Fish Market - in Tokyo

Back In London -

After travellling for over 20 hours and being up for over 24 hours - I finally arrived in London, late last night......

Disecting - Quiet Strenght

One of my goals this year is to read some interesting material which challenges and stimulates my mind. I'm always looking to pick up new insights which may help improve my cognitive abilities and Leadership Skills.......

Today, I finished a book by Tony Dungy - titled Quiet Strength

Visiting Tokyo

I'm in Tokyo for the next few days - attending meetings and trying to earn more about the Online landscape over here - first hand. This is my first trip to Tokyo - and my second to the orient. I arrived last night and I'm already learning some of the interesting nuances of Japanese Culture. Hope to blog about some of my key learning's and takeaways - in the days ahead.

Yahoo: AKA - You always have other options!!

Earlier in the week I blogged about the Microsoft -Yahoo saga and expressed mild concern that both orgs could loose key talent in the wake of a drawn out proxy fight. Clearly, Microsoft is serious about seeing this deal through, this initiative should, at the very least, serve as a forcing function to bring yahoo to the negotiating table. It makes no sense for MSFT to raise the offer when key Yahoo stakeholders seem deadset against the deal. So, the Proxy Contest - will go ahead.

That said, Yahoo is thinking well ahead. The company has announced its directors had decided to offer all full-time employees enhanced severance benefits in case they were terminated without cause in the two years after completion of any merger. Yahoo said that the enhanced benefits, which include accelerated vesting for stock options, were intended, in part, to prevent an exodus of employees.

The new severance plan is intended “to help retain the employees" - They also include accelerated vesting for all stock options, restricted stock units and other equity-based awards, and reimbursement for outplacement services up to a maximum of $15,000. All this from a company which was laying off 1,000 staffers last week.

All of this reminds me of a comment I read in a recent blog post by Mark Cuban. He referenced a conversation he once had with Jerry Yang during which Jerry mentioned that Yahoo stood for: You Always Have Other Options.

In an ideal world, we always have options. If we plan ahead, maintain a level of independent, introspective thinking and stay driven - we tend to have more options. In this case though - Yahoo Investors have few options, none of which seems better than the deal at hand.

Peace...

Yahoo - Still Not Feeling MSFT, Now Talking To AOL

I read this morning that Yahoo & AOL are actually in talks about a possible partnership which (they hope) could help fend off Microsoft's friendly advances. This news comes on the heels of last week's discussion with News Corp.

Clearly, Yahoo is showing that it will consider any alternative to partnering with Microsoft. This is no longer about trying to drive the price up by $3 - $5 dollars. I can't see how a deal with AOL would be significantly more advantageous than one with News Corp. These guys are seriously looking for a "White Knight".

AOL has some similar products to Yahoo - and a merger would probably provide a whole new bunch of integration headaches which are sure to distract Yahoo's Mgt, at a time when they desperately need to provide stronger returns for Investors. According to the Silicon Valley Insider, If the companies combine, therefore, Time Warner could have about a 20% ownership in the New Yahoo. One hurdle to an AOL-Yahoo deal in the past, however, has reportedly been that Time Warner doesn't want Yahoo stock, which means that the deal would have to be done at least partially for cash. A private equity firm could provide some of that cash, but then the question would be: At what value will Yahoo issue the new stock--the post-Microsoft bid $29, or the pre-Microsoft bid $19?

Truth is, Yahoo is not going to find a Suitor better positioned to offer a strong incentive to it's shareholders, to sell out. It's also worth mentioning that -with Yahoo clearly struggling to build its Search Business, Google stands to gain even more in the short to mid-term and could lock up the Search Syndication / Distribution sector - for years to come.

Last week Friday (02/16), the World Street Journal reported that Alibaba, the Chinese Internet Company, part-owned by Yahoo Inc, has hired advisers to help negotiate for expanded management independence in the event of its U.S Partner, being acquired by MSFT.

Alibaba hasn't publicly commented on the Microsoft bid. On Friday, Jack Ma, told his employees that Alibaba management "will always maintain its independence and management control" over the company, regardless of who its shareholders are. Alibaba's reaction is not surprising, given the Chinese Governments involvement in Internet Companies.

I can't figure out why Yahoo is so dead set against this deal. It's doubtful that Microsoft will kill off any of Yahoo's priced assets, as this will certainly diminish the power of the Yahoo Brand, which is undoubtedly reflected in the $42B offer.

Yahoo's initial response indicated that "The board believes that Microsoft's proposal substantially undervalues Yahoo!, including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects."

Fine, but it's safe to say that MSFT will probably come back with a higher bid - especially since $31/share bid has dropped. Both companies must know that by dragging this out, they risk losing talented Leaders & Mid-level Managers, in both Corporations. If Yahoo forces Microsoft's hand, and the Software giant decides to go hostile, that would be the worst possible scenario for Microsoft. Ultimately, Yahoo shareholders would prevail over Jerry Yang, he'll resign and a lot of his loyalists will follow suit. Many who are on the fence, will most certainly be poached by the likes of AOL, Google, IAC, eBay, Large Worldwide agencies and a host of start-ups

That would make the integration of Microsoft's OSG and Yahoo's Global Org, much more complicated and very expensive. What may have been a 1 year integration plan, could quickly become a 24 - 36 month affair. That would certainly have a significant impact in the $1B in gains and expected growth in Search Revenue & Query Share, which this partnership is expected to present.
For now, this saga makes for some very interesting commentary. However, I can only imagine how Yahoo employees are feeling right now.....

Google Losing Online Advertising Share?

A recent report from IDC indicates that Google’s Internet Ad Share is slipping while Online Ad Spend Rises 28%: USA Internet ad spending in 4Q07 grew nearly 28% over the same quarter in 2006 to $7.3 billion. For the full year 2007, online ad revenue grew 27% year over year to $25.5 billion. IDC research also found that Google's net USA market share declined for the first time in two years due to slower growth in domestic fourth quarter 2008 sales. Google's net USA Internet advertising market share was down 0.5 percentage points to 23.7% in 4Q07 compared to 3Q07. Google's estimated net USA Internet advertising sales (excluding the traffic acquisition costs they pay out to the partners in their networks) grew by a little more than 40% in 4Q07, but its year-on-year growth rate in the quarter before had been 50%.

Since Microsoft made the $40B+ offer for Yahoo - the Online advertising industry has been in the spotlight. A potential merger between Microsoft's Online Services Group and Yahoo would create a global Media organization which would control over 15% of the US Online advertising market. Expect that figure to grow, as the new organization starts to promote an unprecedented mix of online assets to an advertising sector, eager to bring more of their marketing budgets online.
Google would still be the "King of Search" - however, display advertising would take on a whole new level of importance. Microhoo! would be competitive in Search - both in terms of algorithmic search and monetization through distribution deals. As for Google, unless it can find a new differentiated revenue stream - it's best days could well be, right now..........

Yahoo Searches For Options

I read today that Yahoo appears set on delaying the inevitable.... Not sure whether Jerry Yang et al, really don't want to sell out, or if they're angling for $36/share. Either way, this deal is not a slam dunk - at least not yet. Apparently, the Yahoo board is split - between two key Factions. You've got the hardnosed investors, who evidently think $40B is a no brainer, and Yahoo loyalists, led by Jerry Yang - who are much less reluctant to sell out to Microsoft.

Hey Jerry, it's always hard to say goodbye, but you may want to consider your shareholders, who stock with you when times were rough and now deserve a decent payout. You could partner with Myspace or Google, but neither one of these companies can offer Yahoo a $40B payout. The Myspace deal smacks of desperation and you're giving all the leverage to Rupert Murdoch.

Google can monetize your search engine results - but then you'll become reliant on a 3rd party for over 50% of your revenue. You've been down that road before and it's not fun.

Now, you need a plan which willl persuade Yahoo shareholders to willingly take an instant 40%+ hit to their holdings on the hope that the Company will be able to deliver even more value over the next couple of years.

Good luck..........