Talks between Microsoft and Yahoo continue as the market closes and the business week comes to an end. Every signal is that the two sides are close to finalizing a deal, somewhere between $33 and $37/share.
Microsoft has signaled that they’ll go as high as $33 this week. The alternate board members, who must be notified before any announcement of Microsoft going officially hostile, have not been contacted by Microsoft, sources say.
The market agrees, with Yahoo stock up as much as 11% today. Yahoo closed at $28.68, up about 7% for the day.
Analysts we spoke to today, emphasizing that they have no inside information, say they expect a deal to be wrapped up over the weekend and announced on Monday. Look for a cash/stock mix in the $35 range, announced before the market opens, possibly with a conference call pre-market as well.
The main reason Microsoft has changed strategies seems to be the overt willingness of Yahoo to do a search outsourcing deal with Google in the event Microsoft walks away or goes hostile. The threat is very real, and some experts say that regulatory approval of such a deal would not be as difficult as some have speculated.
See our interview with Citi Analyst Mark Mahaney from earlier this week.
Good day for stockholders. Bad day for Yahoo lovers!
Even though I have Yahoo stock I hate to see Jerry Yang win.
I hope the deal is done. Google the Goliath really needs some competition in internet market.
Does this mean XBox (w)could have a native Flickr mode without XBMC?
Jay, of course. that’s the main upside of the deal, as analysts have noted.
I really hope MS buys them, 90% of my search engine traffic comes from Google, they have become way too powerful.
Ugh…there is not way this can be good for consumers. I will be pulling all of my business from Yahoo if this goes through.
I also hope the Yahoo/MS merger goes through. I agree with the comments here that it would be good for the competition.
A few thoughts on the current Yahoo/Google test:
If Yahoo would quit monetization (and handing their own properties over for monetization to Google would essentially mean this), this would be bad for the Internet industry. It would mean a monopoly for Google on that crucial part of online advertising.
Sure, it would be good for Yahoo in the short term - it’s common knowledge that Google usually performs better on search monetization (”volvo x70 car dealer boston”) , because their entire system is based on search and based on the long tail. This does not mean, however, that Yahoo underperforms all the time. Yahoo’s system - from the old GoTo days - has been built around high-paying keywords with large volume, so they often even outperform Google considerable on those (”car dealer”). Depending on the application, the latter is often more relevant, and Yahoo has some clear advantages for publishers, too.
(3) The move would be bad for Yahoo in the long term. They’d be a publisher without advertising sales. Image New York Times or TIME Magazine being 100% dependent on a print advertising sales agency which owns a monopoly on advertising sales? Unthinkable! But that’s exactly what would happen. Google would dictate terms, policies, usage areas, no matter on how good their contract would be phrased.
(4) There is an inherent inventory / conflict of interest problem which Yahoo might not have considered… well, I’m sure they have, but it might have been pushed to the back of their mind in the heat of the moment. We can be pretty sure from publishers’ experiences, Google stockholder reports with their focus on TAC (traffic acquisition costs) and Google’s general strategic direction that one of Google’s agendas is to funnel more an more advertiser budgets and resources to their own sides opposed to third-party sites. Seeing it from Google’s perspective, it’s makes of course sense: why have an advertiser spend 1 $ on a partner site, where they make like 30-40 cents, and not on their own site, where they reap the entire 1 $. This inherent conflict of interest by the way has been leading to publishers fleeing DoubleClick after their acquisition by Google, as reported today in a European newspaper.
Although Mike is probably right that this deal is going to go through, I am rather saddened as this means we are headed for a duopoly between the major search powers.
Hopefully someone (somewhere) is developing a rival search engine (that’s half way decent), otherwise we may see an internet cold war develop for the next decade (assuming both companies are able to maintain their mojo over time).
We don’t know anything on how MS will operate Yahoo’s property, do we ?
That’s the most important question to me at least. I don’t care if X or Y is the biggest shareholder, or how much ROI they want for their shares, I just wanna know how things will go for web properties we’re using everyday ( Flickr, del.icio.us, Yahoo Mail …) Any insight mike ?
As much as I think MSN is a poor search engine, a part of me wants it to go through to see if there is a chance to compete against Google.
We already how well Microsoft would run Yahoo. Two words: Windows Vista. As for me: no thanks.
Wahoo Live!
yoo iz pwned yang!
As much as many are wishing msft would just ‘go away’, Ballmer wants a deal and they have the cash to make it happen…so. Its funny to think about how red Ballmer’s bald head gets if/when Jerry ups the price a few dollars a share. To walk away would mean msft’s defeat, even though a lot of people on both sides yhoo/msft don’t see a synergy here.
FD:I’m long yhoo.
$35/share’s very reasonable, as have suggested since long long time ago..
i have already stopped doing business with yahoo - all search traffic comes through g