipates Microsoft buying the online firm and maintaining its services over the long term. However, what if Microsoft goes a different way with it and decides to acquire Yahoo, cut out the fat, improve some offerings and put it back on the market? After all, the companys patents alone are probably worth hundreds of millions of dollars. Maybe Microsoft should acquire Yahoo simply as an investment.