Let Yahoo deal with its mess, Microsoft should go cold turkey on them for a year now, and let Jerry Yang get fired for failing to create shareholder value. A far more interesting question looms on the Microsoft side. What is Microsoft’s Internet strategy going forward?
Here’s my shopping list for Microsoft, given cash is abundantly available, time isn’t:
* Kayak: Microsoft acquired Online travel search engine Farecast earlier, indicating to me that they are thinking about an alternate strategy already. The next acquisition: Kayak. Valuation: $700-$800 Million. Strategy: Continue to build out a vertical presence in online travel, acquire a few more companies for a total budget of $1.5 Billion.
* Trulia: Real Estate search engine Trulia can be a good trunk to build Microsoft a strong presence in the Real Estate vertical. Valuation: $100-150 Million. Strategy: Acquire another 3-4 vertical portals in Real Estate with a total budget of $1 Billion, including a couple of public companies like ZipRealty.
* SimplyHired, LinkedIn and eLance: Microsoft should also develop a strong presence in Jobs by acquiring LinkedIn (Valuation: $700-$800 Million), eLance (Valuation: $200-$250 Million), and SimplyHired (I haven’t done their valuation analysis). Strategy: Create a strong foothold in the massive Jobs vertical. Budget: $1.5 Billion.
* eHarmoney: Offers a strong foothold in online personals. Valuation: $1-$1.2 Billion.
For a budget of less than $6 Billion, Microsoft can clean up some of the current jewels of the Internet, and build itself a great management team of net-savvy entrepreneurs. Especially if these entrepreneurs can be incentivized to keep building according to their dreams, and in their respective domains, Microsoft will end up boasting the most envied portfolio of Internet properties.
Meanwhile, what Yahoo would do under Jerry Yang’s disabled leadership, I dread to imagine!