Why is Yahoo! generally considered to be a poor acquirer of companies?

08 June of 2013 by

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Why is Yahoo! generally considered to be a poor acquirer of companies?

  • Geocities - Yahoo paid $4 billion - During the tech bubble Yahoo splurged for Geocities. It didn't do much with the site, and ultimately killed it ten years later.
  • Broadcast.com - Yahoo paid $5.7 billion  - Yahoo promised to “integrate the company's audio and video programming, business services and advertising programs into Yahoo,” then Yahoo president Jeff Mallett told CNET at the time. Looks like that plan fell through, as Broadcast.com is no more. But it certainly made its founders rich, including Dallas Mavericks owner Mark Cuban.
  • Overture - In 2003, Yahoo acquired search engine company Overture for $1.63 billion in a bid to fight off Google’s encroaching search engine business. Obviously, the effort wasn’t a huge success.
  • Kelkoo - Yahoo acquired Paris-based price comparison website Kelkoo for $579 million in 2004. As Kelkoo started losing momentum, Yahoo sold the company to private equity firm Jamplant for $126 million
  • HotJobs - Yahoo acquired HotJobs for $439 million in 2002. HotJobs performed relatively well, until its market share began to do deteriorate with the onslaught of more competitive startups. And in 2010, Yahoo sold HotJobs to Monster for $225 million.
  • Zimbra - Collaborative software maker Zimbra was purchased for $350 million by Yahoo in 2007. Cloud and virtualization software company VMware ended up buying Zimbra from Yahoo soon after in 2010 for an undisclosed amount.
  • Flickr - was acquired by Yahoo in March ‘05 for $35M. The Flickr announcement of the deal said, “We’ll be working with a bunch of people that Totally Get Flickr and want to preserve the community and the flavor of what is here. We’re going to grow and change, but we’re in it for the long haul, with the same management and same team.” But in 2008, co-founders Caterina Fake and Stewart Butterfield both left the company. In 2009, many engineers from the service were laid off or left on their own.
  • Delicious - was acquired by Yahoo in December ‘05 for $15-20M. Yahoo promised “to give Delicious the resources, support, and room it needs to continue growing the service and community.” But then the app seemed to go stagnant. Traffic dropped. Schachter claims he was stripped of responsibilities and employees within a year after acquisition. Schacter left Yahoo when his contract was up, in June of 2008. “I was largely sidelined by the decisions of my management,” he said after leaving. “It was an incredibly frustrating experience.”

Top failed attempts of acquisition

  • Google - According to reports, Yahoo had the opportunity to purchase Google for $5bn in 2002. Although that price was high for Yahoo in relation to its own value at the time, it would prove to be the last chance Yahoo would have to acquire Google. It didn't, and the rest is history
  • Facebook - As the story goes, Yahoo was nearly able to acquire the popular social network in 2006 for $1bn but due to a faltering stock price, Yahoo lowered its offer to $850m, allowing Facebook CEO Mark Zuckerberg to walk away from the deal.
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