Yahoo! Lets Go, Google Takes Over
Last night, Yahoo! Inc (NASDAQ: YHOO) reported Jerry Yang would be stepping down as chairman. As a result, its stock rose almost 13%.
Jerry Yang has been under siege from activist investors like Carl Icahn since merger talks with Microsoft (NASDAQ: MSFT) failed in May. The market’s speculation in the “on again, off again” merger have been a major mover of YHOO stock. It closed yesterday at $10.63 – almost 68% lower than Microsoft’s $33-per-share offer – at lows not seen since 2003.
As recently as 10 days ago, Microsoft’s CEO had publicly declared that they had no interest in buying Yahoo!. But, after Yang’s merger rebuff in May, Microsoft has stated that they wouldn’t deal with him as CEO. His departure could bring these companies back to the bargaining table. At least, that’s what the market is counting on.
Yahoo’s biggest asset is its almost 20% share of the lucrative search market – compared to Microsoft’s 9%. Google (NASDAQ: GOOG) dominates with more than 63% of the online advertising market. And its share of the advertising market is growing.
Ultimately, an uncoordinated and contentious merger process will prevent either company – in any form – from seriously challenging Google. And anything that Google can do to increase the cost, the time, or the amount of work required is good for them.
More proof that Google’s primary concern is Microsoft: yesterday it released Google Mobile App with Voice Search. But it didn’t release it for Google’s own Android operating platform first. Google released it for the Apple Inc. (NASDAQ: AAPL) iPhone. It did that to compete directly with Microsoft and Apple software.
Jerry Yang named YAHOO to stand for “Yet Another Hierarchal Officious Oracle.” And that’s the problem: the search market may not need another search engine. That’s exactly what Google wants everyone to think.
Companies mentioned in this article: YHOO, MSFT, GOOG and AAPL.
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