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Web 3.0 = (4C+P+VS) = YahooBAY

Posted on Monday, Feb 19th 2007

On September 8th, 2005, I wrote a piece called YahooBay, not SkypeBay, as eBAY prepared to buy Skype. Since then, eBAY has stabilized, their core auction business is doing better, although Skype still remains a relatively unmonetized asset. I hope this changes relatively soon, since I am a shareholder, but I still maintain, it is by and large, non-synergistic, and that money should have been spent elsewhere.

Yahoo’s fortunes, meanwhile, have declined. (Rumor has it, that Private Equity firms are circling above their Sunnyvale headquarters.)

Nontheless, the market caps are not that far apart: $47 Billion for eBAY and $42 Billion for Yahoo.

In the context of my this week’s Web 3.0 discussion, I thought it would be a good time to also bring back the YahooBAY idea.

eBAY’s problems remain the same: lack of synergistic diversification of its core business.

Yahoo’s problems have escalated.

It seems to me, that they really could be a good couple. Where is the matchmaker?

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YahooBay is only as interesting or problemetic as a merger between any two major Web2.0ish companies. However ebay business model is lot more well defined and established than it usually gets credit for. Just imagine a world without ebay. Think where could we potentially go to buy any stuff on auction, in a reliable way? No name jumps up.
Also I think software industry needs to start getting seen similar to how manufacturing was many years ago. Its “maturing” now. It should be considered normal and okay to be serving a well defined need in a consistent and stable way. You dont have to have a crazy growth model figured out to be considered viable.

gargsandeep Tuesday, February 20, 2007 at 5:10 PM PT

Sandeep,

You are right, if you remove the premise that eBAY or Yahoo need to grow at a frantic pace expected of the Internet stocks. These two stocks are not treated as Software stocks, and most certainly not as Value investments. They are treated as Growth stocks. And if they want to continue being treated as such, then they need to do something, and YAHOOBAY is one such “something” that makes sense.

No question, they can choose to just keep doing what they’re doing, and stop being growth companies.

Sramana

Sramana Mitra Tuesday, February 20, 2007 at 5:57 PM PT

First let me say, “impressive blog!”

Second, I’ve been watching (and supporting) this guy Eric Jackson lead a campaign to change Yahoo strategy and management. Looks like he should read this entry. I’m sending him a link to this article.

I write about him here: https://thepanelist.com/Neubert%27s_Trades/Neuberts_Trades/_2007012250/

Disclosure: I own Yahoo(YHOO) and am short 35 strike Jan 2008 calls against my position.

David Neubert Tuesday, February 20, 2007 at 8:34 PM PT

Thanks, David. Yes, I have seen Eric Jackson’s posts. I suspect there are a large number of discontented shareholders of Yahoo out there.

Sramana Mitra Tuesday, February 20, 2007 at 9:11 PM PT

[…] I was extremely annoyed by eBay’s Skype acquisition, and the consequent stock price drop that eBAY delivered. Needless to say, I am an eBAY shareholder, a rather restless one at the moment. […]

Sramana Mitra on Strategy » Blog Archive » Skype: Missing a Segment? Friday, February 23, 2007 at 7:05 PM PT