Monday, 8 November 2010

Rumour Mill Yahoo and AOL

Some rumours going on about a merger between Yahoo and AOL or some form of takeover.

Probably spread as someone wants to either offload shares in AOL or Yahoo without tanking the market.

Just look at the spread on Market Cap of each company. It would be like Microsoft  going off to buy Palm - what would be the point ?

Does this deal make sense ? Aside from Blodget who believes the deal makes sense, I doubt management of Yahoo do.

Why would Yahoo want to purchase a stream of dying revenue at a premium price ? If they had the money they may as well go to AIG and purchase an annuity, it would return higher and be less hassle.

AOL's turnover is decreasing rapidly. Current market valuation is way too high and and any premium above this is ridiculous. Consider all the effort to rationalise both organisations and it will detract Yahoo management even longer so the competitors can get even further ahead.

I haven't been a great fan of yahoo, but this merger would be detrimental to Yahoo. The last company that got into bed with AOL incurred a $16billion loss.

So what could Yahoo do ? Well they need to be a bit further on the ball. Yahoo and hotmail have had mail services a lot longer than google...yet google came in and have taken market share. Why ? Yahoo dont even test their email system on linux machines !! How pathetic is that ? Promoting open source OS should be the first thing on their mind when it comes to hurting their competition.

Yahoo's site for feedback is pathetic. There has been some recent improvements but it was an effort to actually send feedback to yahoo. They made it as difficult as possible. Yahoo finance is very good but the lack of quality updates to this destroys the quality and reliability of the data.

If these things I have listed are common across the entire organisation it is no wonder they are experiencing reducing turnover.

An example slow yahoo is ? Where is yahoo's urls shortner ?

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About Me

I try and work a broadly market neutral strategy and based purely on fundamentals and my gut feel.