This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Google-Yahoo! Deal Not So Far-Fetched

Stocks in this article: YHOO GOOG AAPL MSFT

NEW YORK ( TheStreet) -- Over the weekend, it was leaked out that Google (GOOG) was interested in helping at least a couple of private equity players to finance a purchase of Yahoo! (YHOO).

Most folks have protested loudly against this possibility by concluding that such a deal would never get past the U.S. government. Google, with already two-thirds of the market share of the search space, would significantly increase that by taking over Yahoo!'s share and leaving the rest of the market to Bing, Ask Jeeves, and whoever else is left.

Of course, that is right. Google previously tried to strike a deal with Yahoo! after the 2008 Microsoft (MSFT) buyout was pulled and before Carol Bartz signed up to outsource its search to Bing. That potential tie-up between Google and Yahoo! was discouraged by the government.

So why is Google leaking out this information now? These are smart guys. They know that search is a non-starter.

One cynical theory is that they have no interest in Yahoo! at all. They're merely trying to seem interested so that Microsoft will be forced to more aggressively bid for Yahoo!

With a company that bid "pi" for the Nortel patents before Apple (AAPL) and a consortium of others won them, I suppose anything is possible. However, I just don't see what the point is for Google to do this.

Will leaking something cause Microsoft to bid $25 instead of $20 for Yahoo!? That would be the equivalent to an extra $4 billion to Yahoo! shareholders that Microsoft would have to pay out. That's not chump change, but is that really going to hurt Microsoft? And why would Microsoft really take such action based on one leak?

Which leads me to conclude that there is real interest by Google in Yahoo! However, I don't think it's for its search business.

I think the jewel for Google in the Yahoo! empire is its display ad business. That's a $2 billion a year business for Yahoo! and many believe that Yahoo! is dramatically under-monetizing it. What could it be worth under Google using DoubleClick's technology? $3 billion? $4 billion? Google knows better than us.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs