Marketplace Report: Major Web Merger Rumors

Savvy Wall Street traders are speculating Wednesday that a big Internet merger is in the works. J.P. Morgan recently issued a report saying that the most likely partnership is between Yahoo! and eBay. Noah Adams talks to Bob Moon of Marketplace.

NOAH ADAMS, host:

Back now with DAY TO DAY. Watch out for merging traffic on the information super highway. Some Wall Street analysts think there may be a couple of big deals in the works between some of the biggest names in the Internet game. Bob Moon joins us from the MARKETPLACE news bureau in New York. Bob, what deals are you hearing about there?

BOB MOON, reporting:

Well, JP Morgan issued an analyst report this week suggesting that there could be a partnership or a merger between say, EBay and Yahoo. That's figured the most strategically feasible.

ADAMS: Whoa.

MOON: There have been rumors of some other possible linkups, Microsoft's MSN Internet unit, possibly striking up a partnership with Yahoo. Google is seen as big enough to pretty much go it alone for awhile. But if you're an investor or a potential investor in some of these companies, you might want to pay close attention in the coming weeks and months, because some of these knowledgeable analysts think this idea could become more and more possible.

ADAMS: It's a highly competitive field and there haven't been that many mergers with the Internet players. Why not before and why now?

MOON: Well, up to now, it's been generally thought that the really fast growth of the Internet has worked against the idea of consolidation. But lately, Internet growth has been slowing down just a bit and the competition has been heating up. And it might make sense for one company to own different services that offer sort of one stop shopping, if you will. If you're searching for an online auction item, merging that system with a general search engine might result in some cost savings for these companies, for example - things like that.

To give you an idea of some of the downward pressure that these companies are feeling right now, you've got EBay stock down 30 percent since the first of the year. Yahoo has slipped 20 percent. Even Google is off 10 percent.

ADAMS: Yeah, you mentioned there could be some advantages for somebody like Yahoo and EBay getting together. They offer, to start with, very different services.

MOON: That's true. This JP Morgan report suggests though, that a combined company would have the leading position in auctions, in communications, in payments, graphical advertising, and in audience and geographic reach. EBay for example is one of the biggest buyers of web search terms - which is where companies like Yahoo and Google make a lot of their money. Reuters reports that EBay has a portfolio of about 15 million keywords on different search sites, and they're aimed at steering potential bidders back to EBay. So bringing these companies under one roof, might make sense as these analysts see it. Companies haven't had much to say about this. In fact, EBay says, we don't comment on rumors and speculation.

Today in the MARKETPLACE newsroom, we're looking into whether the idea of corporate franchise can lead to success for a British band.

ADAMS: Bob Moon of Public Radio's daily business show, MARKETPLACE. It's produced by American Public Media.

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