Yahoo! is back around the $20 range again today. If Microsoft could find a way to buy them they could quickly gain some search marketshare, but presuming Microsoft builds a memorable search brand they could probably catch up through other acquisitions cheaper.
I think rather than buying another overpriced ad platform a cheaper way to attack Google would be to buy some of the leading editorial brands/sites that dominate Google’s organic rankings. For far less than the $47 billion Microsoft offered for Yahoo! they could buy…
- Expedia (currently valued at $5.2 billion) and have a leading role in the travel market. I think something like 40% of internet commerce is travel.
- Monster.com (currently values at $2.24 billion) and have a leading role in employment and education.
- Bankrate (currently valued at $700 million) and have a leading role in the mortgage and consumer credit markets.
- WebMD (currently valued at $1.64 billion) and have a leading role in the medical market
- IAC (currently valued at $5.38 billion) After IAC spins off many of their other units this price might go cheaper. Google paid $1 billion for 5% of AOL. Microsoft can get 100% of Ask (with more marketshare than AOL) for not a whole lot more, giving them significantly more marketshare than they currently have and an actual brand in the search market. Plus IAC is buying Dictionary.com and some other generic high traffic sites.
- The New York Times (currently valued at $2.25 billion) and have a leading role in the news market. If they wanted to they could buy it out, spin out About.com as a Microsoft owned web property, then set up the NYT as an industry non-profit that monetizes via a longterm ad arrangement with Microsoft.
I think those companies add up to around $17.4 billion. Pay 50% over market value to close the deals and they could have all the above for $26 billion, giving them a leading position in most high value markets and $20 billion left over for marketing, branding, and buying further assets.
Is the above strategy crazy? What would you do if you were Microsoft?
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