What now Yahoo?
When Yahoo Inc.’s price tag is $44.6-billion (U.S.) – and that’s the starting bid – it is no wonder that few firms have been touted as potential white knights, able to rescue Yahoo from the clutches of cash-rich Microsoft. But what about News Corp.?
Douglas A. McIntyre makes a nice pitch for the idea in his blog for 24/7 Wall St. Oh sure, even after sifting through the lint in its pockets, News Corp. would not be able to come up with a bigger, better bid for Yahoo, and selling off some of Yahoo’s overseas divisions would not ease the financial pain. But with Google Inc.’s help, maybe something could happen.
Mr. McIntyre writes: “Google Inc. (GOOG) would almost certainly advance News Corp. a few years of money against having the exclusive search franchise for Yahoo. Google has already given News Corp. guarantees from search results sold on MySpace. What could News Corp. get for the rights? Probably $4-billion a year. A five-year advance would give News Corp. another $20-billion for a takeover fund. Murdoch could also cut out most of the R&D spending and staff at Yahoo, pushing operating income way up.
And, "Google would get what it wants. It will have pushed Microsoft to the back of the search engine line. Murdoch would own the world’s largest Internet platform.”
From this site the following item:
News hitting everywhere tonight that was buzzed about Friday: The nuclear option I described for how Yahoo can extricate itself from Microsoft's bear-hug big may be becoming real. Word is that Google's Eric Schmidt called Yahoo CEO Jerry Yang Friday and offered to help, which likely amounts to more than the mischievous Dave Drummond blog post earlier today.
While we won't see a competing Google bid for Yahoo, I now give it perhaps a 25% chance that Yahoo tries to block this deal by doing something on the scale of outsourcing search-related advertising to Google. And if it a) comes quickly, and b) came with replacing Yang with a new CEO, it has a chance of succeeding. Assuming Yahoo tries, of course, Microsoft will quickly take its $31 offer directly to shareholders and see if it can set up its own slate of Yahoo directors. What fun!
I am watching this battle of the titans closely and with sheer excitement:-)
