Wednesday, July 29, 2009

Open Letter to Yahoo! CEO Carol Bartz

Update: Techcrunch did this quick analysis of the change in Yahoo! and Microsoft stock today: Yahoo Got Binged, and how!

Hi Carol,

Thanks for the post on the Yahoo-Microsoft announcement. As a shareholder, one aspect of this merger isn't sitting well with me - future revenue growth.

Let's say, for the sake of argument, that this deal gives Bing the impetus it needs and 5 years from today, its market share stands at 40% (from <10% today). Knowing Microsoft, it is sure to re-negotiate its giving away 88% of revenue generated from clicks originating from Yahoo! properties, thereby resulting in reduced Yahoo! revenues. Another immediate impact of this merger is the doubt this casts on the future of Yahoo! Search APIs, Yahoo!'s much praised BOSS initiative, Yahoo!'s new Searchpad, et al.

Over the next few years, is the plan to focus on other ventures that will add to Yahoo!'s bottom-line? With the balance sheet in the state it is in currently, and with Search being the cash cow, unless Yahoo! strikes gold in a new venture, I don't see how revenue projections can be met. Maybe I am missing something here, as is the rest of the blogosphere, some shareholders and the developers building on top of Yahoo!'s platform.


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