The Rumor that Won't Die
Today Overture Services is trading up 17% on rumors that Yahoo will buy the company. This time around, the rumor is mentioning specific ratios: one-half share of Yahoo plus $11, or $25/share, quite a premium over the current Overture stock price of $14.50.
A deal like this would really make me shake my head, given what has transpired lately: Yahoo acquired Inktomi and Overture acquired FAST and AltaVista. It's like all the king's horses and all the king's men will be needed to thwart Google's lead in web search. But three also-ran search engines put together don't necessarily add up to much of a threat.
The only reason I have to assume there is a grain of truth to this is that a massive selloff would have happened already since this is an actively-traded stock in a downtrend. Surely some big holders would take this "pop" as an opportunity to dump if the rumor were false. Stay tuned. If it does come to pass, it could be one of Yahoo's silliest acquisitions yet. It's doubtful that MSN, Lycos, and other big partners would maintain their Overture deals if it were a part of Yahoo. Overture does have 90,000 advertisers, and Yahoo would enjoy a 100% revenue share of pay-per-click ads if it acquired Overture, but as I've argued earlier, those 90,000 would no doubt sign up with Yahoo in a heartbeat if they went in-house (or acquired another PPC player at a much lower price).
Posted by Andrew Goodman
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