Is eBay flirting with a Yahoo! hook-up?
Speculation is rife on Wall Street that a big internet deal or alliance is in the works, with eBay, Google, Microsoft or Yahoo! as possible partner - and a Yahoo!-eBay partnership seen as most likely.
A report authored by analyst Imran Khan and the JPMorgan Chase internet team said on Monday: "A partnership or merger between eBay and Yahoo! is the most strategically feasible.
"A combined company would have the leading position in auctions, communications, payments, graphical advertising, audience reach and geographic breadth."
Silicon Valley insiders, high-tech bankers and financial analysts are giving new credence to potential merger deals, which fly in the face of common wisdom that the internet's rapid growth has always outweighed the logic of consolidation.
But internet growth is slowing, and competition among the biggest companies - Google, Yahoo!, eBay and Microsoft - is intensifying.
eBay stock is down 30 per cent on the year. Yahoo is off 20 per cent and Google down 10 per cent.
Google, which nearly doubled its revenues last year, is expected to grow 62 per cent this year. eBay is seen growing 30 per cent, down from 50 per cent two years ago, and Yahoo!'s growth is slowing at a similar pace.
An eBay spokesman said the company works very closely with all the major web search providers - Google, Yahoo! and Microsoft - but he declined to comment on any potential Yahoo! tie-up.
eBay is one of the world's biggest buyers of web search terms. It manages a portfolio of 15 million keywords on different search sites aimed at wooing bidders.
The spokesman added: "We don't comment on rumours and speculation. We are talking to Yahoo! and other companies all the time as part of our normal course of business."
Yahoo! was not immediately available to comment.
The 56-page JPMorgan report weighs other scenarios, including the possibility that Microsoft's MSN internet unit would strike a partnership with Yahoo!. Google is viewed as likely to sit out big mergers and continue to go it alone, Imran argues, a view that many Wall Street analysts share.
Investors worry that gains by these companies are likely to come at the expense of one another, rather than through internet expansion, driving shares down this year.
Microsoft shares are off 12 per cent so far in 2006, hit by product delays as well as a recent move by the company to step up investment to better compete with Google and Yahoo!.
http://networks.silicon.com/webwatch/0,39024667,39159121,00.htm