The Fight Over Yahoo's Remains
By Charles Moffat
My Yahoo stock has suddenly become valuable again. Indeed, its been undervalued ever since the internet bubble burst back in 1999/2000, the same year I was fired from Yahoo Inc. due to downsizing.
Historically speaking, I'd also say it was Yahoo's fault. The merger with Geocities, and the resulting scandals and legal lawsuits from Geocities' users, many of which fled Geocities in a massive exodus.
Yahoo and Geocities was essentially the start of it all. When historians sit down to write about the birth and popularity of the internet, Yahoo and Geocities will be the grandparents of all internet companies. When the exodus of ex-Geocities users started getting their own servers, that was when the new era of the internet was born.
But it was also the bursting of the bubble. After the merger was over, Yahoo stock crashed (indeed many of the online companies crashed in what I'd call an investor ripple effect) and has been undervalued ever since.
It has taken six years for Yahoo to reclaim some of its former glory, and now when it finally looks like it might grow stronger something else has happened...
Something that makes people realize that Yahoo is now a dinosaur, about to become extinct.
But a valuable dinosaur nevertheless.
I am talking of course about Microsoft and Google.
Since the dawn of Microsoft Windows, Bill Gates has been determined to buy out all of his competition. Companies have fallen before the ink of his pen. With lots of money to waste and a monopoly to maintain, Microsoft's only concern is companies that refuse to be bought.
Companies like Google.
The makers of Google have done something very smart for their company. They have maintained the majority share of ownership, making it immune to hostile takeovers. This wisdom has proven to be the key to why Google is not already part of the Microsoft Corporation. People can still invest and buy stocks in Google, but they can never buy up a majority share of the stocks available.
But there are other companies on the internet that Microsoft could buy... and one of them is Yahoo Inc.
Except here's the trick, Google is also interested in buying Yahoo Inc. Both companies have spied this aging dinosaur as a route to expanding their business, and the relative low cost of Yahoo stock means that this aging dinosaur can be bought up relatively cheaply.
Unless it becomes a bidding war, which it might.
The primary reason for Google to buy up Yahoo is simple: Google wants to get personal. Or more specifically, it wants Yahoo Personals. For the past two years now, Google has been exploring the possibility of getting into the personals business. Instead of searching for widgets and whatsits on the Google search engine, people will be able to go to Google Personals and search for LOVE.
And Love is the 2nd biggest business on the internet. (The 1st is Sex/Pornography.)
And one of the key reasons why Yahoo Inc hasn't yet sucked the bullet and gone to the great internet graveyard in the sky is because Yahoo Personals is very profitable.
Google has been looking into the possibility of building their own Google Personals website, but it would be cheaper/more useful to simply buy Yahoo Inc, sell off or dismantle its various parts and convert Yahoo Personals into Google Personals.
But Microsoft has its own plans for Yahoo Inc. Microsoft wants to buy it up, get into the personals business, change Yahoo Messenger into a hybird of MSN Messenger and eventually buy up a separate company known as ICQ Messenger.
Of course, there's also the matter of Geocities, now known as Yahoo Geocities. Or derisively called "Geoshitties". I worked for Geocities too, once upon a time. It was my first job as a webpage designer and I was there for 2 years before the Yahoo merger and before Yahoo started messing things up.
So if I hate Yahoo so much, why do I own stocks in them? Well, because I was originally an owner of Geocities stock, which was converted to Yahoo stock at the end of the merger.
And depending upon what happens in the future, I will be either an owner of Google stock or Microsoft stock (depending upon who actually buys the company).
Who would I prefer to sell my stocks to, when the time comes? Google, certainly. Without a doubt. Even if Microsoft was bidding slightly more money, I'd rather sell to Google instead. Why? Because of longevity.
True, Microsoft has a history of longevity. Its been around since the Stone Ages... but Google is the future. Whether or not they get a hold of Yahoo Personals or not... Google Personals will eventually become the new standard for online personals, much like Gmail has become the new standard for email and Google Adsense the new standard for online advertising. Google simply tries HARDER to make things better for the people using them. They give you more options and more flexibility. Its better quality that the standardized/lazy approach that Microsoft is pushing.
The following is some historical looks at the stock markets of each company I've mentioned above. As you can see, Yahoo Inc. is ripe for the plucking. But who will pluck it? And when?
I predict that Yahoo stock value might rise to roughly $150 US/share if a takeover does happen. However, if a bidding war ensues, the stock value could rise up to $200 US or more. For future reference, the stock symbols for these companies are: msft, yhoo and goog.
There's also a possibility that Yahoo Inc. might try to resist a hostile takeover. They could argue against it based upon issues of monopoly (meaning it would make both Microsoft and Google too powerful if they gained control of Yahoo). Also, there is always the chance Yahoo might rebound and become popular again, but I can't see it happening.
A possible takeover of Yahoo Inc. isn't necessarily in the immediate future however. It might take several years, or it might happen as soon as this summer.