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Yahoo Ain't Worth No $44 Billion

If you listen to Wall Street, paying $44 billion for Yahoo is the smartest idea since E=mc2. Google's stock is down, and Yahoo is on the rise after Steve Ballmer's public pitch for the No. 2 search engine concern.

Let me toss some cold water on this little love-fest.

I don't see anything in the Yahoo portfolio that Microsoft doesn't already have. It's kinda like Time magazine buying Newsweek, Coke buying Pepsi or BP merging with Exxon -- just more of the same. Even worse, Yahoo is on the decline (its market share and financials are more like Boo-Hoo than Yahoo!).

Yahoo is, to a large degree, a legacy company. All its core offerings -- search, e-mail, forums, news and IM -- have been around for years. Why spend $44 billion to buy the past when you could invest that money in inventing the future?

This deal seems like a knee-jerk reaction to the Google threat. Instead of building technologies that can outpace Google, Microsoft is hoping to buy a company that has proven it can't keep pace. From a purely business standpoint, maybe the Yahoo audience is worth that kind of cash -- but this isn't a deal based on technical innovation. What do you think? Write me at dbarney@redmondmag.com.

Posted by Doug Barney on February 04, 2008 at 11:52 AM