Look At What Yahoo Could Have Won


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By: Andy Beal
2008-06-16

Growing up in England, I always enjoyed watching the darts game show Bullseye. Host Jim Bowen took great delight in showing losing contestants the prize they just missed out on.

"Look at what you could have won" was just one of his many catchphrases.

Why am I telling you this? It was the first thing that came to mind after reading Microsofts Kevin Johnsons email to employees highlighting the much better offer Yahoo turned down, in favor of Google.

Heres what Microsoft offered

  1. Microsoft would have invested $8 billion in Yahoo! at $35/share;
  2. Microsoft would have purchased Yahoo!s search assets for $1 billion, and assumed the operations and R&D expense while returning data back to Yahoo! for use in their advertising business; and
  3. Microsoft and Yahoo! would have entered into a long-term search partnership, where Microsoft would have provided favorable economics to Yahoo! search, including a three-year guarantee of higher monetization than Yahoo!s Panama paid search system currently provides.

Johnson argues the following benefits Yahoo would have realized

"New Transfer of Cash to Yahoo! Shareholders. This proposal would have transferred $9 billion from Microsoft to Yahoo!, which could have been used by Yahoo! to reward their shareholders.

"A More Profitable Ongoing Business. This proposal would have resulted in higher operating income on an annual basis for Yahoo!, with our projections more than doubling Yahoo!s operating income in the first year of operation, and increasing it by more than $1 billion above its current operating income level.

"A More Compelling Search Offering. The combination of the search platforms would have unlocked new R&D innovation, eliminated redundant engineering efforts and allowed for greater scale in serving our customers.

Even with the obvious Microsoft spin, it seems Yahoo took an "anyone but Microsoft" path.

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About the Author:
Andy Beal is an internet marketing consultant and considered one of the world's most respected and interactive search engine marketing experts. Andy has worked with many Fortune 1000 companies such as Motorola, CitiFinancial, Lowes, Alaska Air, DeWALT, NBC and Experian.

You can read his internet marketing blog at Marketing Pilgrim and reach him at andy.beal@gmail.com.
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