Tuesday, June 19, 2007

A Window to Yahoo!



The dominance and presence of Google has been a great threat to modern day giants like Microsoft and Yahoo. The product portfolio of Google has been very impressive and it is amazing with the rate Google has been able to bring innovative products and services to the market. Google has lead the way in transforming Web 1.0 to Web 2.0. Due to this, the competition has gone up immensely in the IT industry. Of late, the heat of competition and delivering the best to the customers has been felt by Yahoo as well.

In the past few years, Yahoo has been criticized for not being able to bring innovative product in the market and increase the market share. The BBC says that Yahoo currently accounts for about 26% of all online searches in the US, well behind Google which has a market share above 49%. Consequently, on 18-June-2007, Terry Semel was replaced by Jerry Yang (co-founder) as the new CEO of Yahoo. Mr. Terry was in the post of CEO since 2001 and during his tenure, Terry witnessed the fall in the market price of the share as well as fall in the market share.

Following chart provides a look into how Yahoo performed during the tenure of Terry as CEO.

Figure 1: Yahoo’s performance in the past 7 years

It is pretty clear that until, 2005 Yahoo was doing (post dot- com bubble burst) but after that it slumped. Due to this the shareholders as well as the employees of Yahoo have been reportedly dissatisfied with the performance of Terry. A clear picture will emerge from the comparison of stock price of Yahoo with that of Google and Microsoft. The Figure 2 shows the performance comparison (of past year) of the aforementioned stock taking a 200 Day Moving Average.

Figure 2: Performance Comparison

So the million dollar question at this moment for Yahoo is “Will Jerry be able to take the Yahoo out of this slump?” This is quite a difficult question to answer (that is why it is a million dollar question). Now will this downhill drive open a window for Microsoft to pounce and acquire Yahoo? This expectation has been in the air for quite a while now and as the saying goes “Expect the Unexpected”, don’t be surprised if Yahoo is acquired by Microsoft. The acquisition will create a good synergy for both of them and above all, a strong and unified force will be established to face the mighty Google.

1 comment:

Sangharsha said...

After going thru your post, it seems that Microsoft's $45Bn bid is a good deal for Yahoo!
Either way they haven't given good/innovative stuffs since long...
They should merge, just to become a better competitor of Goog.
Isn't it?

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