Microsoft has made it clear that it would borrow at least part of the funds to make the gargantuan shareholder payoff to acquire Yahoo Search in what has been presented as a “half-stock, half-cash” deal. Analysts are already sharpening their pencils to calculate the kind of ROI that Google Analytics might report for the CPA (cost-per-acquisition) of the transaction.
In December of 2007, Google owned a 68.1% market share on daily search activity. Microsoft’s MSN and Live search owned 9.1% market share and Yahoo! 17% in the final month of the year. Ask market share and search volume has continued on a gradual decline.
During the last four quarters, Microsoft’s revenues for its online services (MSN, Windows Live, aQuantive, etc.) were $2.8 billion and it lost $949 million. Combining Yahoo’s revenues with that business, you get a combined sum of $9.8 billion, but Microsoft would still show a net loss for that business of $289 million.
Ventures like Yahoo! Mail and Yahoo! Finance, are extremely successful and boast loyal followings. But Yahoo! Mail faces stiff competition from Gmail and Microsoft’s Hotmail, one of which will be compromised by a consolidation. Yahoo’s financial site also faces challenges from News Corp.’s recent decision to free WSJ.com. Yahoo! Personals is one of the largest online dating sites, but user-driven platforms on Facebook, MySpace, and even Craigslist will gain market share in the matchmaking world over the next few years.
According to comScore, traffic spent surfing through Yahoo!’s site dropped 13% this past November, year over year. Microsoft’s MSN properties also saw a dip of 5%, but Google proved resilient, increasing 116%.
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