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Analysts: Microsoft Likely Eyeing Yahoo Search Assets
Although Microsoft provided no details Sunday about what deal it might cut with Yahoo, it seems highly likely that search advertising would be a major piece.
Search advertising continues to be the largest segment of online advertising and is the fuel that has propelled Google's revenue and profits to levels that have made Microsoft green with envy. "There's got to be some search component to the deal," said industry analyst Greg Sterling of Sterling Market Intelligence.
What shape the tie-up might take is anyone's guess. It could be some sort of joint venture in which the companies pool assets and create a larger ad network, Sterling said. Or it could be an agreement for Yahoo to outsource part of its search advertising business to Microsoft, along the lines of what Yahoo has reportedly been negotiating for weeks with Google, he said.
What's clear is that since Microsoft withdrew its offer to buy Yahoo for $33 per share on May 3, Yahoo's management and board have been bombarded with complaints from shareholders.
Last week, billionaire investor Carl Icahn turned up the heat even more when he put forth a slate of 10 candidates and announced his intention to launch a proxy fight to oust Yahoo's board at the company's shareholders meeting in July, and strike an acquisition deal with Microsoft.
"Yahoo is under pressure to show shareholders some deal, probably with Google but maybe not just with Google, to give them some assurance of value on the immediate term," he said.
Of course, it's not great news for Yahoo shareholders that Microsoft is now only interested in doing a limited, narrow deal with Yahoo, said Brian Bolan, research director at Jackson Securities.
To Bolan, it seems evident that Microsoft has rethought its plan to buy all of Yahoo. "The clear indication of this is that Microsoft has looked through this soup-to-nuts and it has realized there's only a couple of parts of Yahoo that they really want. They don't want to duplicate services and features much in the way Yahoo has done over the years within its own properties," Bolan said.
One thing Microsoft does want and need is better search technology and better search monetization, so it's likely that Microsoft is eyeing Yahoo's assets in this specific area. But whatever form the deal takes, it will not be worth anywhere near what Microsoft had been ready to pay to acquire Yahoo, he said.
Consequently, Bolan expects Yahoo's stock to take a significant hit on Monday, as disappointed investors react to Microsoft's statement that it's not currently interested in a full-blown acquisition. "That's going to take a lot of the M&A [merger and acquisition] premium out of the stock," Bolan said.
"The stock has been running up on the idea of a bunch of people buying shares to try to force this [Microsoft acquisition] deal, to try to make this happen," he added.
A limited deal with Microsoft means that Icahn will likely push ahead with his proxy fight, so that with control of the board, he can carve out an acquisition deal, which at that point will likely be for somewhere at or a bit above the mid-$20 per share range, Bolan said.
And if no acquisition deal materializes for Yahoo, its stock will likely fall apart, said Bolan, who currently has a "sell" recommendation and a $17 price target on the stock.
Microsoft announced its $44.6 billion cash-and-stock bid for Yahoo on Feb. 1, but abandoned its three-month courtship on May 3, saying that Yahoo had rejected a revised offer for $33 per share, an increase of about $5 billion. Yahoo formally rejected Microsoft's original offer on Feb. 11, saying it undervalued the company.
Yahoo's stock closed at $19.18 per share on the day before the initial Microsoft offer, which boosted it to almost $30. However, on Monday, May 5, the first day of trading after Microsoft's offer withdrawal, Yahoo's stock closed down 15 percent at $24.37, after dropping as low as $22.97 during the day.
Not surprisingly, various large Yahoo shareholders have expressed their displeasure with Yahoo's board and management for, in their view, not negotiating in good faith with Microsoft and causing the talks to collapse.
Yahoo co-founder and CEO Jerry Yang and other top Yahoo executives have since then tried to shift the blame to Microsoft, alleging that the $33-per-share offer was never put in writing and that Microsoft unexpectedly walked away at a time when Yahoo was still open to negotiating.
At the same time, Yang has failed to seal a deal in which Yahoo would outsource part of its search advertising business to Google, a move that could give Yahoo a significant revenue boost. Those negotiations with Google were cited by Microsoft CEO Steve Ballmer as a major reason to withdraw the offer because, in Ballmer's view, outsourcing search ads to Google would weaken Yahoo's competitive position in online advertising.
After Microsoft withdrew its offer, its top officials have repeatedly said that the company is no longer interested in acquiring Yahoo, arguing that Microsoft can strengthen its Internet business via internal efforts. On Sunday, Microsoft reiterated that it "is not proposing to make a new bid to acquire all of Yahoo at this time." However, Microsoft did add that it "reserves the right to reconsider that alternative."
--------------------------------------------------------------Facebook CEO Wants to Talk With Google on Friend Connect
Facebook CEO Mark Zuckerberg wants to sit down with Google and work out the privacy issues that caused Facebook to block Google's Friend Connect last week, he said Monday.
"We want to talk to Google about this and see if there's a way we can make it work," said Zuckerberg at a news conference in Tokyo. He was in the Japanese capital to launch the a local-language version of the social networking site.
Google Friend Connect allows Web site operators to add social networking functions to their Web sites. Users visiting the sites will be able to interact with new people or existing friends from social networking sites like Facebook, Orkut and Plaxo. It's the possibility of data redistribution to third-party sites by Google that caused Facebook to block access, it said last week.
"Part of the issue with Google's Friend Connect is that when users grant access to Google's product, Google might share their information with another application, or some part of it, maybe not all of it, without that user knowing. And part of what makes our system work is that people know exactly who they are sharing all their information with," he said.
Zuckerberg contradicted Google Engineering Director David Glazer, who said last week in a phone interview with IDG News Service that Google had spoken to Facebook about the service prior to its launch.
"They launched that without asking us or talking to us about it first so we had no choice but to follow the rules that we had set forth for any developer on top of our platform and we followed them," said Zuckerberg. "But Google's a big player in the space and they make good things and our goal is to work with them to figure this out."
Zuckerberg also noted that Facebook has had a similar service, Facebook Connect, available since late 2006.
"We think it's good that other people are picking up on this trend now," he said.
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HyLighter Helps Groups Collaborate on Documents
Collaborating with other members of your team to create and modify documents is a common business need. But what's the best way to handle this task? A new online document collaboration service called HyLighter lets you use color coding to highlight annotations, which the service tracks separately from the original document.
Products designed to address the needs of people who collaborate on documents have been around for awhile. One familiar example is Microsoft Word's Track Changes capability; introduced several years ago, this feature lets users mark up a Word document with comments and suggested changes that other collaborators can accept or reject.
Many well-known Web services provide highly flexible document collaboration options, including access to shared documents. Microsoft Office Live and WebEx WebOffice, for example, let you upload documents to a private online site for sharing, reviewing, and modifying. Basecamp provides an online Writeboard for document collaboration, as well as simple project management services.
HyLighter, currently in beta testing, specializes exclusively in document collaboration. It delivers benefits unavailable in more-generic online sharing services--most notably an intuitive color-coding scheme that highlights areas of concern to the business team.
HyLighter tracks comments and suggested changes separately so they don't obscure the original document. In fact, you can't change the document itself within HyLighter, which might make it unsuitable for some users. But in situations where tracking collaborators' concerns is important, it can be quite handy. HyLighter is a work in progress, so I wouldn't recommend relying on it exclusively when you're working with important documents; be prepared to use something else if you run into diificulties with it. For example, the service says that it supports documents in Word, PDF, and HTML formats, but some PDFs that I uploaded to the service did not render completely faithfully. (HyLighter acknowledges that some multicolumn PDFs with embedded graphics, such as the one in the screen shot shown above left, may not display properly.)
On the other hand, Word documents displayed flawlessly. HyLighter says that it plans to support annotation on graphics, audio, and video files eventually.
How HyLighter Works
HyLighter recognizes two types of users: the originator of the document, and the invitee--the person whom the originator asks to participate in the collaboration. Short animated tutorials on HyLighter's site explain both user roles in greater detail.
The originator starts the process by signing up for the service and uploading a document. I ran into a minor problem the first time I tried to sign up: I didn't receive an acknowledgement via e-mail. But on a second attempt the following day, I was successful.
Once logged in, you'll see a spare interface. Across the top are menu options for accessing documents you originate and documents you have been invited to collaborate on. A right-side pane contains links for changing your profile and for importing documents that you want to work on in HyLighter.
Importing documents is straightforward. You provide a document title, locate the file on your PC, assign it a copyright status (secure, pending, or not applicable) selected from a drop-down menu, enter a description if you wish, and list the e-mail addresses of the people you want to invite as collaborators.
Each invitee receives an e-mail message requesting input on the document. Before working on a document, the invitee must set up a HyLighter account.
Comments, Not Changes
After uploading a document from your PC to the online service (which takes a few seconds), you can start annotating it.
HyLighter's color bars resemble real-world highlights applied with colored marker pens: They don't obscure the text. Yellow bars highlight passages where you've made a comment, blue ones indicate comments from others, and green ones signal areas of common concern. Darker shades of blue or green appear when collaborators show especially strong interest in a segment--for example, when several participants leave comments about the same text.
Comments appear in a pane to the right of the document. Each comment appears under its author's name, and clicking a small box-shaped icon to the right of the author's name turns the relevant highlighting red. Other small icons let you replace, add to, or remove comments.
When you add or replace comments, a simple text-editing box appears, offering some common formatting options such as for boldface and italics. You can insert links to Web sites or data on an external server--videos from YouTube, for example--but you can't upload the external data into HyLighter itself.
Buttons located above the comments column make additional document-wide functions available. One lets you create a G-note--a general comment that isn't linked to any particular area of the document. A Compare button lets you designate whose comments you view--your own, say, or only those of colleagues.
Once the collaboration is complete, you can press an Export button to export the document and comments into an HTML file, seemingly limiting the service's usefulness. (HyLighter plans to include support for export to RTF, PDF, and possibly Word formats in the future.)
In the mean time, HyLighter's help file suggests a workaround that uses the Easy View button: Click it to generate a narrower window in which the highlighted document appears in the upper pane and the comments in the lower pane. Unless you have a very small display, you'll have enough room to open your document creation app (Word, for example) in a second narrow window alongside the Easy View window; then you can make the changes manually. Obviously, this isn't an efficient way to work.
Is HyLighter Worth It?
I like the way that HyLighter separates the comments from the document. Most Web-based collaboration tools modify the document itself, and as a result, when many users are involved, the intention and tone of the original text can get lost.
If only one or two people are reviewing your document, however, the danger of drowning in comments may be very small. Meanwhile, the extra work of transferring comments and changes to the original document may loom as a major drawback.
HyLighter is free to use during its beta period, and the service shows real promise. If you need to collaborate on documents, I recommend that you try it out to see whether it suits your style.
Once the final version of HyLighter appears, it will be available as an application that users can install on their server, as well as being a hosted service. Pricing has not been set.
Richard Morochove is an IT consultant and writer. Send him questions about using technology in your connected small to mid-sized business via e-mail . PC World may edit your query and cannot guarantee that all questions will be answered.