The Times Are Indeed Changin'

I put some lyrics from the epic Bob Dylan song about change at the end of my post on who ends a web service this morning. But they are apropos to the news from the big Internet companies over the past 12 hours. Wow.

Google misses the quarter on soft revenues and blames it on the one area they don’t have a dominant franchise – social networking.

Now Google’s two biggest competitors look to be teaming up.

This could mean a big drop at the opening for Google. Investors like to dump first then analyze then decide what to do about it.

I think Google is so well positioned that I’d look to buy some more today. I may well do that myself.

A combined Microsoft/Yahoo will have 30% market share in search and maybe they can do something with that. Clearly there are big synergies in merging Yahoo! and Microsoft’s online businesses. The merged entity will be dominant in email which is an important category that isn’t going away.

Lot’s to think about. I love this business. Just when you think you’ve got it figured out, everything changes.

#stocks#VC & Technology

Comments (Archived):

  1. stevenloi

    Any way you see this NOT happening?Well played by Microsoft. Well played. Coming in for Yahoo!’s heart…

  2. stone

    This is a big deal but let’s not forget that Yahoo has been in trouble for some very good reasons: 1) Their search engine hasn’t inspired users. 2) Their product vision has been muddled. 3) They missed their chance to buy Facebook when the price was right — they have a VERY arrogant M&A team, especially when Toby was there. Panama came two years to late. We all know that using yield optimzation to rotate ads is a good idea. 4) They are losing all their key people because morale is at an all-time low, and 5) Their US traffic is flat YOY — hard to fix this.

    1. stevenloi

      #1 – They will never be as good as Google at search, #2 – Very true. How many of their “startup” projects that they had to get into TC’s deadpool? #3 – Don’t think this is a right why they are in trouble. Although they probably missed out on opportunity. Both in business and in keeping employee morale up (a piece of the hottest property in SV) #4 – Spot on, #5 – That’s not a problem. They have all the users and traffic they need. They just can’t figure out how to best utilize those eyeballs.

  3. stone

    I didn’t mean to imply that Facebook (in and of itself) a big loss, but a symptom of a very arrogant M&A team — losing Facebook was a byproduct of the arrogance.

  4. Jeff

    “This could mean a big drop at the opening for Google. Investors like to dump first then analyze then decide what to do about it.”I think 11bn before the bell is a big drop.

  5. Carl Rahn Griffith

    i now fully understand why bill g has such a knowing smile and glint in his eye on wednesday when the competitive subject of google came up …

  6. Emil Sotirov

    One thing doesn’t seem to be changing though… the total joke of a “market” for executives in this country. The executive nomenclature (apparatchiks) continues the distributing of wealth between themselves – “…Semel’s total compensation over the last 5 years – $550 million.” – and nobody seems to care. It is still politically incorrect to talk about this – you risk being called a socialist – especially by “naive capitalists” who probably still believe that we have a functioning market for health care.What kind of a market would pay Semel this kind of money for this kind of mediocrity!

  7. Steven Kane

    Aside from being one awesome spectator sport, this is all good for everybodyMS-Yahoo (sounds like a starship name) will finally (hopefully) create a serious GOOG competitor, which will stimulate everyone to reach and stretch and fight and innovate. Anyway GOOG needs a kick in the pants. Complacency and smugness have dulled those bloody geniuses. And Yahoo needs fanatical but methodical market driven red-faced leadership, a la Ballmer.Btw, IMHO anywhere below $600 GOOG is a big buying opportunity. Ferchrysake’s, at 500 GOOG’s P/E is about 1/2 of that of Altria, 1/4 of UPS and only 2X Oracle and Microsoft. Buy buy buy and hold hold hold. Your grandchildren will be so grateful.

    1. fredwilson

      totally agree steve

      1. Steven Kane

        and now, the most urgent issues. post-closing new names!microhoo? yahoosoft? MSY-Office? MSYNBC?and… will the XBox become… the YBOX?

        1. fredwilson

          I hear they are thinking of calling it gamesville!

  8. bobngu

    This union (if it happens), previously unholy but business makes strange bedfellows, should give Google a run for its money. Based on the recent beating that Google stock has taken in addition to their post-earnings surprise admission to social networking inventory not monetizing as well as expected, I believe Google is starting to enter the plateau phase like all new hot companies at some point in time. This is when Wall Street falls out of love for a previously hot and seemingly invincible company and valuation / market cap will normalize.

  9. stone

    I don’t think this does anything to Google and for MSN around Search. Both Yahoo and MSN have been losing share for years now. Neither companies have been able to insire users. Where does this help? With display advertising. With Google getting very close to owning Doubleclick/DoubleClick Exchange, Microsoft will now have lots of traffic — real scale for advertisers. This keeps them in the game long enough so they can figure out how to get human beings to use their web products.

  10. Don Jones

    I bet MSFT will buy Facebook next. “MicroHooFace” is a great name for a company!