Microsoft Quick Take: Needs Yahoo More Than Ever

Microsoft's (MSFT) just-released numbers look weak to me. Revenue was a little lighter than expected, while EPS was just okay. Guidance is decent on revenues, but no hell on earnings. Looks like Windows and Office were both somewhat sucky in the quarter.

So what does this mean for Microsoft? It means the company was whistling past the online graveyard when implying it might abandon its Yahoo (YHOO) bid. Sure, it might, but that would be even more unhinged than usual from this oft-unhinged company. The market was looking for a blockbuster quarter from Microsoft, and it didn't get it, so Microsoft needs juice (read:Yahoo) more than ever.

Comments

[norm901]

can someone please tell me the future of yahoo and its stock price??

[User 183066]

author must own alot of yahoo

[MuddlingInvestor]

I'd like to see conference call transcript, then I'll discuss it in my blog. Sure MS needs Yahoo! But they are doing it the wrong way. The right way would be to invest in YHOO and drop MSN completely. Yahoo! knows how to make money on the Web, MS doesn't. Buying Yahoo! doesn't change this equation. If MS manages Yahoo!, combined MSN-Yahoo! will lose even more money.
I still agree with John Dvorak that this deal is DOA. Yes, we are in minority.

[LookingConfident]

Norm, you ask ....

"can someone please tell me the future of yahoo and its stock price??"

You need to work that out yourself, really. But this may help?

"The Microsoft Digital Advertising Solutions (no doubt) "works" very similar to Yahoo's RME (Right Media Exchange), as was discussed by Yahoo's president Sue Decker, in my previous post."

The above from a post on the LOK board, on Ozestock.com.au

And along with Google's (new) Ad Manager I feel they (including AOL) will ALL experience a major problem in regards to BIG brands. The kind (of problem) that is 'half' brushed on, within this article from The NY Time's blog.

"As for Yahoo’s advertising strategy, Ms. Decker started referring to the company’s focus on “premium partners,” by which she meant newspapers and other media companies, like Forbes, with whom the company is aligning.

She didn’t say as much, but this seems like a sensible way to contrast Yahoo’s advertising network with those of Google and AOL, both of which work with the broadest range of publishers, big and small.

Many traditional media companies worry that the rise of advertising networks is undercutting their prices and turning their precious advertising space into a commodity to be traded like pork bellies. There may well be an opportunity for Yahoo to define itself as the "ad network" that is especially friendly to mainstream media.

Of course, Yahoo is not in reality keeping the online ad world limited to the old country club set. It owns the Blue Lithium ad network, and the Right Media exchange, which is the most active pork-belly pit for cheap online ads.

But at least Yahoo can say to publishers that it feels their pain. The rise of cheap “non-guaranteed” advertising space has dragged down Yahoo’s revenue, Ms. Decker said.

I wonder if there is a bit of a conflict between these two strategies. Can Yahoo really be the most open starting point for Web users if it also wants to help bolster old-guard companies?"

bits.blogs.nytimes.com...

Very soon, the BIG Portals will not only be competing with each other (for BIG brand Advertisers) but against many "other" quality publisher sites (like NYT), being very much similar/marketable to, (as I'd imagine), Yahoo's own “premium partners” concept, or, to other similar type (existing), publishers within Google's own long-standing, Display Advertising Network.

www.johnchow.com/googl.../

With BIG brands reported as quickly moving to take control of their own 'advertising spend', for many more I'm sure that the Looksmart "premium display" (alternative), may suddenly appear very attractive to them.

www.looksmart.com/adve...

And in "coming in from the side" through the OPEN Exchange facility (other than as a BIG Portal 'partner'), BIG brands will still be able to access those BIG Portal ("premium partner") sites at a cost that the very same BIG Portals will need to match or, surpass, in servicing those (their) existing “premium partners”, that they may happen to have. Yes, they'll soon need to "out-bid the market-place", to now win the same placement.

Remembering always, that the new "auction" process is a "two-way" street.

Interesting times ahead that will most certainly "reflect" (& strongly I feel), in Looksmart's Q2 figures ............. For the BIG Portals will have been well and truly made to have "bitten the bullet" and will be competing on a fairer, much more "equal footing", by then. IMHO.

Hope it all helps.

:)

[Zeninvestor]

Yahoo and Microsoft both NEED each other! Both has weaknesses that they other can at least ameliorate. One more reason why that deal will get done!

[LookingConfident]

I would agree that both Yahoo and Microsoft NEED each other and MSFT may need to raise that 'bid' a little higher to see it happen....

The market has been told, that .....

Yahoo! Sees Q2 revs of $1.73 bln -$1.93 bln -(A rise of $0.38 bln - $0.58 bln or, 28.15% - 42.96% Q/Q)

Yes, that's a 28% - 43% rise in revenues, for this Q2 period.

Where's it all coming from, some may ask?

In the Yahoo CC Sue (Decker) advises, of:

"Significant growth in "class 2" remnant CPMs, impressions (Yahoo and it's Right Media Exchange)."

www.alleyinsider.com/2...

And in my view, there was never a doubt that Verticals WILL be the next big thing.

"Vertical businesses are harnessing the network effects of the Internet, much like Expedia and others did for travel in the late 1990s," said Kelsey Group Program Director Peter Krasilovsky, co-chair of Drilling Down on Local '08. "We're seeing an accelerated effect from fragmentation, which will draw ad revenue from traditional media toward online vertically targeted solutions."

Revenues for interactive classifieds and verticals will grow from US$3.9 billion to US$14.7 billion during the same forecast period, representing a 30.5 percent compound annual growth rate (CAGR).

www.prnewswire.com/cgi...=

So, raise the bid MSFT and give yourself some chance of being a competitor, in a fast changing space ...... And Yahoo, failure to accept will be at your peril, in your not doing so. IMHO.

:)

[JPU]

MSN is just a dead end alley, goes no where. Acting and shouting tough will not bring MSFT anywhere either. You just can't rough up a bunch of creative people and expect them to listen and do accordingly. MSFT has to be humble and creative in asking to be on board. MSFT is not buying a ranch or a piece of land. It is buying a company with creative people.