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Technology Stocks : Altaba Inc. (formerly Yahoo) -- Ignore unavailable to you. Want to Upgrade?

To: HG who wrote (15781)	12/2/1998 1:21:00 PM
From: Original Mad Dog	Read Replies (2) \| Respond to of 27307

Happy Girl, I wouldn't start a newspaper either. But I don't agree with the analogy between newspapers and portals. Newspapers are a largely local and long-established business. They are also a diminishing business, in that fewer people read them than used to, and many readers are receiving their information and entertainment from other sources. But newspapers have barriers to entry that net portals don't have. As a largely local business (I'm not talking about the handful of "national" newspapers here, although some of the same points would apply), newspapers can only exist if they attract enough local advertising. There is only so much local business activity available to support that advertising market. And a newspaper has to pay for content, printing equipment, distribution, etc. -- all of those things are major expenses when you are talking about printing a bunch of stuff on pieces of paper and delivering it to peoples' front door steps every day. That's why markets as big as Detroit can't support more than one major newspaper operation (they have had a JOA there since the mid-80's; the papers are one business operation but two editorial voices). Do net portals have that kind of operating expense? I would argue that they don't -- at least not to the same extent. Yes, they have to pay for content and servers and stuff like that, but it can't cost nearly as much. >People like routine, people resist change, people have brand loyalty built into them - unless there are clear benefits to be derived from changing the established habits. What benefit would an alternate portal have to offer ? < Two responses to that. 1. YHOO's current valuation seems to have factored into it an assumption or expectation that there is this large group of people, in the U.S. and worldwide, that are going to rush to the Internet over the next few years. In other words, YHOO longs expect that the Internet's current user base will expand dramatically and relatively quickly compared to past paradigm shifts. Probably so, although we may disagree about how much how fast. But here the point is -- those new users have no brand loyalty yet. What is to stop a major media player or a Disney or MSFT or NY Times or Tribune Co. or any number of others (even Murdoch) from putting huge dollars behind the creation and marketing of a new "superportal"? Believe me, if the profits are there, somebody will try. And then the battle will not be over existing customers with routines that are hard to break; it will be over new customers with no Internet habits at all. Add to that some tie-ins to ISP's or browser software, so newcomers default to non-YHOO locations (as they already do), and you have this large marketplace where YHOO has to overcome established non-YHOO habits. 2. As new and better methods of delivering Web content into homes emerge over the next few years, I suspect that video and multimedia content will be far more important than the current largely text-based content. An anecdote: over the weekend I helped my brother-in-law, who moved to the U.S. from India in his late 20's about 10 years ago, set up his Internet service and browser. You know what really captivated him about the Net? The ability to get audio radio broadcasts from several Indian networks in Hindi. (We found that through YHOO, but now that he has that on his favorites page, he doesn't need YHOO to get to it anymore.) Sure, he was impressed by the availability of his professional journals and other text-based stuff, but what he talked about -- and what he went to the next day when he booted up -- was the radio broadcast. Well, imagine what that will be like when we can get video or better in real time without glitches? I think that creates a great opportunity for an existing television/movie etc. company to carve out a portal business for the Web's new converts. The first generation of Web users, including ourselves, tend to be more interested in the text-based content, I think. (maybe an overgeneralization). The really big audience numbers, though, are going to be the people who would rather watch something than read it (current TV users). And I am not convinced that a portal in the mold of YHOO or Lycos will make sense for them. (Rupert Murdoch, are you listening?) Sure, YHOO can form an alliance with a video content provider. They probably will. But YHOO's ability to dominate such an alliance is questionable. And the ability of YHOO's shareholders to reap most of the rewards from such an arrangement is also questionable. Back to my skeptical mood today, I guess. MAD DOG

To: HG who wrote (15781)	12/2/1998 8:25:00 PM
From: Dave Mansfield	Read Replies (1) \| Respond to of 27307

Hi Happy Girl, I did respond to MadDog in a previous post. In respect to some of your comments: >>There are x number of people who spend x hours on the net. As such, the net can support only so many portals successfully. The industry will reward the first movers.<< Not sure exactly what was meant here, but as far as the industry supporting first movers, do you remember Sony's Betamax? The first and best video format which came out. And where is Betamax now. This may not be a good comparison as it was a great marketing effort by VHS which ultimately made them succeed over Betamax, something that Yahoo is very good at. But remember, first and best do not always win. >>Are you saying YHOO shareholders will lose money or YHOO itself will lose money due to dilution in earnings ? I'm not sure I understand this point.<< What I meant simply that in a takeover, it is the company which is being taken over and their shareholders which make the most money the most quickly. In most cases, the acquiring company loses some of it's price. Long term if it's a good acquisition, everybody wins. Could happen here, but I still think Yahoo is too overvalued to happen. >>My RR example was to illustrate the brand power and brand loyalty means a lot. I believe RR cars division is no longer owned by RR ? So effectively the car isn't a Rolls. The name has survived with the premium ! The analogy I want to draw is that once established as a leader, YHOO may well survive its competitors.<< I agree that brand name can get you a bit more for a product than the generic brand, maybe 10-15% more. But not the 500-1000% that can be implied by referring to a Rolls. And believe me, those people who still buy a Rolls don't do so just because of the nameplate. Those cars are still well built. Bye bye for now Dave