Filed under: Deals, Competitive strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), News Corp’B’ (NWS)
Yahoo! (NASDAQ:YHOO) is running out of options to keep itself out of the hands of Microsoft (NASDAQ:MSFT). Rupert Murdoch said that his company, News Corp (NYSE:NWS), wouldn’t pursue a deal with the portal. There had been talk about combining Murdoch’s large social network, MySpace, with Yahoo! to create a company with a tremendous internet user base.
“We’re not going to get into a fight with Microsoft, which has a lot more money than us,” Mr Murdoch said, according to the FT. He was bowing to the inevitable, which is that Redmond’s $44 billion bid for Yahoo! isn’t going to be topped by another company.
Aside from slicing down Yahoo!’s options, the news points to the great sense of putting the internet company together with Microsoft’s on the internet business. The two companies would have about 32% of the search business in the US. Google (NASDAQ:GOOG) has about 60%. Neither Yahoo! nor Microsoft can handle Google’s lead on its own.
The merger would also save money. Microsoft’s on the web operations are in the red. As Yahoo!’s revenue has slowed, so has it margin growth. A combination would grant for the reduction of staff. Yahoo! needs a partner and it has run out of suitors.
Douglas A. McIntyre is an editor at 247wallst.com.
Entries (RSS)