At least Yahoo can’t complain this week about Google grabbing all the headlines.
While Google has been dishing out the usual morsels of news – tweaks to Google Video, YouTube and Google Office – everyone else can’t stop talking about Yahoo. First Terry Semel got dissed at the shareholders meeting, although his job looked secure. Then he was out, just in time to avoid another disappointing quarter.
Now it’s growing evident that the bigger force driving these events is a plan to put Yahoo on the block. Why else would appoint a founder as CEO, foregoing the chance to bring in an experienced CEO from outside (even though, as Semel said, Yahoo had “long been talking about … a smooth transition.”) The shrewd Rupert Murdoch sees a chance to trade up from MySpace and its plague of controversies to a more respected Internet name.
If Yahoo’s board is, as rumors have it, decides to seek a suitor and take over after the Internet giant after 13 years of bachelorhood, the question is not so much when as who. So with the markets entering its sleepy summer season, let’s take some time to handicap those potential suitors. The following is pure speculation: Think of it as a shotgun-wedding pool, as opposed to a death pool.
Private Equity Firm
Strategic sense: A-
Certainly not the most likely scenario right now, but to my mind the one that would probably serve Yahoo the best in the long run. Yahoo’s corporate culture and structure are a shambles, and repairing things while keeping revenue growing and innovation alive will be nearly impossible with current leadership and board direction.
Private-equity takeovers are ideal for these kinds of clean-ups. They eliminate infighting and focus on implementing a smart plan quickly. There is significant risk: A restructured Yahoo may lose its innovative edge and alienate its longtime users. But as things stand now, that seems to be the path Yahoo is on anyway.
Comcast or AT&T
Strategic sense: B
It used to be big ISPs felt they needed a Web portal to lure in customers. As broadband content matures and the “triple play” of telephony, television and the Internet starts to blur together, the idea is back in fashion. Comcast has a burning desire to become a destination for media consumers. But AT&T has longstanding ties with Yahoo through its SBC acquisition. They’ve been quiet suitors so far, but we may see one or both elbow their way to the front of the line.
Strategic sense: B-
The obvious argument for a Microsoft-Yahoo combo is that it would create overnight a sizable competitor to Google in online advertising. If it happens, though, get ready for a lot of sound bites about how tying two bricks together doesn’t make a life raft. Integrating both companies may prove so distracting that neither one could focus on the task at hand: beating Google at its game.
Strategic sense: C-
Much less likely to happen without an old-media style executive like Semel to bridge the cultural gaps. In fact, Murdoch may have shown his hand by leaking this deal because Semel’s departure makes it less likely. It would benefit Murdoch a lot more than it would Yahoo – but come to think about it, that probably increases the chances it will happen.
GE, Disney or CBS
Strategic sense: D
Let’s hope this doesn’t happen. In the merger-mania of 2007, a company decides this is their best chance to have a sudden footprint in the Internet, where ad dollars are migrating. Well okay, maybe some Google shareholders are hoping this will happen.