Earlier this month, Google Inc. and Yahoo Inc. has scapped their partnership with each other.
Yahoo has agreed last June to show Google search advertisement on their search results pages. This was Yahoo’s move after it ended its partnership with Microsoft under their takeover bid of $47.5 billion less than a month before that. It was also speculated that the internet giant will have problems without the partnership with even one of these companies.
With the partnership that has ended, Yahoo is once again on a shaky ground, starting from scratch and having difficulties managing its remaining shares and liabilities. And these adjustments take drastic effects. California based Yahoo has announced that it would be laying 10% of its workforce.
Due to this event, Yahoo is taking the option to make deals with Microsoft again. It was last spring that Google and Microsoft took bids against each other for a Yahoo share and Yahoo Chief Executive Jerry Yang bets with Google’s deal. It is said also that as of this moment, Yahoo is in negotiations with a $13 billion trade, barely compared to Microsoft’s previous offer of $33 billion.
“To this day, I believe the best thing for Microsoft to do is to buy Yahoo,” Yang said last November 5.
An analyst for JP Morgan,Imran Khan, said he believes it would be better for Yahoo to sell its search operations to Microsoft, the idea that was previously proposed this spring but Yahoo rejected. The result should have been more savings for Yahoo, plus it would have greater focus on display ad business.
Khan also wrote in his recent research notes that “We think continued investment in search, at the expense of display investment, has given competitors the opportunity to bite into Yahoo’s leading display ad market share.”
Despite Microsoft’s claim that it does not need Yahoo to beat California based Google, industry watchers and software makers still think it would be more interesting if Microsoft considers Yahoo’s offer again.
An analyst for the independent research group Directions on Microsoft, Matt Rosoff, said Microsoft has no plans in buying the whole of yahoo. That is also the pointed reason why the talks before failed.
“At this point, given how the online ad market has changed and how the overall economy has changed, they might just wait for Yahoo’s situation to get worse,” Rosoff added. Microsoft has also announced that they will observe and wait to “see what happens to Google and their revenue. Perhaps Google won’t look like a threat, and Internet advertising won’t quite look like such a good business.”
Another step for Yahoo was making a partnership with Time Warner’s AOL. Although that does not guarantee anything. Yahoo’s potential gains from an AOL acquisition are unclear, but one cannot deny the possibilities if these two would come up with an aggrement. Also, the acquisition of AOL would give Microsoft more reasons to take advantage of Yahoo’s situation.
Fingers are still crossed, and Yahoo is doing its best to catch up with Google.
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