Google and Yahoo's Achilles Heel?

 |  Includes: GOOG, YHOO
by: Paul Kedrosky

Leo Hindery gave a provocative speech at Convergence 2.0 today on the end of the portals business. Here is a summary:

Hindery ... first took all content and distribution and broke it down into three columns using a powerpoint slide: Portals (AOL, eBay, Google, MSN, Yahoo!), Content Providers (ABC, NBC, Disney, et al.) and Non-Broadcast Distributors (Cable, RBOCs, Satellite, Wi-Fi etc.) Hindery points to the portals column and says that the $225 billion market cap represented by those five companies can be directly linked to lost money in the valuation of the companies from the other two columns. This imbalance, he says, will correct itself.

Why? Because he thinks at least two-thirds of the imbalance is based on advertising dollars and non-proprietary content. Content providers will eventually figure that out, and, he argues, the result will be four of the five aforementioned portals will fold.

Ballsy stuff.