Yahoo! is simply not attractive to anyone at this price, except for shorts like myself of course.
Let's see, it's up almost 70 points (almost 20 percent) in the last two trading sessions. Must be attractive to somebody!
As a merger candidate, YHOO's attractiveness depends upon what the suitor is looking for. YHOO has eyeballs and customer brand loyalty, but does not derive revenue directly from those customers. AOL, OTOH, has customers (God knows why, when I used them they were just awful in all respects) and the customers' credit cards (hence a stronger revenue stream).
Seems to me that if you are looking for access to an audience like YHOO's you don't have to buy the company for $100B to get it. Just run a bunch of ads. They aren't even making a billion a year in revenues yet (they probably will this year, for the first time). If what you seek is exposure to those eyeballs (the identities of which YHOO has little clue), then why not just throw a couple hundred million at the Hoo for a sponsorship deal and a shitload of ads. Why spend $100B on the whole thing?
I heard a CNBC talking head today speculate that there would be a consolidation possibly involving YHOO and either DIS or CBS. I asked myself: what does CBS gain from combining with YHOO? Does that force me to view 60 Minutes or Touched By an Angel while I am viewing my YHOO portfolio page? I haven't watched a CBS show in a couple of months, maybe longer, and if they buy YHOO that won't change. As for Disney/ABC, there are more opportunities for cross promotion, perhaps, but I still don't see what YHOO gives them beyond what a slew of ads would provide. Ah, but this is cyberspace, it doesn't have to make sense, I forgot there for a sec. . . .
Am I missing something . . . . again?
MAD DOG
P.S. Investors don't like the AOL deal because embedded in the price (share exchange ratio) is a tacit acknowledgement that AOL was overvalued by about a third. They should be ecstatic -- some would have pegged the overvaluation as much higher. |
