Google.Google.Google. (How’s that for a tongue twister?) Nonetheless, Google seems to be the solution to most problems in modern times. Also, for many companies, it is the source of numerous tribulations. One company that is directly affected by the success of Google is undoubtedly Yahoo. It surely must be frustrating for CEO of Yahoo Terry Semel, to constantly look at Yahoo’s position in the market and realize that there is an 80000 pound behemoth called Google sitting right above it.
As with any predicament, one must come to a solution to eradicate any complications. In Yahoo’s case, Semel is fervently trying to come up with alternatives to catch the attention of Wall Street and put itself in the spotlight for many investors and analysts. FORTUNE has learned from multiple sources that Yahoo has been flirting with AOL. In other words, Yahoo had recently approached Time Warner and showed interest in purchasing America Online. If this were to happen, there are very likely chances that Yahoo would come into the spotlight that it desperately desires; however, chances are that this would be only ephemeral given the sheer size of Google. AOL seems to be benefiting either way. A quote by senior analyst of Forrester research comes to mind: “AOL's value is driven to the extreme merely because you had two industry giants fighting for it”.
AOL is worth about $13 billion dollars, however, chances are that Time Warner will ask Yahoo for more. Interestingly, both Yahoo and Microsoft have had difficult in internet advertising against Google, so a Yahoo-Microsoft merger could prove to be ground-breaking in many ways. An eBay-Yahoo merger is another possibility, however, it is not very feasible given the starkly different focuses within the Internet.
In 2005, Google beat Yahoo in the race to become a pivotal partner of AOL to become its primary search partner. Google gained a 5% stake in AOL for approximately $1 billion dollars. If Semel, the former co-CEO and co-Chairman of Warner Brothers, does have other options lined up if the deal with AOL does not work out. According to FORTUNE, Yahoo’s market value is about $35 billion dollars. There have also been several rumors within the market, that Yahoo is eyeing the popular networking website Facebook.com for a cool $1 billion dollars.
Ironically, there is also a very likely possibility that Semel may sell his company. Surely, the tables would now turn and Microsoft and Google would become competitors. Even though Microsoft is the more viable and likely purchaser, one can never count Google out in any fight these days.
Google’s dominance in the market, has been the primary reason for the decline of many other companies. Furthermore, Yahoo has definitely missed out on key opportunities to catch up such as purchasing Myspace.com or Youtube.com (bought by Google).
Whichever path Yahoo ultimately chooses, the bottom-line is that it is trying its level-best to improve and come ahead in the race against giants such as Google and Microsoft. It is clear that Yahoo is looking ahead to the future and planning many of the decisions that it is likely to take ahead of time to prevent any potential complications in the future.