Microsoft is suddenly interested in backing a potential Yahoo buyout deal, and it may be for the same reason it invested in Uber recently, according to Global Equities Research analyst Trip Chowdhry.
Speaking on CNBC’s “The Rundown,” Chowdhry said the only reason Microsoft may be interested in a Yahoo deal is to maintain its existing partnership with the internet company and “gain influence” the way it did by partnering with Uber.
“If you look through the noise, I think the basic thing Microsoft wants to do is gain some influence, just like it did with Uber…so that Microsoft can continue to provide its Bing search to Yahoo properties,” Chowdhry said.
Last week, Re/code reported Microsoft is willing to provide financial help to potential bidders interested in buying Yahoo’s core business. The goal is to keep its existing search-partnership deal with Yahoo, in case Yahoo’s search business gets sold to a third party, the report said. Yahoo struck a deal with Microsoft in 2009 that pays Yahoo part of the revenue Microsoft generates from selling ads against Yahoo users.
In July, Microsoft invested in Uber’s monster “close to $1 billion” round that values the ride-hailing company at $50 billion. It wasn’t entirely clear why Microsoft would invest in Uber, but some speculated it was aimed at collecting user data and turning Uber into a customer of Azure, Microsoft’s cloud computing platform.
Chowdhry was particularly critical of Yahoo’s core business, which has been struggling with stagnant revenue growth, and said it’s hard to see someone like Microsoft paying for even part of it unless there were other benefits.
“I don’t think Yahoo by itself is a strong company. It’s a declining asset company,” Chowdhry said. “I don’t think anyone would be interested in buying Yahoo because it’s yesterday’s story.”
The idea makes sense given Microsoft’s renewed openness towards partnerships under CEO Satya Nadella’s leadership. In fact, Nadella’s first big hire was Peggy Johnson, its executive VP of business development, who’s been signing partnership deals with competitors like Salesforce, SAP, and Red Hat.
“We are now focusing on the collaborative side of these engagements,” Johnson said in a previous interview with Business Insider.