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May 26, 2006




John Doe

Ebay is also testing their auction system for ad buys.

Could be a smart foundation for adcenter

Still Inside

I wonder if these rumors are really true, or if some reporters are getting the wrong idea.

It makes sense that MSFT would come to EBAY to get closer, but a full-on merger doesn't sound necessary. MSFT could buy into EBAY with a few $billion and combine it with some kind of tight agreement for EBAY to do what they need to help MSN and/or "shit on" GOOG. It would be a win/win, and MSFT would probably see some return on the EBAY stock they buy to boot.

If they are indeed in those kinds of talks, they would also be consulting with antitrust experts to make sure such a deal is OK, so maybe that's where the story came from.



MS probably thought of buying eBay because their CEO no more believes in Developers, Developers, Developers - rather chants, Advertisers, Advertisers, Advertisers... and then he threw a chair at them ;)


The secular trend toward google dominating search in the US continues. It's becoming increasingly difficult to understand the valuation disparity between GOOG and YHOO. Henry, your insight on that point is appreciated. I understand your argument about p/e being meaningless given the volatility of expenses and taxes, but it still seems to me that YHOO is way overvalued relative to GOOG.
ps this isn't an argument that GOOG is undervalued - just undervalued relative to YHOO


Ebay does have Paypal and Google appears to be working on a parallel solution - Google Checkout (MS has InfoCard in development which has the potential to provide a global payment solution and rival Paypal too).

Getting Ebay could be more important than initially thought (there is a fit with SKYPE/MSN too).

However, MS needs to be broken up, it's a jack of all trades and master of none at the moment.


Victor, you're dead wrong about YHOO and GOOG's current evaluations. Google is over-valued and Yahoo is undervalued. Yahoo's "user base" is bigger than Google's except in search. It's possible that Google will be able to attract all those search users to their other services, but except for Gmail, there really hasn't been a move to Google's secondary offerings. And that service might be the exception to the rule, since it relied on Google's data center superiority for it's killer feature: storage space. Google's consumer offerings outside search have had limited appeal.

There is a lot of speculation built into Google's price. I think they are both great stocks, but Yahoo is the better value.

Still Inside


If paid search has taught us anything, it's that search traffic is the only traffic that matters when it comes to advertising. I don't know what the numbers are (somebody help me here), but based on my own significant sampling of the market, I'd say it's at least 5:1 in terms of dollars-per-eyeball, and search has a LOT of eyeballs.

YHOO might have a bigger base of users, but I'd bet on them based on their ability to make paid search happen, not the other stuff. (I'm somewhat bullish on YHOO doing just that, but we'll see).

I've argued repeatedly here that GOOG needs to focus on SEARCH. If Gmail did not exist, GOOG would still have the same market cap they have now. Ditto for every single one of their other consumer products that don't vector off of the homepage search box.

For both companies, the real war is in Search. The other stuff is just noise.


Neal Lachman

As I have said earlier, it is most unlikely that MSFT would completely swallow an established business.

It is more likely that MSFT would opt for a very powerful alliance, a strategic partnership or joint venture, with Ebay, Yahoo. Even Google and MSFT partnerships are maybe an option in the distant future for that matter!

MSFT has a history of teaming up... look at MSNBC, MSFT-AT&T Broadband, MSFT-Comcast, MSN's search partners hitherto, et cetera.

I think MSFT has had merger discussions (if any for real) it was their way to get some inside info from Ebay. Not that I believe that they went as far as doing some in-depth due dilligence, which would come at a later stage, but there must have been some disucssions (again, if any) about Ebay's future plans.

Maybe a bit of legit corporate espionage?


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