Howrah News Service -  Latest news and headlines on Howrah,West Bengal and World: Better results helped Yahoo reject MS bid

Better results helped Yahoo reject MS bid
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newsbyte on 04 May, 2008 02:40:19
 
By Goutam Das
Bangalore, May 4: So the forces of Yahoo and Microsoft will not combine, after
all, to challenge the dominance of Google with over 60 per cent marketshare in
global online search and advertising.
But why did Yahoo reject Microsoft’s $33 a share final offer and hold on to
its $37 per share demand, considering that its profit margin has been slumping
for the past three years — from 36 per cent in 2005 to nine per cent in 2007?
Yahoo’s optimism that it can survive on its own may have stemmed from
impro-ving financial performance, beating analyst expectations Q1 FY08. In Q1,
its income grew to $542 million from $142.4 million last year.
Yahoo’s revenue guidance for the next two years is ahead of consensus
estimates as well. Minus traffic acquisition costs, the firm expects to clock
revenues of $7.1 billion in 2009 and $8.8 billion in 2010. You may want to take
it with a pinch of salt — the guidance came after Microsoft’s initial offer
of $29.4 per share and was seen as an attempt to get the software giant to hike
bid price.
Also, Yahoo has reported improving search monetisation — its ability to make
money from search-related advertising — with Project Panama, its years-old
search and ad technology.
It may have bridged the revenue per search gap against that of Google in the US
by concentrating on search relevancy, as well as by incorporating video and
audio against the search results page. Yahoo’s future strategies are likely to
hinge on embracing an "open app-roach", its search user interface will be opened
to developers, besides innovations around mobile search.
Nonetheless, it may take several months to find out whether the initiatives are
good enough. But Yahoo went ahead and rejected Microsoft’s sweetened bid
nevertheless.