Friday, February 1, 2008

Microsoft is buying Yahoo! Buy Google!

What a news this morning! Microsoft is going to buy Yahoo! Both are stocks in my "Tech Have Beens" portfolio on Stockpicr. Old folks getting married? Fun for them, but why would we care?

What does it mean for investors?
1. Current owners of Yahoo! stock: sell right now. You don't know if/when this deal can go through. You just got 50+% profit. Bank it.
2. Everyone else: Buy Google! I remember history of Hotmail. I was a user in 1997. Then Microsoft bought it. First thing happened: Hotmail was unavailable for couple of weeks. Then I was flooded with spam. Then MS sent me a message that I need to convert to Passport (for those who doesn't know, it was supposed to be one common login system for the whole Internet). That's when I dropped my account. I had Yahoo! mail already, which was much better. If MS goes the same way with Yahoo! (and history suggests that they don't know any better), Yahoo would be dead (or a zombie) in about a year. I just can't imagine that MS knows how to accomodate Yahoo! culture. And they definitely don't know how to manage from outside. So expect huge lost of talent inside of Yahoo! and huge lost of customers outside of it. And where are both going to go? Google, of course. I'm definitely going. Google mail is great, their financial site is closing on Yahoo! Finance, and that's all I'm using on Yahoo! nowadays. From financial point of view: MS never knew how to make money on the Internet. They are still losing (more and more) it on their MSN properties. Yahoo! knows how to do it, but not good enough. Guess, what Yahoo! will be doing under MS boot (sorry, sure and gentle guidance)?

Full disclosure: at the time of publication author had long position in Google (GOOG) and did not have any positions, long or short, in Microsoft(MSFT) and Yahoo!(YHOO). Positions can change at any time.

Disclaimer: This article is not intended as an investment advice. Every person should make her/his own investment decisions based on all available information and advice from her/his own financial advisor.

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