Webtresting

The hot news of the web world:

1. Yahoo allows Google to sell ads on Yahoo’s search results.
2. Previous talks between Yahoo and Microsoft comes to an end.
3. Yahoo shares fell. But both Google and Microsoft shares went up.

Links to news sites:

1. CNN : http://edition.cnn.com/2008/TECH/06/12/yahoo.google.ap/index.html
2. International Herald Tribune(IHT): http://www.iht.com/articles/2008/06/13/business/13yahoo.php
3. CNN Money: http://money.cnn.com/2008/06/12/technology/yahoo_google.ap/index.htm

Analysis of CNN edition:

CNN: Yahoo Inc.’s efforts to revive takeover talks with Microsoft Corp. have reached a dead end, prompting the Internet pioneer to hire online search leader Google Inc. to handle some of its advertising sales.

Thats funny! Hired Google? That sounds like Yahoo hired Google as a sales man saying ” I have good traffic, so Google, come and sell standing on my roads”. Well, I see it the other way round. It would have been better to say Google hired Yahoo. That should have sounded as if Google saying: “Yahoo, I have a lot of traffic, but my ads are in surplus. Would you like to sell some from your shops(sites)?” Haha.. Sorry for being so sarcastic, but the opening line on CNN news deserves this for trying to be so “goody goody”. Anyways, Google is ruling, and its destined to rule.

CNN: The news disclosed Thursday caused Yahoo shares to plunge 10 percent as investors abandoned hope that Microsoft would renew a nearly five-month quest to buy the Sunnyvale, California-based company.

Let analyze this. Yahoo share value was rising, because the investors were buying shares in the hope of getting paid more when Microsoft buys Yahoo. The deal came to an end, the investors lost their hope of quick profit, and stated selling to recover some of their money. But these were the investors who wanted to make a profit, not out of value generation, but out of speculations and money spinning. If I had money I would have purchased the Yahoo shares. Why? Because the deal is going to return lots of profits for Yahoo over next one year. Why so? Because, Yahoo and Google are the two most reaching ads network. When they shake hands, they could increase their monopoly over the ads network. Advertisers would have less of an option, and so the ads would become more competitive. They will offer higher revenues, and hence bot Google and Yahoo make bigger profit. Long term investors, run! Buy Yahoo Shares.

CNN: Yahoo is trying to fend off a shareholder mutiny led by activist investor Carl Icahn, who has vowed to replace the company’s board because of the way the directors handled the Microsoft negotiations.

With Microsoft apparently out of the picture, Yahoo is turning to Google to help its chief executive, Jerry Yang, prove that he made the right decision last month when he turned down Microsoft’s takeover bid of $47.5 billion, or $33 per share. Yang asked for $37 per share, prompting Microsoft CEO Steve Ballmer to withdraw the oral offer. 

Yahoo estimated that the arrangement could boost its revenue by as much as $800 million during the first 12 months of the partnership.

 

In my opinion, this is either an ego issue, or make quick money issue. Ichan doesn’t seem to be interested in the Company. He seems more interested in the profit he would have got by selling his shares to Microsoft. Doen’t he understand that by selling his shares he would have thrown himself out of the company? Let us assume that he throws out Mr Yang, changes the board o directors, and then sells off the company. The buyers would reinstate Mr Yang seeing his “see the wellbeing of the company attitude”. Mr Yang, thumbs up to you.

CNN: “I am happy to be helping them to stay independent,” Google co-founder Sergey Brin said Thursday.

Kiss you Sergy Brin.  Even after victory you express humility. Your attitude must have shaped the personality of your company. Your focus isn’t money. Your focus is the source of money, i.e value. Lot of things to learn from you.

CNN: Microsoft had hoped to use Yahoo as a weapon in its efforts to slow Google’s growth, but they couldn’t agree to terms.

Keep trying MicroSoft. You are getting more and more micro and soft to get crushed. We public love Google not for its politic, but for the value it generates for us. Its innovating. Its making our life easier. What are you doing?

CNN: Brin and his co-founder, Larry Page, both think the partnership could even help foster more competition by providing Yahoo with more money to improve its own search technology.

Well, that’s a good logic to be presented to the antitrust movement, who think that monopoly is always bad. But if we dig deeper, thats not going to happen. Why? Because Yahoo may develop better technology because of the revenue it earns from Google. But how will it monetize its technology? If its going to be on the web business, its source of revenue is going to be advertisements.  And ads are going to come through Google. Its a win win situation for Google as well as Yahoo. But Google is the winner in any case.