23 November 2008

Weekend reading:
Yahoo could be attractive target for Nokia!?

Shares of Yahoo Inc soared 10 percent on Tuesday on hopes that the departure of Jerry Yang, its embattled chief executive, would clear the way for a deal with Microsoft Corp.

Yahoo announced late on Monday that Yang, whose leadership had come under growing criticism from shareholders after he failed to agree to a deal with Microsoft, would step down from his role as soon as the board finds a replacement.

So, while everyone else is expecting a new Microsoft offer, Tony Cripps, senior analyst with Ovum, has suggested that the time could be right for Nokia to pounce and acquire Yahoo!!

Yahoo's future remains in the balance following the stepping down of CEO and co-founder, Jerry Yang. This follows its snubbing by erstwhile acquirer Microsoft and the collapse of a proposed advertising deal with Google. While Yang's absence may re-open the door for Microsoft, Yahoo's low valuation plus its brand and considerable consumer support, especially stateside, suggests that a different suitor should step forward: Nokia.

Yahoo may be down but its intherent value remains intact

Microsoft's recent denial of any interest in re-opening takeover discussions with Yahoo would appear to rule it out as an acquirer. Were it now to step in as a white knight, surely such statements would lead to accusations that Microsoft was deliberately posturing to drive its rival into corporate purgatory before pouncing?

Microsoft's original offer of $31 per share in February valued Yahoo at around $45 billion. With Yahoo shares currently around a third of that, the company could represent a good investment for another company looking to grow its web presence - especially a cash rich one, given the current financial climate.

So which companies might be interested in buying Yahoo? Google seems an unlikely bet. The loss of its deal to supply advertising to Yahoo's US operations on competition grounds will have been a blow to Google's overt aim of putting advertising in front of as many users as possible, as often as possible. However, the company would not benefit to any great extent from acquiring Yahoo for itself.

AOL has also been suggested but the benefits of one struggling web company acquiring another are debatable.

Nokia's web ambitions will lead it to Yahoo land

The mobile handset giant is intent on becoming a major web player in its own right and Ovi (the umbrella for its web applications and services), as we see it today, is only the start. There's a clear imperative coming from Espoo for Nokia to become part of the fabric of the Internet and not just to build on the foundations laid by others.

As a starter, Nokia will make its Nokia Maps API available to third parties. While not unique (Google Maps API is already out there), Nokia has significant assets to bring to mapping, not least through its acquisition of Navteq. And there are plans to expose further Nokia services to web developers, although it won't be drawn on them as yet.

Nevertheless, reversing into the Web from a mobile point of view may not be that easy. Mobile is rapidly being subsumed by the Web; it will not redefine the Web in the way Nokia is hoping for (although that's not to say that it won't change the course of web evolution).

The pace of development on the Web and its rapidly evolving capabilities as an application platform for developers and consumers are extremely