Today Yahoo and Microsoft announced a deal to combine their forces against Google. Yahoo gets to retain 88% of ad revenue ($500 Million in value over 10 years), and access to some of Microsoft's reach. And Yahoo gains$ 250 Million in savingsMicrosoft gets an instant bump in search marketshare - 28% vs 65% for Google. So what did the investment community think of this long time deal. Who came out on top....
Microsoft gained nearly $2.94 Billion on market value - nearly all of it at the direct expense of Yahoo, that lost $2.91 Billion. Ouch. Read TechCrunch's review of this Yahoo to Microsoft valuation shift.
Investors lamented that Microsoft paid Yahoo no money upfront and that it will share only 88 percent of search revenue from Yahoo sites with Yahoo.
"I was surprised at their decision to give the milk for free rather than forcing Microsoft to buy the cow," said Eric Jackson, a former Yahoo investor, who sold off his holdings in September after Yahoo turned down Microsoft's $47.5 billion buyout offer.
"Yahoo should have fought harder for a big upfront," similar to the search proposal Microsoft initially suggested last year after it failed to buy all of Yahoo, Jackson added. Reuters.
We think CEO Carol Bartz underplayed her hand and was out-matched by Microsoft. However, over time will this deal make sense - time will tell. We think it spells the end of Yahoo and possible Bartz' herself. And what about Google? We always believe that any innovation that Bing/Yahoo come up with - Google has the resources to quickly leap over- and maintain...and potentially grow market share. It is good that there may be competition for Google's search prominence, yet we believe that the combined marketshare for Yahoo and Bing will maintain current levels or drop off... stay tuned. If anything - the search market just got a little more interesting. Yahoo - RIP.
Updated: on the second day - yahoo dropped 3.43% -further eroding value.
As advertisers we like adcenter for the great conversion rates of Bing’s traffic.. With Yahoo though we are forced to buy clicks from junk partners that send nothing but fake clicks.. It’s a daily job to monitor all the new bad-domains to block.. And you have to PAY for all that.. :P
With the current merge of Yahoo and Bing let’s hope the new “team” will do it RIGHT by giving the advertisers the choice to pay only for real yahoo/bing searches.. just like Adwords and adcenter allow (for now?).
Just my 2 cents
Cheers!
Posted by: unlimited | August 30, 2009 at 10:15 PM
Investors complained that Microsoft paid Yahoo any money up front and that share only 88 percent of the incomes of Yahoo's search site with Yahoo.
Posted by: Attorneysmax | September 27, 2009 at 05:53 AM