Will Yahoo turn out to be an egg on its buyer's face?

173 thoughts on “Will Yahoo turn out to be an egg on its buyer's face?”

  1. “The average U.S. Facebook user is spending over six hours a day on the social network…”

    As if that stat equals a fully engaged user with fingers constantly tapping on the keyboard and eyes glued to the screen. Nice stat though for the IPO dog and pony show.

    Yahoo has one asset – Mail.

  2. Weird.. Mail? That’s all Yahoo has? Last I checked, Yahoo leads the web in a lot of different properties.. like finance.yahoo.com, autos.yahoo.com, omg.yahoo.com and 10 others..

    1. I agree with the articles sentiment; I just don’t see anything in Yahoo, saving it buy acquisitions makes no sense if the core asset is worthless, you could essentially just start a new company at that point. Only the alibaba stake is valuable, beyond that I’d hope microsoft would bail the company out. The big mistake was not pursuing carl icahns deal in 08. Jerry Yang is an idiot.

      1. depends on your definition of “core asset”. Take a look at Y! Sports(#1 sports site and fantasy sports). You can spin that off into a company and it will be more successful and easier than starting a new company as you suggested.
        I’m guessing a lot of buyers would be interested in purchasing Y! sports

  3. Agree with Om on the monetization and talent problems. But I am also surprised how narrow minded he is. Y! properties like frontpage, news, sports and finance still get huge traffic and are tops in their fields. Y! sports is doing very well especially with their Fantasy Football (#1 by far).
    Techies don’t represent everyone. Sure, Y! has fallen behind Facebook and Google in visitors and time spent but at #3 they still have a ton of users.
    The potential buyers get it and that is why they’re willing to throw down so much $.

    1. Its amazing how techies call something as useless as foursquare a next big thing valueing in billions of dollars and something as yahoo ‘a pretty far gone thing’

  4. Good article, and spot on. Totally disagree about hiring at Google though, it’s still a tough gauntlet you need to get through — I’ve worked at both Yahoo and now work at Google 🙂

    1. Really?- wow, I actually didn’t realize that their sports section or any others were so dominant, I suppose that’s some value, though personally I don’t really know what you’d do with those, then again Silverlake is essentially offering no premium. I believe that the end result is a sale to Microsoft, as apparently a PIPE assists that from a tax perspective. Agree with Elvirs on foursquare.

  5. Alibaba could salvage value from Yahoo. They could expose manufacturers more directly to US consumers, circumventing the mess of eBay brokers.

    The other entities would indeed be buying a shell, and would likely resell 5 years later for a tenth of what they pay.

  6. “The fact is that the buyout philosophy might work on old industrial-age companies, but I am not sure it would translate to Internet companies.” Nail banged squarely on the head.

  7. Throwing around useless statistics about time spent that are out of context in terms of the user experience is ridiculous. Yahoo! is a company that could be poised once again for growth. It still has over 700MM global users and growing, top web properties in 10 vertical categories, a search business that has largely been ignored (which is the true hidden value at Yahoo!), super strong relationships with advertisers and lastly the opportunity to diversify its monetization strategy to drive incremental growth. Last I checked Facebooks growth is starting to level off and their revenues are half of Yahoo!’s. Yet, they deserve a 100 billion valuation? The Valley has lost all grip with reality and investors are starting to believe their own nonsense. There is still big value to be unlocked at Yahoo!, they just need to get out of their own way.

    One point I do however agree with is that there is a brain drain. This isnt because Yahoo! isnt a viable company but rather the executive team would prefer to hire people that make them look good in lieu of hiring the best players they can possibly find and in some cases doing whatever you need to do in order to win. AKA overpaying product and engineering talent.

  8. At the price proposed nothing new needs to happen. Even if Yahoo US continues its decline into oblivion the price still makes sense. Silver Lake’s most recent investment in Alibaba valued it at $32bn, so Yahoo’s 1/3rd stake is roughly $10bn+ and then there is the liquid stake in Yahoo Japan and some cash on hand.

    If the Yahoo core operations can be turned around and if you place any value on them, then the deal will be a winner.

    Because of the price, there is very little downside. Also, Silver Lake are clearly bullish on the Alibaba asset and they can be justified for doing the deal just based on that.

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