Because Microsoft Corp. (NASDAQ: MSFT) and Yahoo! Inc. (NASDAQ: YHOO) apparently prefer to do much of their heavy squabbling over the weekend, there's little noise emanating from Silicon Valley or Redmond, Wash., Tuesday morning, though an activist investor in New York may still be seething after his attempts to broker some kind of deal between the two companies went up in smoke.
Citigroup Inc. analyst Mark Mahaney (pictured) is weighing in on the fallout from the latest developments, astutely concluding Microsoft may not want to focus just on Yahoo!'s search business assets, but also its display advertising business, and acquire the entire company. Though he is skeptical of Yahoo!'s argument that a search-only deal would undermine the synergies between its search and display businesses, he points out that the online display advertising market, which was a $7.2 billion business in 2007, is set to grow 15% in 2008, and Yahoo! has a 27% share of it.
After running the numbers from Microsoft's latest proposal to acquire Yahoo!'s search business, Mahaney argues the cash flows to Yahoo! "don't seem overwhelming," especially when considering the strategic value of the business to Microsoft in its quest to better compete with Google Inc. (NASDAQ: GOOG).Continue reading at TechConfidential.com.
Add your comments