Newsletter Archives

  • AOL and Yahoo making Googlie eyes

    As you read this, Yahoo’s stock may be soaring. Or maybe not. Wait ten minutes and check again.

    Recent activity seems to reflect a Wall Street Journal report that AOL (remember the company that makes almost half of its US revenue by selling dial-up internet access?) and a bunch of high power venture vult… er, private equity firms “are exploring making an offer to buy Yahoo.”

    Yahoo stock’s meteoric rise appears to have started before that report hit the stands, fueled no doubt by insider tea leaf reading and ESP. Or something else.

    When I saw the headlines, I first remembered Microsoft’s failed attempt to take over Yahoo, back in December 2008. Microsoft offered more than $45 billion. Yahoo fought back, successfully shunned Microsoft’s advances and, under a new CEO, ultimately saw its market capitalization fall to less than $20 billion. As Kara Swisher reports in her BoomTown blog, three top Yahoo execs recently left for greener pastures, and CEO Carol Bartz is feeling the pressure.

    To make things more interesting, AOL – remember, they’re the big fish swallowing $20 billion Yahoo – has a market cap of less than $3 billion.

    Yahoo’s more than a dial-up internet portal, though, and its investments make a potential takeover a prickly proposition.

    Start with business affiliations. The enemy-of-my-enemy-is-my-friend camp at Microsoft has forged an alliance with Yahoo in which Microsoft’s Bing drives Yahoo’s search. As a unified force, under a ten-year contract, Yahoo and Microsoft are taking on Google for search engine market share. (Details in my post earlier today.)

    AOL’s search engine, though, is tied to Google, with a five year contract that started just last month.

    Here’s where it gets complicated.

    Yahoo owns 35% or so of Yahoo Japan. The majority shareholder of Yahoo Japan is SoftBank. (If you’ve been in the business for a while, you may recall that Masayoshi Son, the founder of SoftBank, once owned all of US magazine publisher Ziff-Davis.) That’s a bit, uh, touchy because Yahoo Japan recently joined with Google to corner Japan’s search advertising market place. Microsoft’s suing Yahoo Japan over the snub.

    Contrariwise, Yahoo owns 40% of China’s Alibaba, the pre-eminent Asian online business-to-business site. Yesterday, Microsoft and Alibaba announced a grand plan to take over China’s number-one search engine Baidu, launching a new “shopping search engine” called Etao. You may recall that Google and the Chinese government had something of a, shall we say, falling out, which left Baidu with more than 70% of the search engine market in the Middle Kingdom.

    Alibaba tried to buy back its 40% stake, but Yahoo wouldn’t sell, and relationships between the two are said to be sour. That’s the polite way to put it.

    So Google-affiliated AOL’s rumored to be going after nine-times-larger Microsoft-affiliated Yahoo, which owns 35% of a Japanese company being sued by Microsoft and 40% of a possibly-alienated Chinese company that just started a new venture with Microsoft.

    To make it more complicated, many people believe that Yahoo’s most significant assets (some would say “only” significant long-term assets) are its stakes in Yahoo Japan and Alibaba.

    Keep that in mind as you follow the machinations of the stock market this week.

  • Beware phishers

    I”m always admonishing people to be careful about phishers, but it looks like Hotmail, Yahoo Mail and Gmail are getting a particularly nasty dose at the moment. Neowin reports that 20,000 Hotmail users have already given up their userids and passwords. BBC says that they have “seen two lists that detail more than 30,000 names and passwords from e-mail providers, including Yahoo and AOL, which were posted online.”

    It’s always been a problem, but the phishers are getting much more clever these days.

    Of course, you’re savvy enough to pass by those emails that say you underreported your income to the IRS, the ones that say your package couldn’t be delivered because it had the wrong address, and the ones that say you better pay for that new Mac or else…

    I’ve tried clicking through on several of those phish mails as soon as I get them (hey, who can resist running down somebody who says I’m due a tax refund?), and have been pleasantly surprised to discover that Firefox is blocking the sites, just like it should.

    SANS Internet Storm Center recommends that you immediately change your passwords on Hotmail, Gmail, Yahoo Mail and AOL accounts.

  • AOL is Free!

    So who cares?

    Time Warner just announced that it’s going to spin off AOL, in an attempt to distance itself from what must surely be one of the most disastrous and ill-formed acquisitions in history.

    Time Warner could’ve revived AOL. I think. Instead, AOL has just slowly sunk into the sunset.