WebProNews

Without Microsoft's interest, investors flee

Signing on with Google for its search advertising after ending discussions with Microsoft pushed Yahoo's market value close to where it was before Ballmer and company came calling in January.

Yahoo closed at $19.05 on January 31, a low point at the end of a two year run of disappointments for its shareholders. CEO Terry Semel became the ex-CEO, Jerry Yang retook the role, Roy Bostock took the Yahoo chairman's seat, and then along came Microsoft and a $44.6 billion offer for the company.

Since that time, Yahoo has done everything possible to avoid a takeover. It appears to have succeeded, as Microsoft and Yahoo both disclosed their talks about such an event were at an end.

Wall Street demonstrated its disappointment yesterday, with negative sentiment continuing today. Shares of Yahoo at lunchtime today hovered at $22.38. On Valentine's Day, they closed at $29.98, the highest close over the period of Microsoft's overtures for Yahoo.

Plenty of discussion arose from the end of Microsoft's talks and the arrival of Google to scoop up the goodies with a non-exclusive deal with Yahoo. How serious that non-exclusivity will be is up for debate; would Yahoo actually try to get Microsoft's search ads, or anyone else's, alongside search results when Google's money makers could be in place?

"As much as everyone still has lingering doubts about Microsoft after their hardball monopolistic practices of the nineties, it’s clear that they, along with Yahoo, were the only force counterbalancing the massive presence of Google in search marketing," TechCrunch's Michael Arrington said.

But search marketers, in our observation, already considered Google the keen focus of their efforts. Google dominates US search traffic. Sure a particular campaign looking for a certain demographic may toss some search ad dollars to the old Yahoo, or even Microsoft's MSN/Live brands, but the real juice followed the users to Google.

We'll see how well Google's vaunted auction system for search advertising takes advantage of this shift in power. We've seen what relentless upward bidding has done for the crude oil market, to the point where even the Saudis are frightened of prices today.

But Google doesn't have to worry about Americans suddenly gaining a wide-scale interest in public transportation, high-speed trains, or electric cars. They can sell ad spots against any of that. Google doesn't have a viable competitor without Yahoo in the mix, despite protestations by both companies to the contrary.

Unless of course, Yahoo experiences a change of leadership as corporate raider Carl Icahn wants to impose upon the company. As PaidContent noted, factors to terminate the Google deal exist, and a scenario exists where Microsoft could end up with what they wanted in January.