Rumor Mill: Amazon-Netflix, Yahoo!-Facebook
Rumors of a potential acquisition by Amazon today sent shares of Netflix up over 5.5%. Amazon closed down nearly 2%. The price of the rumored acquisition is anywhere from $1.5 to $2.1 billion.
Because Netflix's stock has been stuck in a slide recently -- down almost 18% this year -- some analysts think it is the perfect time for the company to be snapped up. But others are less sure, citing a potential Internet tax issue that could pose a problem to an acquisition.
Larry Dignan of ZDNet explains:
"Currently, if an e-commerce company has a location in a state it has to charge a sales tax. For Amazon that means it has to calculate a sales tax for a handful of states. Netflix is located in many more states due to its 43 distribution centers.
Those distribution centers would mean that Amazon would have to charge sales taxes in nearly all states. That fact could crimp demand and potentially increase costs due to information system tweaks."
And via the Organ Grinder blog at the Guardian, Yahoo! is allegedly heating up talks to buy Facebook again. Facebook was rumored to have turned down a Yahoo! offer of up to $1.6 billion last year, and Yahoo! has recently been said to have had their eye on bebo as a means to sate their lust for a social network.
The Organ Grinder doesn't mention any numbers, except for an off-the-cuff remark about Mark Zuckerberg holding out for $2 billion (here's betting he'll hold out for more now). If the rumors pan out, and Yahoo! is indeed in the hunt for Facebook, it would likely be the biggest acquisition in company history and probably the most important. Yahoo!-Facebook would be a pairing of two of the top 10 stickiest properties on the web, and would give Yahoo! a way to tie all of its services together -- something the company has been searching for a way to do for years.
Of course, at this point, this is all just rumor and speculation.
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How short memories are. Yahoo has put up much bigger numbers before including 3.5B for geocities and more than 5B for broadcast.com
I think facebook would be a great purchase.
Posted by: Narendra | June 6, 2007 4:30 PM
Ah, I stand corrected. I forgot about the ridiculous size of those.
In my very flimsy defense, I was just starting high school in 1999, so this might be more of a case of never having those memories than memories fading. ;)
That said, I think as a percentage of market cap the deals might be similar (don't quote me on that). So it's probably all in how you spin it. :)
Posted by: Josh Catone | June 6, 2007 5:11 PM
I think Google should buy them. It would be a superb fit, probably on a cultural level too. This Orkut thing is a disaster.
Posted by: Jean-Michel Decombe | June 6, 2007 5:22 PM
I heard that Google are definitely considering Facebook. There's no way Yahoo will be the only bid, that's for sure.
However I get the feeling that Facebook won't sell. If they go it alone, they could be as big as Google and Yahoo within 10 years. They may float, but do they need much more cash to expand?
Yahoo's acquisition track record recently is to buy somebody, let it sit and stagnate for a while with no funding and no new development, then force all the users to log in using a Yahoo ID.
Whereas Google either totally integrate it pretty damned quick (eg Writley becomes Google Docs) or they pump the cash in and actually help the brand (eg YouTube).
I know who I'd rather flip to.
Posted by: Paul Lomax | June 7, 2007 1:48 AM
FB's strategy seems to be more aligned with Yahoo!'s: build an infrastructure, integrate an API and become the platform. Google is more about being the biggest blackhole of user data.
Thinking more about APIs, FB would be a much better fit with eBay. Social shopping would be huge!
Pierre
Posted by: Pierre Far | June 7, 2007 2:09 AM
But the social network has got to be very important to Google since they want to "make the world's information universally accessible". There are many things found outside of keyword searches, for instance through peer recommendation. Take MySpace, for instance, which is used by countless people to discover new bands. You can't do that with a keyword search like "new bands". Google has yet to build a sense of community across their properties. There is Google the tool, but there is no Google the community. Either Google can go it alone, or they can go with Facebook, which is beautifully designed and extremely popular already. Of course, Facebook will probably want to keep growing alone unless the price is really right.
Posted by: Jean-Michel Decombe | June 7, 2007 9:22 AM
mmmmm I don't mind what happens to FB, but i am starting to get fed up with seeing google every were i look news, newspapers, tv, games absolutely every were i dont have a problem with them it just would be nice to see some other company getting involved and having different views on things.
Posted by: Resonate | June 10, 2007 3:46 AM