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How Yahoo can keep MS at bay?

Now that the threat posed by MS takeover bid appears to be receding, Yahoo can shift its focus on bettering …

Now that the threat posed by MS takeover bid appears to be receding, Yahoo can shift its focus on bettering its prospects. Although the rumor mills are still agog with talks of proxy wars amongst the hedge fund companies prying to own Yahoo, industry veterans believe, Yahoo must depart from its current cumbersome online media strategies, if it has to survive any hostile takeover attempts in the future. Alan Meckler, CEO Jupiter Media, a leading online media company headquartered in Darien, CT, believes Microsoft might return back to pursue Yahoo again and if Yahoo has to resist the advances it needs to change its growth strategy.

Writing for his blog, Internet Media Commentary, Alan Meckler says that Yahoo must go on an acquisition spree to sustain the cutthroat web competition from its archrival Google. According to him, if Yahoo diversifies its web presence, it can make a better business decision. He says that since Yahoo cannot be the biggest and the best search company, it can aim to be the biggest and the best online media company. Meckler says the fact that Yahoo is working with Google to farm out its search shows the world that Yahoo knows it has lost the search wars. “If Yahoo is remaining independent, it needs to change its growth strategy.  18 months ago I suggested that Yahoo should purchase Dow Jones.  Yahoo needs to be the biggest and best media company, as it can never be the biggest and best search company now,” says Meckler in his blog commentary.

Meckler feels Yahoo must make a bigger purchase and not just a smaller acquisition. Once it makes the big purchase it might very well be the best defense against Microsoft returning to the hunt, he says. “I have two acquisitions to suggest,” he says adding that Yahoo should purchase Cnet and follow that up with buying up all or most of IAC.  “The cost would be many billions. But Yahoo would then offer an astounding array of Internet content, services and ecommerce offerings,” he adds.

Combined with Yahoo’s enormous traffic, Meckler feels, this combo would clearly be a winner. “This combo would keep Microsoft away forever and more importantly these acquisitions would make Yahoo the most interesting Internet company in the world,” reiterates Meckler.

Interestingly, industry veterans such as Alan Meckler, have often said that if Yahoo intends to survive the annexation, it must seek alliances from other media groups or acquire some of the big media companies such as Time Warner’s AOL. A report from the Silicon Alley Insider, a New York based digital business community site, discussed how Yahoo could reinvigorate its lost morale by acquiring Time Warner’s AOL. “The combination of AOL and Yahoo makes the most sense. The combination would bolster Yahoo’s domestic market position, especially in ad networks and display advertising. Yahoo and AOL have almost exactly the same strategy with regard to owned-and-operated properties and third-party ad networks,” says the Silicon Alley Insider report.

Yet another suggestion was a Yahoo deal with News Corporation’s MySpace, which according to Silicon Alley Insider will make Yahoo’s web presence stronger. “Yahoo would emerge larger and better capitalized, with a strong position in social networking–an area in which it is currently weak. It would remain a stand-alone public company, which we think is a big advantage versus the Microsoft deal,” says Henry Blodget in his analysis with the Silicon Alley Insider.

All the discussions apart, Meckler feels Yahoo needs to zealously pursue the suggested acquisitions. “I am not sure that Yahoo has the right management to pull this off.  Regardless, this plan should be considered,” he says.

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