Can it really be the case that Yahoo's CEO doesn't know the company has become roadkill on Al's information superhighway? One has to wonder.
The advertising–not the search arm–of Yahoo was really the only hope for the company, but it never managed to get it up and running. The complete capitulation by Yahoo to Google's automated online advertising juggernaut was the end for the company–although it is not a poison pill. (Do we hear antitrust suit? Duh.) So the company remains an attractive buy–but only for the buyer positioned to challenge Google in the advertising space. And that company is Microsoft.
So recent Wall Street Journal speculation about Softies seeking a partner (Time Warner? News Corp.?) to help them go in and try to buy Yahoo again seems to be based on a complete misunderstanding of the Internet and what's happening to the media business. On the other hand, CEOs and VCs have blown billions (and continue to blow millions) due to a complete misunderstanding of the Internet and what's happening to the media busines, so why should this case be any different?
While it's true that Yahoo does the best job presenting a useful old-fashioned portal (remember the mid-nineties when everyone on the planet was going to build a portal to the Internet, including Time Warner?) and Google does a surprisingly poor job (witness the constantly out-of-date Google news page), that's not where the real value lies going forward. In the future, search will continue to be big, but the real hook is advertising, and Yahoo was close to getting something off the ground when Yang hit the stop button. (Now you know why all those Yahoo execs have been doing spectacular somersaults out the exits.)
It's extremely unlikely that Microsoft will find a partner in this deal. Yahoo's value is specific to Microsoft. No other company can leverage Yahoo's assets and make a run at getting an advertising machine up and running to compete against Google. And Google is vulnerable. Its Adsense program, for example, lacks any customer support (machines that don't answer questions don't count) and it is the subject of countless complaints from clients–and advertisers.
So I'm sticking with my earlier prediction: Microsoft buys Yahoo in August. (Yes, August 2008, smartiepants.)