Wall Street is buzzing with rumors of a massive merger or alliance quietly in the works, with Google, Yahoo, eBay, and Microsoft as the potential “candidates”.
According to analysts, a partnership between Yahoo and eBay is the most likely scenario.
“A collaboration or merger between eBay and Yahoo! is the most strategically feasible“, stated a report by analyst Imran Khan and his team at JP Morgan Internet.
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Who will team up with whom among the four giants of the Internet? Source: BusinessSolutions |
“The alliance between these two companies would dominate in areas like auctions, communication, payments, advertising, public outreach, and geographical coverage“, Khan added.
Not only Khan but also observers in Silicon Valley, high-tech investors, and financial experts are speculating about these potential “super merger” deals.
The Pressure to Unite
The growth of the Internet is slowing, which intensifies the competition between giants like Google, Yahoo, eBay, and Microsoft more than ever. eBay’s stock has dropped by as much as 30% over the past year, while Yahoo and Google have seen declines of 20% and 10%, respectively.
Since the beginning of 2006, Microsoft’s stock has decreased by 12%, mainly due to a series of product delays and a newly announced strange investment plan.
Among the four giants, Google still appears to maintain its position. Last year, the company’s revenue nearly doubled, and this year, it is projected to grow by up to 62%. It is estimated that eBay will grow by about 30%, a decrease from the 50% rate of two years ago. Yahoo’s growth rate has also decreased similarly to eBay’s.
When asked, an eBay spokesperson only vaguely stated that the company is closely cooperating with “all major web search providers” including Google, Yahoo, and Microsoft. Of course, he declined to comment on the potential partnership with Yahoo.
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Source: Olganza |
eBay is one of the world’s biggest “buyers” of search keywords. The company manages a portfolio of up to 15 million keywords, distributed across various search engines to attract and entice users.
The 56-page report from JP Morgan also considers several other possibilities, such as Microsoft’s MSN Internet division potentially partnering with Yahoo. Google is expected to remain outside of any merger and continue to “fight solo” – a viewpoint shared by many Wall Street experts.
The Ghost of Google
According to JP Morgan’s assessment, Google’s rapid market expansion is the driving force behind other giants seeking alliances or mergers.
On May 3, the Wall Street Journal reported that Microsoft’s MSN division is strategizing to “Stop Google” by potentially acquiring a stake in Yahoo.
Last week, Yahoo’s CEO, Terry Semel, confirmed that Microsoft had expressed interest in acquiring part of Yahoo’s search division. However, Terry asserted that “there will be no deal“, as the search division is “the strategic focal point of online advertising“.
“It would be like selling the right hand and only keeping the left. It’s nonsensical“, Semel declared.
The Most Likely Scenario
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An alliance between eBay and Yahoo is the most strategically feasible. Source: AP |
“For me, the most intriguing partnership is between Yahoo and eBay“, analyst Scott Devitt stated. “However, such a merger is very rare and requires extensive discussions“.
eBay and Yahoo possess strengths that could complement each other. While Yahoo excels in media, eBay is seasoned in e-commerce. Yahoo is powerful in Asia while eBay dominates Europe.
The “most convincing” scenario is an alliance between the two companies, where eBay uses Yahoo’s search tools to attract users to auctions.
In return, Yahoo could leverage eBay’s “valuable assets” like the PayPal online payment system and the vast number of users utilizing Skype’s VoIP software.
However, a major factor affecting this possibility is eBay’s heavy reliance on Google. “eBay cannot sever ties with Google. They need a relationship with Google, they need Google’s powerful search tools to attract customers“, Devitt noted.
Thien Yi
