Response to Larry Dignan’s 'Will Google Play Spoiler and Bid Also?'

My compliments to Mr. Dignan for putting a different angle on this possible acquisition of Yahoo (YHOO) by Microsoft (MSFT) or Google (GOOG) (Microsoft/Yahoo: Will Google Play Spoiler and Bid Also?).

Now for my take on the Google quarterly report and MicroHoo commentary this weekend.

First, the Microsoft/Yahoo/Google idea-

It is an interesting idea on Google getting into the Yahoo fray. There would be less overlap and quick monetization once the search engines are changed. Yes, there are EU and US monopoly concerns but I think the "do no evil" philosophy could be granting enough assurances to the US and EU to appease regulators. Remember the EU and the US Department of Justice hate Microsoft. Imagine the uproar if Google got the EU and US approval and Microsoft was denied. The DoubleClick approval is pending by the EU as well.

One way or the other, a Yahoo acquisition by Microsoft or anyone else will take at least a year. It would be so contrarian and a Ballmer nightmare if Google was to scoop this deal from Microsoft. Perhaps someone from the Google office will make this their personal project. Just a thought…..remember while the lawyers, regulators, shareholders, and others debate the Microsoft/Yahoo marriage; Google will keep innovating and moving forward while Microsoft and Yahoo commit resources to work on integration issues.

Second, the earnings report-

The financial numbers are out there for all to see and the analysis and spin on the numbers is interesting. However, fundamentally the Googleologists continue to open the internet Web 2.0 and Android in the new Cellular 2.0. Google has a track record with open source protocols and these will only get larger as the “build out” of the Web and Cellular 2.0 continues. More revenue sharing is possible for all participants. This whole arena is a work in progress requiring fine tuning and tweaking constantly. You just have to see past the edge of your desk into the new internet without borders and cellular without limits. Many of the old business mantras are simply obsolete in this arena.

This weekend many of the bloggers and “talking heads” blather openly predicting the demise of Google and internet monetization in a slower economy. NOTHING COULD BE FARTHER FROM THE TRUTH. A slowing economy demands internet usage for cost reduction comparisons and economy of motion utilizations. Are you driving around town with gas at $3 per gallon looking for the best deal on your next purchase or are you researching online and getting information on the location and price of the item that suits your budget? Web 2.0 and Cellular 2.0 are in still in their infantile stages. There will be some missteps and flawed executions. What separates the truly great companies from the mundane is the ability to rapidly correct flawed ideas and implement a solution or a new direction rapidly by doing what is right and necessary without hesitation.

The recent decline in the stock price is an opportunity to invest in the next “Microsoft” for the 21st century: GOOGLE !

Disclosures: Author has a long position in GOOG

Comments

[Channon:]

I have been amazed at how few people weighing in on this offer truly understand ecommerce and the revenue structures of these companies.

The MSFT offer is a great deal for YHOO shareholders.

It's a terrible deal for MSFT shareholders.

I am the CEO of an ecommerce company. MSFT's problem the past 5+ years is a lack of vision and creativity. Buying a company that hasn't had a new idea in the same 5+ years does nothing to address that company. YHOO should JUMP at this opportunity before MSFT shareholders wake up and force Ballmer out. MSFT should spend 1% of that $46B to actually innovate.

(No direct position in MSFT, YHOO, or GOOG, but all owned long through index funds. And, I agree with your opinion that GOOG is a buying opportunity. Our PPC expenditures at GOOG are up significantly in 2008 YTD. And, we view that as a good thing.)

2008 Feb 04 01:42 PM

[Tom B:]

" Imagine the uproar if Google got the EU and US approval and Microsoft was denied"

Hard to see why regulators would even examine a Google acquisition of Yahoo. Google is an advertising company. Does Google control even 50% of Global advertising revenues (I'm including TV, radio, internte, billboard)? I doubt it. In contrast, MSFT has a history of lawlessness.

2008 Feb 04 11:17 PM