Maybe it was planned, maybe it was not. Yahoo!’s Head of Sales leaves the company for Martha Stewart Omnimedia, reports Rafat Ali.
Operationally and structurally it might be sound to have “to organize product management, engineering, and distribution around marketing customers rather than advertising products,” but the fact is that 10 of 26 of Yahoo!’s executives listed on its management page have now vanished into thin air.
The likely result of this power vaccum? I personally see a private equity firm (or two) making a move to buy Yahoo!
Yes, Yahoo!’s P/E are higher than what a PE typically likes to see, but the market is growing very quickly and the shift of ad dollars is accelerating. I did the math, YHOO is now at $36B but could be a $100B IPO by 2010 (disclaimer: I own shares in YHOO).
Here’s the math (Scroll down to 9. Analysis). Problem facing YHOO has as much to do with Wall Street as it does with main street.
Ideally, Yahoo! should remain patient but its investors will continue to bail if they keep suffering from Google-envy. And that is the cost of remaining public.
Increasingly, they’ll wonder why not accept MSFT’s $50B offer, and truth is, there’s no real guarantee that this was even ever offered or will be again in the future.
Other options?
A merger with MSN.com/Live.com would mean giving up 40% of the company to MSFT.
A merger with eBay is not really a win, since it means a merger of not-so-equals where Yahoo! shareholders give up 56% to eBay shareholders.
Ultimately, this one is too easy to call: private equity has yet to really make a big, big move online (H&F’s $1.1B purchase of DCLK was peanuts, compared to the size of PE deals we’re seeing, after all).
The online space is booming, Yahoo! is so out of vogue, a PE firm should buy Yahoo!, take it private, forget about Wall Street, and if the market continues its course and Yahoo! maintains what it’s got, the PE firm can at least triple its money and do an IPO for $100B in 3 years. Here’s the math, again.
Disclaimer: long YHOO
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