Now that Yahoo has passed on Microsoft’s bid, it’s up to Jerry Yang to show the company’s testy shareholders that soldiering on makes more sense than selling out. That’s going to be a tough job. A handful of shareholders have already sued the Internet company over its decision not to talk with Microsoft, and the disenchantment is likely to spread if the stock returns to the level it was before the unsolicited bid came in. (A quick fact: From the time Yang retook control of Yahoo last June through the day before Microsoft unveiled its bid, Yahoo stock lost nearly one-third of its value on his watch.)
So how is Yahoo going to get its shareholders back above water? One key to the plan is the ‘buy and build’ initiative it has started with AMP. Yahoo’s new online advertising management platform is built on a pair of deals that cost the company nearly $1bn in 2007. A year ago, Yahoo spent $680m to pick up online ad exchange network Right Media Inc, and then followed that up last September with a $300m play for behavior-based marketing vendor BlueLithium.
AMP is slated to come out in the third quarter of this year, although a few publishers are currently test-driving it. The stakes for Yahoo are huge. By its own assessment, the US online ad market will hit $50bn in four years. Securing a chunk of that ad spending will go some distance in silencing shareholder grousing about Yang & Co’s decision to stiff-arm Microsoft. Of course, that’s only if AMP delivers and doesn’t become another Panama-style disappointment at Yahoo. If that turns out to be the case, Yang would be lucky to find a buyer for his company, even at a discount.
Yahoo’s recent display ad networking deals
Source: The 451 M&A KnowledgeBase