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What goes up comes down:A story of a boy called Yahoo!

May 5, 2008

Okay, I am gonna keep it really short. Not because I am in a hurry [well, my girlfriend ditched me, so no more stupid walks, Thank God! Plenty of time, I must say]. I will keep it short for this time, I am trespassing into unknown territories. Really unknown.

For one, I am but just an outside passive spectator of the Web 2.0 businesses [like staying updated on something more solid], secondly not a great Yahoo! observer[again, like staying updated on something better] and thirdly I have no informed sources[and I would really like to do better than being a news readers]and lastly and most importantly, its not connected with India or global economics as such.

So let me just add my two pence and a disclaimer: Take everything with a pinch of salt.So here it goes.

Rather than saying something about which the rest of the world has cut, dissected, sautéed and fried with endless “what-next” questions, let me ask “why?”

“Why?” Take 1

Why did Microsoft go all ballistic for Yahoo? Because, it is the best and largest content provider on net? Is it the only one?

Okay shot 2. Does Y! search look good?

I doubt that.

The only great thing about Y! is its email and group user base. Pretty formidable. In fact, India has more Y! signups than GMail signups. So is it MS’s best move? Capture the user base, by buying out a big player. Seems pretty much lame to me. But of course this entire Web2.0 is a lame game, where advertisement revenue have made losers look like rockstars. So, if there is no ace on Y! sleeve,apart from the formidable user base, why MS rose its bet per share to 33 USD? Seemingly when, Y! shares were in sweet teens.

People keep talking about “to counter Google, to counter Google” logic. But what plans do MS has to bring Yahoo out to perform like a winner? Deeper pockets dont work in a world like this, execution does. And Google surprisingly earns very less through all its other affiliates combined. It has just three aces up its sleeve, they are SEARCH! SEARCH! and SEARCH.

So how does MS think of countering that? YPN, [Yahoo Publisher Network], though is registering some modest activity but is yet to catch. There was a bar chart of the ad market share compiled by Darren Rowse, if I remember correctly [now which post was that ? ]. Seemingly YPN performed marginally better than Snap!.

Does Ballmer think Live+Yahoo Search > Google Search ?

I doubt the logic though. So what is cooking behind the scenes? What is Ballmer after? Plain userbase, which is not returning much revenue to Yahoo, and just checking emails?

“Why?” Take 2

What interests do Yang has in turning down, Ballmers offer? Yahoo has launched Shine, and other eyecandies recently, but whats the deal? You know, Ballmer knows and Yang knows too that Shine is not going to be a superstar of Yahoo-dom. So what is keeping Yang from selling out? Some speculations:

  • He hates Ballmer : Given the tone of the letters exchanged, doesn’t look like that they are going out together
  • He hates Ballmer and loves Google too very much : Can’t say much about it.
  • He hates Ballmer, loves Google and has some ace up his sleeve: 😉

I really don’t know whats cooking, but I don’t think shareholders will be a happy lot though. Yang says that, its Asians operations warrants a higher bid. Furthermore AOL has appeared as the KNIGHT IN THE SHINING ARMOR.Yang has got some plenty of explaining to do, as its shares have taken a heavy $5 beating on NASDAQ today. Presently trading somewhere in the vicinity of $27 and some change. So now Yang has to prove that he can do much better than just asking for $37 per share, he got to prove he deserves that.

And is Ballmer going to leave it at that? I doubt.

You know how I see? Ballmer being exactly that, Ballmer, will pursue Yahoo for a hostile bid. AOL, seeing a perfect foil, comes to save the damsel in distress [ahem ahem Jerry in jittery distress]. So perhaps, just perhaps the shareholders of Yahoo may get to have the cake and eat it too. Meaning, exit at much higher levels.

But again this is a speculation, and a brain storming post.

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