Feb 8, 2008 114 reads by Navneet Kaushal

Yahoo has scheduled a special meeting of board of directors on Friday to eventually come to a decision, reports Tech Crunch.

It's been one long week of negotiations and there doesn't seem to be a competing offer in sight, a final word from Yahoo! is long overdue. It's being projected that the company would choose to deal with Microsoft, while a core group of Yahoos opposed to the takeover might press for a search treaty with Google. Even though outsourcing of search to Google is quite possible but it is not clear how would this sort of a deal would dissuade Microsoft from acquiring Yahoo!

One factor that has the potential to prevent Microsoft from moving ahead is its own shareholders, who seem to be frustrated at the deal as well as Microsoft's stock prices. This factor could even forestall any appreciation in the $31 per share bid from Microsoft, which is something, Yahoo! perhaps looks forward to happen.

Given the circumstances Yahoo! could either accept the offer and ask for an increase in price, or deal with Google for search advertising and keep the search to itself.

While the search-outsourcing deal has the potential to add 25% to Yahoo's short-term cash flows arising out of increased revenues and cost cuts, which could add about $5 to Yahoo's pre-offer share price as Mark Mahaney's analyzed. Even then it would be about $5 below Microsoft's take-out price. There's another downside to it and which is about 4000 Yahoos could lose their jobs and affect the companies long-term value.

If outsourcing to Google was so promising a proposition then the question arises that why didn't Yahoo! cash in on to it, before. If Yahoo! Would simply do so to avoid a takeover it might incur a long-term liability in lieu of a short-term benefit. So, it appears that the merger is perhaps a more attractive an option. The final decision rests with the the company and it shouldn't be long when the results are finally out!

Navneet Kaushal

Navneet Kaushal

Navneet Kaushal is the founder and CEO of PageTraffic, an SEO Agency in India with offices in Chicago, Mumbai and London. A leading search strategist, Navneet helps clients maintain an edge in search engines and the online media. Navneet's expertise has established PageTraffic as one of the most awarded and successful search marketing agencies.
Navneet Kaushal
Navneet Kaushal
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