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May 8, 2007

Yahoo! and Microsoft: Summing Up

Actually, there isn't much to sum up, other than the merger is not in the cards, at least according to most analysts.  The best that may come out of this is a partnership in some respects that combine some of their Internet properties in some way where they can compete against Google.  The consensus seems to be that the companies are too diverse to merge cultures to any competitive effect, and that the combined company would still be well behind Google in market share for search and advertising dollars.

As to the first point, Yahoo! seems to be lumbering forward with their Panama ad system that places targeted ads on web pages.  This competes against a well entrenched Google operation and can grow Yahoo, but likely will not displace much in terms of Google market share for ad revenue.  Microsoft keeps reworking Windows Live Search to the point where one wonders if they have any idea what their overall strategy for the Microsoft web presence.  Their goal is obvious, they way to out-Google Google.  Getting there is another issue.  Even a merged company would likely take years to build up any headway against Google.

Yahoo! has seen it's stock drop and its earnings failing to meet analyst expectations over the past several quarters.  There have been management shakeups as attempting to address the issue.  Sadly, the merger rumors pushed Yahoo! stock way up for a bit implying that the company has ongoing value but isn't managed as well as it could be.

The copyright lawsuits filed against Google are unlikely to stop its growth.  More likely they will force Google to spend some of the billions coming in through damage payouts.  Microsoft and Yahoo! may have to realize that they are second and third best in this particular market.  They either need more new ideas or a very bad Google stumble.  Neither are likely to happen anytime soon.

May 8, 2007 | Permalink

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