6 Comments Add your own

• 1. James  |  September 8th, 2007 at 7:11 pm

  My problem with Yahoo has always been the growth by acquisition strategy they’ve seem to adopt in growing the company. These guys have made boat loads of acquisitions which is yet to yield fruit for shareholders. Adding insult to injury is the kind of acquisitions they seem to be making. Yahoo has always been contended snapping up companies with minuscule past records. Being most of their many acquisitions are private companies, shareholders find it very difficult to verify the financial records of these companies prior to acquisitions. Yahoo also seems to forget all these acquisitions need to withstand the toughest test of all which is integrating the new company’s system to theirs….a major issue for most acquirers.

• 2. Pat McCarthy  |  September 8th, 2007 at 10:11 pm

  Interesting thoughts James. Like most companies who have made lots of acquisitions, I think Yahoo!’s have been hit and miss over the years. Some of them have yielded great results, some haven’t done much. For example, how can you say the Overture acquisition didn’t yield fruit for shareholders when it’s a huge line or revenue and profit for Yahoo!?

  Most acquisitions these days tend to be private companies, so I’m not sure that’s a Yahoo! specific trait. Often times the companies aren’t getting bought just for their financial records anyway, but for the technology, talent, clients, etc.

• 3. James  |  September 9th, 2007 at 7:31 pm

  Ok explain to me why the company continues to lose market share to Google? Explain to me why the company continues to disappoint Wall Street quarter after quarter? Explain to me why they continue to change certain features i.e yahoo finance UI even after users overwhelmingly asked them not to.
  My friend i know you work for Yahoo and i really admire the loyalty but quite frankly a management shakeup starting with Susan Decker is very well needed to turn that ship around.
  Your quoted” Often times the companies aren’t getting bought just for their financial records anyway, but for the technology, talent, clients, etc”. Let me tell you something, acquisitions made by billion dollar companies are ALWAYS about the financials.
  A company looking to make acquisitions for any other reason might as well stay private. Gone are the days when a public company runs business” as is”.
  On a positive note, i will grant them the credit for acquiring overture when they did. Only God knows where Yahoo would be today without that search engine.

• 4. Pat McCarthy  |  September 9th, 2007 at 8:41 pm

  Search market share is lost to Google because Google has had a better search product. Not sure what that has to do with our acquisition discussion, but I digress. We could also talk about how Yahoo is #1 or #2 in 20 top content verticals, something that Google can’t touch.

  I wholeheartedly disagree that companies are ALWAYS bought for the financials. That’s a crazy statement. They are always bought for what they can do for the buying company’s financials in the long run, not for what their actual financials are today. To use Yahoo as an example, when they bought Flickr a couple of years ago you can bet Flickr didn’t have much in the way of positive financials. If it was only about financials, why would Yahoo buy them?

• 5. James  |  September 9th, 2007 at 10:35 pm

  Let me explain how those set of questions relate to our acquisition debate. BTW- these are my opinions
  1. Generally, strategic acquisitions if made accurately are beneficial for big companies like Yahoo because they basically reduce the sunk cost that may result if the company had ramped up their R&D to develop the product themselves. In addition to getting an already finished product, the acquirer can also benefit from the savings that may result from lawsuits filed by the “acquiree” for possible patent infringements. The problem Yahoo has is the kind of acquisitions they’ve made. Huge successful PUBLIC companies like Yahoo need to be very careful and particular when making acquisitions. Meaning they should acquire companies that have a broad customer base in whatever industry they’re targeting.Piecemeal acquisitions for a company that size is unacceptable because the more acquisitions they make, the more integration/culture issues they will face.
  By the way, i also noticed you did not address my question about Yahoo’s refusal to ignore their users concerns about the Yahoo Finance user interfaces being changed a few months ago.
  2.Yahoo loves to make acquisitions that accredit traffic but continue to miss the key element which is monetizing this traffic. Yes you guys acquired Flickr, Delicious and yes your portfolio of sites generate more unique visitors than any other site out there. But who cares if the company can’t manage to monetize this traffic. Its fine and dandy to acquire all these cool companies but a huge problem if they can’t seem to monetize the wide range of users who use the services these companies provide.
  This is why i feel a high level shakeup is very essential to steer the company back to the cash machine it used to be. (By the way, i take back the comment of recommending Susan Decker or Yang resign) I bet these guys are very intelligent people.
  Hopefully BlueLithium’s technology will help the course(word is they have a business model similar to Tacoda)
  Finally. nice podcast with YPN, Tacoda and Feedburner… It was very insightful.

• 6. CPM Advisors  |  September 29th, 2007 at 10:13 am

  Pat – enjoy your blog though wish you posted more frequently. I know, you’re busy

  Some interesting data about how NetRatings’ Adrelevance overstates Yahoo! ad spend figures tremendously, and skews the top advertiser numbers. Seriously, who believes that LowRateSource spent over $50 million on Yahoo in August? I’m surprised by how little scrutiny these numbers get…

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