Digital Daily » Sandeep Aggarwal

The YHOO-MSFT Crap Shoot

John Paczkowski — Tue, 16 Jun 2009 17:00:48 +0000

On stage at our All Things Digital conference last month, Yahoo (YHOO) CEO Carol Bartz said that a search deal with Microsoft (MSFT) would require “boatload of money,” and an outright acquisition even more. It doesn’t require a great feat of augury to see that an agreement between the two–at least at this time–isn’t that likely, as a number of analysts have recently noted. “In our view, the likelihood of a Microsoft-Yahoo search deal has gone down materially in recent weeks,” Collins Stewart analyst Sandeep Aggarwal wrote in a research note to clients today. “The Bid/Ask spread for the deal remains the single biggest hurdle followed by some disagreement on operational aspects/deal structure, in our view. We believe that a Microsoft-Yahoo search deal can happen but we are reducing the probability from 80%+ to 50%, and with the lowered probability, we restrain ourselves in terms of assigning any timeline.”

So, a 50-50 chance for a deal. Sounds about right, with Carol Bartz the wild card that could swing the odds as quickly and easily as she drops the F-bomb and with Microsoft as the desperate gambler looking to win back the deed to the search market it lost. Said Citi’s Mark S. Mahaney, “Although we view the likelihood of a major transaction as unlikely near-term, we continue to view Yahoo as the only logical long-term acquisition target for any company seeking scale in Internet advertising.”

Analyst: The Great Dark Times Cometh!

John Paczkowski — Sat, 04 Oct 2008 00:19:32 +0000

The financial markets’ descent into the maelstrom over the past several weeks is proving quite a test of faith for Collins Stewart analyst Sandeep Aggarwal. Last week he cut his estimates for Yahoo (YHOO), citing the company’s deteriorating fundamentals. Since then he’s become increasingly dismayed by Wall Street’s continued collapse, so much so that today he slashed estimates on a host of tech stocks, among them Google (GOOG), Microsoft (MSFT) and comScore (SCOR). “Failed banks, massive credit crunch, job losses, and lower consumer confidence now characterize the macro economy,” Aggarwal wrote in a Friday research note. “We believe this will hurt the Internet sector more than currently believed.”

And it will hurt some Internet companies more than others.

“Should the economy run into a recession, this would be only the second downward economic cycle for the Internet. Each Internet company is at a different phase of its evolution,” Aggarwal added. “We believe that a possible recession will be felt harder by those companies that have been delivering extremely high organic growth rates, have high operating leverage, or are approaching minimum operating scale levels in 2008-2009.”

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New From Microsoft: Live Search SearchGimmick!

John Paczkowski — Wed, 01 Oct 2008 16:52:52 +0000

Microsoft’s Live Search Cashback–“The Search That Pays You Back!”–must have had at least some short-term positive effect on Microsoft’s search business because the company is augmenting it with another rewards program. Now, in addition to receiving Cashback rebates on certain purchases of products found through Microsoft’s live.com Web search, users can win prizes as well. The company’s new SearchPerks rewards program awards Live Search users points for every Live Search query. And those points can later be redeemed for prizes like ringtones and Xbox games, or donated to charity.

Quite a gimmick, though Live Search Senior Director Frederick Savoye says SearchPerks, like Cashback, is actually part of Microsoft’s (MSFT) grand plan to “innovate the [search] business model.” If that’s so, the company might want to rethink it. Because Cashback really hasn’t done much to bolster Microsoft’s laggard search service, which remains a very distant third in the search market. According to Nielsen Online’s MegaView search ranking for August, searches on MSN/Windows Live declined 23.8 percent year-over-year. Its August 2008 share of the search market: 10.7 percent.

A 23.8 percent YoY fall in searches doesn’t seem like much of an innovation to the search business model. And with its search market share in decline, Microsoft clearly needs something more than a steady stream of gimmicks to stem the bleeding. Said Collins Stewart Internet analyst Sandeep Aggarwal: “Internal initiatives at [Microsoft] need time to lift off and prove their merit, but sooner or later the company will have to face the realities and decide again if a combination with [Yahoo] can speed the process.”