Sandeep Aggarwal at Collins Stewart argues that Google’s strong quarter increases the pressure for Microsoft (MSFT) to close the deal on Yahoo (YHOO). We agree:
The urgency to acquire Yahoo! goes up and Yahoo!’s worth for MSFT increases (multiple expansion for GOOG). We think that a big Beat March quarter by Google should increase pressure for Microsoft (MSFT, $30,00, NR) to acquire Yahoo! sooner. From MSFT’s perspective Google has been growing very fast and no other company has been able to challenge GOOG to become a compelling #2 player in online advertising. Las week’s out-performance by Google further reinforce that MSFT must act soon to acquire YHOO if they want the #2 position in global online adverstising market.
Aggarwal is also optimistic regarding Yahoo’s Q1, citing the possible reaccelaration in display and the fact that Yahoo’s closer connection with big advertisers should help it in stronger O&O. display advertising, which will offset weak search.
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