We are in the midst of earnings season and, as always, a lot of excitement, hope and fantasy is hovering through the room. In my excitement about what’s going to be reported today, I also took a look at the tea leaves this morning. What they told me was something I was thinking about for a few months, Apple is going to buy Yahoo! How about that?
I have had this idea that Apple should buy Yahoo for a while now, but for some reason, I never really took a look at that or discussed it with someone. Here it is, I believe that Apple should acquire Yahoo. To master the first hurdle, Apple could pay for that acquisition with some of the content in its penny jar. With that out of the way, what would they get for it? Yahoo is a bid “out of favor” with the net population, even though Ms. Bartz, Yahoo’s CEO, told the analysts that traffic is rising and the situation is getting better. She saw a few “proof points” for improvement.
Looking at the numbers, revenue 24% down to $1.21 billion and earnings down to $223 million from $310 million compared to the same time a year ago. Wow, that is quite a chunk! The analysts have expected a bigger shrinking, so the stock was rising after hours. I must say, however, making $1.21. billion in revenue is a surprise for me. How did they do that with just a small share of the search market? Anyway, combining technology from Microsoft and from Yahoo displayed major issues and delays for a better search experience. Looking at the 800 pound gorilla Google and Microsoft’s Bing, there might not be enough in the search market for Yahoo to reach past heights.
What’s in it for Apple? Well, that is the question. First of all, they would be in the search business. And there is a quite sizeable user base. By far not all Apple users, but, and here I would have to speculate, a good number of users that have access to Yahoo from Google’s Android mobile platform, and others of course. I am sure there is some valuable information buried in these transactions. Apple bought this small research company last year. I remember the “turmoil” in market research last year over Nielsen, the TV rating and audience measurement company. All the movie and content owners didn’t know what people are doing in the future, watching shows on TV, or iPad or the phone. Apple has a good advantage with being in control of some big market. Due to the iPhone, iPad and iTunes, a portal such as Yahoo could increase that advantage in the research market.
A few weeks back, Amazon.com stepped on the music and movie industries’ toes, with launching a cloud application to enable users to stream music and movies on the internet. That was a huge step and now everyone is waiting for what Apple is coming up with. At this point, Apple only has the more or less static iTunes. Well, I am sure they have a complete cloud solution, just waiting to be launched at the right time. If not, here is the point where the tea leaves saw the “opening”.
There are quite a few other parts of Yahoo that could be of interest for Apple. Blogging, email, social media like “pulse”, finance and all the other services that Yahoo delivers. I believe that would be a great addition for Apple and would answer Google’s call when they decided to jump into Apple’s business with smartphones and Android.
The longer I think about this, if I would be Apple, I would take a close look at this possibility.