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News Corp., Yahoo, Google: Minting Web Money

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July 4, 2007

Posted by neillevine

About This Editor: I am a writer. Have been writing for other sites, but expect to do most of my future work HERE! My expertise extends from the esoteric such as burning hydrogen to the unpredictability of the stock market and my writing makes me a jack of all trades and exasperated master of none. I have had some influence over national wildfire and water policy and there are hints of a change in energy policy, BUT as Samuel Goldwyn once said, "A verbal promise is not worth the paper it is written on."

         

Based on recent news reports, I believe it is safe to assume that News Corporation, NWS, is going to be successful in its effort to buy Dow Jones, DJ, and its subsidiaries, which include The Wall Street Journal. Since the goal is to provide content for a new business news cable channel, even though there is competition from MSNBC, Bloomberg, CNN and the like, it should nevertheless still mean increased revenue and profits for News Corporation, presumably translating into an increase in News Corporation’s stock price. Probably not in the league of the capital gains posted by a good internet company, but still a nice uptick.Intriguingly, recently there was a story that appeared in a British News Corporation paper explaining how rewarding it would be for Yahoo, YHOO, to take MySpace off of News Corporation’s hands at a nifty price. Yahoo would gain significant traffic from such a deal, eventually meaning increased advertising revenue, greater profits and a higher stock price (naturally). In numerical terms, it means Yahoo has five hundred million visitors a month and MySpace plus its affiliated video site attract one hundred fifty million eyeballs monthly, or a thirty per cent boost in traffic for Yahoo once this hypothetical merger would be completed and advertising added, plus potential growth from other enhancements and improvements to the sites that could be made down the line along with any other web destinations that are added to the mix.

By way of comparison, Google, GOOG, had revenue of twelve billion dollars in the past fiscal year, underlining how much more successful Google has been with its popular AdSense program and with its search share growing while Yahoo’s share slips. Comparing Google’s recent stock market capitalization of one hundred sixty billion dollars versus Yahoo’s thirty seven point two billion also shows how badly Yahoo has been lagging.