In theory I'm taking the day off. But I'd just like to point out that a few months ago I posted What if Microsoft Bought Yahoo? and got some interesting comments (most via private email).


That's relevant because of renewed speculation that Microsoft wants to buy Yahoo for something like $50 billion dollars. Personally, that seems a bit low to me, but I'm far from unbiased in this matter.

And speaking of things that I'm biased about, here's a report that Flickr will replace Yahoo! Photos. I'm glad to hear that the decision is finally made and we're talking about it in public. The Flickr team has been busting their asses in the last few months to build out more infrastructure. They just keep rocking.

With that, I'm off for the day. At least in theory.

Call me if BillG writes that big check.

[Thanks to TechCrunch for the logo. :-)]

Posted by jzawodn at May 04, 2007 07:35 AM

Reader Comments
# Joseph Hunkins | Joe Duck said:

Given that the market valued Yahoo at about 38 billion yesterday, I think 50 billion is a good number. But if you mean that Yahoo's long term prospects are comparable to Google's but the market doesn't recognize this ... I'm inclined to agree.

Flickr v Yahoo photos decision = good!

on May 4, 2007 09:41 AM
# Tony said:

As a Yahoo employee,

My own thoughts on this topic is very positive about the possible merger. I'm not very religious about whether I like a company or not. I really just care about whether what I'm working on everyday makes a difference in this world.

Looking at it from my own professional growth, merging the #1 (Yahoo! News) and #3 (MSNBC) news sites would make for a killer News site in terms of audience. Our news team get to work on a property that will touch and influence a even more massive audience. Same goes for a lot of verticles properties that Microsoft and Yahoo! share the top 3 top spots. These properties immediately jump to a dominate spot.

We've seen it over and over again that when you are #1 in any market, advertisers and users flock to you and you grow even faster. Imagine, already the most visited page on the planet, being the default homepage on IE 7? Drawing even bigger $$ for the coveted advertising spot on the right hand side.

Also from a stockholder's perspective, the merger will be a short term positive for Yahoo!, so of course I am all for it. Longer term, the growth rate will be much slower for the MS+Yahoo! company. But the stock will be much less volatile, good for the longer term predictabililty from a financial point of view.

With the many assets and distribution networks that Microsoft offers, Yahoo! properties will have a much wider distribution platform to play with. Just think of Windows Mobile phones, X Box, IE browsers, Windows desktops all getting Yahoo!-fied.

I'm excited about the possibilty of the merger, again this is all rumors.

on May 4, 2007 09:48 AM
# Jeremy Zawodny said:

To me it's less about Yahoo's long term prospects compared to Google and more about what Panama and our advertiser base could mean to Microsoft/MSN/Live/whatever's web properties. Despite their sad showing in search, they have quite a large audience. And if Panama plays out as has been suggested to investors, there could be some real upside there for Microsoft too (assuming this was to happen).

It's hard to tell where Yahoo or Google will be 5-7 years from now, so I won't even attempt to go there.

on May 4, 2007 09:51 AM
# Simon Willison said:

I wonder what Microsoft would do with Yahoo!'s enormous Open Source technology infrastructure. They eventually managed to port Hotmail off FreeBSD (and spread it around as a case study) but it took them years.

on May 4, 2007 09:52 AM
# Jeremy Zawodny said:


I'd like to think they're smart enough to leave well enough alone and focus on the bigger picture. But you really never know.

We live in interesting times, that's for sure.

on May 4, 2007 09:53 AM
# Tony said:

>>>>>Imagine, already the most visited page on the planet, being the default homepage on IE 7? Drawing even bigger $$ for the coveted advertising spot on the right hand side.>>>>>>

But the question that begs to be asked is, why didn't MSN do so well since it was/is the default page and has been for years?

Yahoo is already on Googles tracks and only a few years behind before it becomes Googles match.

MSN has simply lost it's way in the search engine wars with the current Admin at the helm.

Try to type a developer question in MSN and more often than not you get a blank page. Never so with google, and Yahoo is not that bad either.

I hope if and when the merger occurs that is dosen't signify the demise of Yahoo, with the current admin in Microdoft MSN I fear it will.

Tony ( lol, not the same Tony who works for yahoo, I'm a software developer)

on May 5, 2007 01:09 AM
# mmmmm said:

i am not sure why posters and pundits focus on technology stacks, OS use, or any other technical details like this. for an acquisition of this magnitude, these are largely irrelevant. microsoft folks surely understand that yahoo has a unique technology stack. they don't want to buy technology - they already have enough of their own. they want to buy time to market, ad relationships, and userbase.

if microsoft even remotely cares about technology, than can steer yahoo in a ten-year plan to migrate to windowsWhatever. they aren't spending $50 billion just to write up a "windows success story" whitepaper. i don't even think this is really even about search...both firms seem to have given up on trying to out-search google (i am sure this will meet with strident opposition, but i still believe it is true).

yahooers should not be so negative on this proposal. yahoo is not just temporarily lagging google in ad revenue. yahoo has been put into a permanent number two position with significant distance between number one and number two. panama is not going to close that gap, not at this point. yahoo revenues are more flat than ebay's, than google's, even more flat than microsoft's. yahoo is not going out of business, but it is a laggard among its peers. if trends continue, microsoft may be able to buy yahoo for $30 billion in eighteen months instead of $50 billion today. NOW NOTE: yahoo is the STILL the most overvalued of these firms by P/E!! most people tend to forget this, maybe it is too scary to contemplate. YHOO can fall a long way from 27 folks.

there is also the issue of revenue diversification. yahoo and google are one trick ponies. both are still subject to the cyclical ad spend market. google has not eliminated the business cycle, when ad spend inevitably cycles down, the barbarians at the gate will be screaming as to why they didn't use their cash hoard to buy some diversification insurance, which is EXACTLY what they said to yahoo in 2001 (and they were right to do so). so don't undervalue the diverse revenue stream that microhoo would have. in good times its boring, in bad times its boring (but in a good way).

if this talk has indeed already been concluded and no deal is to take place, the pressure on terry semel will be unbelievable. shareholders have watched ho-hum companies like GE tear it up while yahoo delivers nothing. if monday comes and we get confirmation that this is a no-go, the downward pressure on the stock could really ratchet up, institutional investors will be pissed at being pawns in a pump-n-dump that yahoo PR did little to negate. if terry can't provide a meaningful endnote to these little games, YHOO is headed for 24 or lower, shareholders are going to be out for blood.

on May 5, 2007 09:40 PM
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