Yahoo’s Content, Global Web Presence Still Highly Valuable

By Don Reisinger  |  Posted 2012-05-14

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 didn€™t. 

It was yet another black mark on the once-dominant search engine and Web portal. If Yahoo can€™t 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 Yahoo€™s fortunes. But now, Yahoo likely can be had for cheap compared to the original offer. Furthermore, it appears that Yahoo€™s 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. 

Microsoft, always looking for a way to take on Google, might just be in the best position ever to acquire Yahoo. Read on to find out why: 

1. It€™s cheap 

One of the nicest things about acquiring Yahoo now is that it can be had on the cheap. In fact, the company€™s shares are trading today at $15.52€”far 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 shouldn€™t have any trouble matching (and even offering a premium on) Yahoo€™s $19 billion market cap. 

2. The board wants out of the turmoil 

Yahoo€™s 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 Point€™s 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 Yahoo€™s shareholders. Why not listen to him? 

3. Remember Google 

Although some might say that Yahoo is a sinking ship, to Microsoft, it€™s 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 Microsoft€™s 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

Google€™s 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. Wouldn€™t 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 Yahoo€™s many Web products aren€™t 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 company€™s 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 company€™s patents alone are probably worth hundreds of millions of dollars. Maybe Microsoft should acquire Yahoo simply as an investment. 

Follow Don Reisinger on Twitter by clicking here

Rocket Fuel