Thursday, June 21, 2007

Turmoil in Yahoo!/Semel aftermath keeps eBay merger option alive

I believe all the turmoil around Yahoo!, after CEO Terry Semel quit, fortifies the case for a merger with eBay, which I defended before.
Keep in mind that Google is the perennial enemy to both. Microsoft on the other hand is carefully treated as an equally beleaguered colleague, rather than as a competitor.

The recent animosities by no means endanger a Yahoo!/eBay merger:
  • Google was ready to invade eBay's Live event, which made eBay pull away from AdWords. Instead, eBay could be a bigger Yahoo! partner.
  • Google attacked Microsoft over Vista's desktop search. The case was settled.
Nor do the recent advances, quite to the contrary:
  • Yahoo!'s problems keep any merger speculation alive, particularly with Microsoft.
  • Now the Times of London reports that News Corp floated the idea of swapping MySpace for a 30% Yahoo! stake. I believe the implied MySpace valuation must be too high for Yahoo!, which proved quite frugal when approaching Facebook. Also, I believe that Yahoo! needs to be a 'content neutral' aggregator, not a News Corp vehicle.
  • However, the eBay/MySpace talks are still ongoing.
  • Yahoo! has not responded to Ron Burkle's try to involve Yahoo! in a counter offer for Dow Jones, News Corp's much desired prey.

In other words, I think Yahoo! is carefully aiming for eBay. At the same time, News Corp must be kept at an arm's length.

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