Back to Tech Blog homepageJerry Yang must be starting to understand how Alfred Chuang of BEA Systems felt when Larry Ellison of Oracle came calling last year. Like Chuang, the Yahoo boss has just been landed with a takeover offer at such a big premium that he can’t possibly just ignore it. Also like Chuang, the options for other deals - or for staying independent - are shrinking fast. Here are the other partnerships or alliances that Yang could have grabbed at in the last year or so, and the chances that he can turn to them again now as he looks for an alternative to Microsoft:
News Corp, sensing the chance to consolidate its position on the internet, at one stage proposed combining MySpace with Yahoo in return for a large stake in the internet portal. For Rupert Murdoch, the opportunistic move would have meant trading the hot social networking site for a slower growing but far more stable property, but Yahoo saw less value in the idea. To judge from the noises emanating from around News Corp today, there’s little interest in trying to revive the idea.
Time Warner has also at times considered something similar for its AOL unit, merging it into Yahoo and keeping a piece of the action. If Yahoo falls to Microsoft, Time Warner will be robbed of its two most obvious partners as the online advertising market consolidates, so Jeff Bewkes might be expected to try to intervene. However, people close to Time Warner seemed distinctly underwhelmed by the thought of wading into the fray against Microsoft.
This has been one of the more intriguing options. Yang is said last year to have considered out-sourcing Yahoo’s search advertising to Google. Project Panama, the overhaul that was meant improve the efficiency of Yahoo’s search advertising system, has been only a qualified success: Yahoo could boost its earning per share by 25 per cent by partnering with Google instead, according to Mark Mahaney at Citigroup. As Yahoo searches for ideas to boost shareholder value while staying independent, this looms as the most likely alternative. Much will depend on whether Google wants to go head-to-head with Microsoft in such a direct way.
A higher offer from Microsoft to win over Yahoo’s board seems the most likely outcome. A year ago, before Yahoo’s shares hit the skids, Microsoft was willing to pay $60bn, according to one well-placed source. Times have changed and there’s no way Yang can hope for that kind of happy ending any more, but holding out for a bigger pay-day still seems his best option.
David Gelles, Joseph Menn, Chris Nuttall and Richard Waters in the FT's San Francisco bureau upload their views - plus tech insights from writers in New York, London and Tokyo
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