Citi’s Internet Analyst Mark Mahaney has been at the center of the Microsoft/Yahoo takeover battle since the beginning. On February 2, a day after the Microsoft bid, Mahaney gave his reasons why he believed the deal had just a 60% chance of happening.
Mahaney also estimated (on February 2) that a search advertising outsourcing arrangement with Google could boost Yahoo cash flows by 25% and suggested that the financial markets were underestimating the probability of such a deal (he was right, as we learned two months later).
Later Mahaney updated his estimate based on new data and said a Google deal could increase cash flows “more than $1 billion a year,” a 50% gain in cash flow from 2007.
Last Friday, in anticipation of the expiration of the Microsoft deadline for Yahoo action on the bid, Mahaney made a new set of predictions: 45% chance of a merger at a price somewhat higher than the initial bid, a 40% chance that Microsoft will go hostile, a 10% chance that Microsoft walks away, and a 5% chance for deal at the original bid to be accepted. That means he thinks a deal in some form is 90% likely, up from his 60% chance on February 2.
Given how consistently right Mahaney has been in his analysis, Erick and I reached out to him today to pick his brain on the deal. The podcast is below, and a transcript has been posted on TechCrunch.
Key takeaways:
- Mahaney clearly thinks a Yahoo/Microsoft deal is going to happen, either through a hostile move by Microsoft (40%) or via a negotiated deal (50%).
- He doesn’t count out the chance for a more permanent Yahoo/Google deal, though. We talk about the various ways Yahoo may be able to get a Google deal past the regulators, particularly via outsourcing only a portion of search ads on a non-exclusive basis.
- Mahaney maintains his current estimate that Yahoo can increase cash flow in the near term by $1 billion/year by outsourcing search to Google.
The most interesting exchange came at the end, when I steered away from what Mahaney thought would happen, and asked him what he would do if he were Microsoft CEO SteveBallmer: walk from the deal, or go for it aggressively. Mahaney didn’t hesitate in his answer:
Arrington: So if you’re Steve Ballmer, do you walk from this deal or go after it aggressively?
Mahaney: You go after it aggressively. You know what it’s like to see businesses increasingly concentrate on one provider. The longer you wait to attack that provider, the worse your odds. You can’t walk away.
There are very few people outside of Microsoft who know the company’s business as well as Mahaney. If he says Microsoft needs Yahoo, I’m not going to disagree.
Guys, your “TalkCrunch” podcast on iTunes is broken. The urls aren’t getting picked up by iTunes:
http://feeds.feedburner.com/Talkcrunch
So, people (including myself) can’t get the audio using iTunes.
I haven’t debugged your rss xml, but if I click “subscribe” from iTunes Store, I get the feed, but no episodes are recognized. If I click “get episode”, I get only the one episode and the others aren’t recognized. The most recent episode is not included in the list for using “get episode” in the iTunes store interface.
thanks for fixing it!
-Jason
Hey Jason,
I think I’ve remedied the problem (or at least part of it). Can you confirm?
Excellent! It works! Thanks for the quick turn-around.
-Jason
I believe that Yahoo could save money by outsourcing to Google, but why is there no discussion of cost to the brand? Yes, Yahoo is now a smaller player, but a huge part of their brand is being not-google. I just don’t see that happening.
Both companies have sufficient power base to make the same amount of profitability. It’s a simple matter of providing the services that people need. If Microsoft’s internet business can’t convert market domination to useful participation and cash, then it’s simply because they don’t get “IT”, and buying more stuff isn’t going to solve that problem.
moncler down coats womens
IcYwmg fsukavirojke, [url=http://hzpahwkhasyd.com/]hzpahwkhasyd[/url], [link=http://ggkhnwaofsjj.com/]ggkhnwaofsjj[/link], http://piricjyyxwax.com/
a,
d,
b,
Yahoo and Microsoft merging is probably the best thing that could happen for Yahoo. It’s been struggling for a long time. This will help them both compete with Google which is good because Google needs some heavy competition so it will continue to innovate.
杭州最好的KTV是哪儿？杭州东方魅力www.mote188.com
杭州最好的夜场是哪儿？首选杭州东方魅力www.dongfangmeili.net
杭州夜场招聘首选杭州东方魅力？www.mote188.com
Interview With Citi Analyst Mark Mahaney On Yahoo/Microsoft/Google xpqrgvifez longchamp sac http://www.absynet.fr/ longchamp sac