Gord Hotchkiss, writing for Media Post Publications, is pretty confident that Yang taking over the CEO post at Yahoo is a sign that the search engine won’t stay independent much longer. “My suspicion is that there may be an acquisition deal in the works and this is a ‘feel-good’ move to help shore up Yahoo’s eroding stock price until the deal can be finalized.” If that’s really what’s going on, then we have to ask: who is the most likely suitor?
News Corp. may be one of the contenders; stories are circulating in the press that it is discussing an interesting deal with Yahoo. Depending on which source you believe, Yahoo would get MySpace in exchange for giving News Corp. a 25 or 30 percent stake in the search engine. But some are saying the potential deal could collapse now that Terry Semel is no longer Yahoo’s CEO; the idea was that he’d serve as a bridge between News Corp.’s and Yahoo’s very different corporate cultures.
Wired is advocating the deal, saying that it would give Yahoo a new business model. Instead of trying to be a portal, “Yahoo…would be able to plug in its very good but under appreciated and monetized Internet tools like mail, calendar, photo sharing etc…into one of the largest distribution networks in the world.” That would be very good for Yahoo; still, would a different pairing make even more sense?
It’s almost certain that the search engine has other suitors. Rumors of Microsoft wooing Yahoo keep surfacing from time to time, and it’s a fact that the two companies have been in negotiation for a merger before. Those talks broke down, though they have been deepening their partnership. While a merger between Yahoo and Microsoft would certainly create a formidable challenger to Google’s crown, these two companies also have significantly different corporate cultures. As Kelleher pointed out in GigaOM, “Integrating both companies may prove so distracting that neither one could focus on the task at hand: beating Google at its game.”
Kelleher thinks the best hope for Yahoo is to be bought by a private equity firm. Yahoo is a mess; its culture and structure need repair, but who can focus on making those kinds of fixes when the field is moving so fast and the only hope of keeping the money coming in is to keep innovating? According to Kelleher, this is exactly what private equity firms do best. “They eliminate infighting and focus on implementing a smart plan quickly. There is significant risk: a restructured Yahoo may lose its innovative edge and alienate its longtime users. But as things stand now, that seems to be the path Yahoo is on anyway.” Ouch – that’s painful, but honest.
Kelleher thinks it’s more likely that Yahoo will be bought by either Comcast or AT&T, to give them “a web portal to lure in customers.” He also mentioned buyouts by Disney, GE, or CBS as possibilities. All of those scenarios seem less likely to me than a deal with either News Corp. or Microsoft. Then again, a marriage isn’t the only possible future for Yahoo.
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