Yahoo, once the dominant force on the internet, has been losing ground for years now and it looks to take the final downturn. A few months ago only, Microsoft was almost begging Yahoo to join it in the competition against the might Google. Yahoo refused time and time again refusing offers that are now almost 100% higher than the actual price of Yahoo(YHOO). With Microsoft’s recent launch of Bing, it is becomming increasingly clear that Yahoo’s search business is in major trouble as it continues to lose market share, especially to the new Microsoft’s search engine.
It is now being reported that a new search deal is almost done. Among other things, this deal would set Bing as the search engine used by Yahoo. My question of course is what Yahoo will be focusing on if it cannot even have its own search engine. Other segments of the company such as dating and stores have also been losing market share to the point where it is unclear what Yahoo will look like one or two years from now. As part of the deal, Yahoo would retain most the sales responsibility for the new merged business. But in a world where Google is by far the dominant player, I doubt a few extra salesman will be what takes Yahoo to the next level.
Yahoo is currently up on the news in after hours trading and it might last for some time but I do think that this deal will hurt Yahoo in the long term, especially since this time around, Yahoo came into the negotiations in a position of weakness, a major difference from the last few times such discussions took place.
Oh and did I meantion that this deal will without any doubt be under scrutiny by the Department of Justice as this deal will take out on of the very few big players in online advertising. It probably will still get done but this will cost money, focus and time.
Does Yahoo look bad for not following Carl Icanh’s advice a few months ago when they could sell their company for over 30$ per share? Amazing isn’t it… Just name one good and promising part of Yahoo right now??? Yes, exactly, I didn’t think you’d come up with one.