Yawoo: Niche Site Courted by Portal
by d. andres jacomeThey always say to buy on the rumor and sell on the news. For the last month, we've been hearing about key internet portal Yahoo's interest in CBS MarketWatch (MKTW).Looking back at Yahoo's recent buyout trends, this deal makes a ton of sense. Remember Yahoo's purchase of Overture (OVER) last summer?--the pay-per-click- search business was booming, Yahoo's developing search model was fledgling, and rival sharks like Microsoft were circling the same bait. On July 13, 2003 Yahoo bought Overture (OVER) for 1.6 billion.
Significantly, that deal took place when Yahoo's stock had completed a HUGE run up. More than a year later--after a split this summer--Yahoo's stock is AGAIN flirting with its year high. And Just as Yahoo was relying heavily on Overture prior to the acquisition, today Yahoo's Finance division and MarketWatch are already bedfellows--the former gets a nice chunk of its news from the latter. And MarketWatch is no babe in the woods--the site gets close to 6 million hits a day.
But let's talk advertising power--that what Yahoo REALLY wants. CBSMarketWatch just revamped their site to make it more ad-friendly. And it's paid off: thier 3Q net income was 3X what they generated a year ago. Not bad during a market that has been as exciting as watching paint dry. As Bambi Francisco points out, "niche sites" like MarketWatch are turning into a hotbed of "advertising and media" services. Internet surfers are pickier today then they ever were. As she says, "It is not a one size fit all world. Better get niche." Niche sites will ultimately aggregate that heavily splintered readership.
The internet is an enormous jigsaw puzzle that the conglomerates cannot wait to piece together. It is not whether or not MKTW will go; its just a question of when. Watch that.
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