After rising to world domination, Indian-owned steel giant ArcelorMittal and mining company Vedanta Resources are being accused of paying scant attention to the environment and the rights of tribals in their areas of operation.
ArcelorMittal, the world's largest steel company that is owned by Indian billionaire Lakshmi Niwas Mittal, is bracing itself for protests by environmental campaigners at its annual meeting to be held in Luxembourg Tuesday.
And Vedanta Resources, the mining giant owned by another London-based Indian billionaire Anil Aggarwal, is being targeted by Survival International, a global group fighting for the rights of tribals that claims the company's activities are threatening the survival of a tribe in a remote corner of Orissa.
Both companies vehemently deny the allegations.
Campaigners from Bankwatch, which monitors the activities of international financial institutions (IFI), are gathering in Luxembourg saying ArcelorMittal has used money from publicly funded institutions such as the European Bank of Reconstruction and Development to boost its profits rather than address the environmental and social impact of its plants.
They are carrying a 40-page dossier claiming ArcelorMittal, which has received more than $500 million in loans from IFIs in the past 10 years, has not invested sufficiently in clean technologies at the state-owned plants it has bought across the world.
One member of the group alleges that pollution from the ArcelorMittal plant in Ostrava, the third largest city in the Czech Republic, is so high that people in the district of Radvanice a Bartovice have to use magnets to clear steel dust from inside their homes.
A spokeswoman for Mittal, however, said the steel giant takes environmental issues very seriously.
“During 2007, we spent approximately $500 million on health and safety and environment-related projects and since 1990 we have successfully reduced the carbon footprint of our steelmaking by over 20 percent,” she said.
She also said the company is drawing up plans to reduce emissions from the Ostrava plant.
Meanwhile, Survival International has launched a global campaign saying plans by Vedanta subsidiary Sterlite to mine bauxite from the Niyamgiri mountains of Orissa would destroy the Dongria Kondh tribe if carried out.
Survival is urging shareholders, including major British companies Coutts Bank, Standard Life, Barclays Bank, Abbey National and HSBC, as well as local authority councils in Middlesbrough and Wolverhampton to sell their stakes in Vedanta unless it abandons its plans.
Survival says Sterlite plans include building a huge open-cast mine which it says would destroy the local forests, part of the mountain and the Dongria Kondh tribals, whose 8,000 members live on the slopes of the Niyamgiri.
A spokesman for Vedanta said: "As one of the largest metals and mining groups in India and with mines in Australia and Zambia, Vedanta is committed to managing its business in a socially responsible manner.
"The management of environmental, employee, health and safety and community issues in respect of our operations is central to the success of our business. Therefore, we vigorously refute these allegations from Survival."
Sunday, May 11, 2008
Wednesday, May 7, 2008
Cincom Socrates Software Helps Complex Manufacturers Create Effective Sales Configuration
Worldwide software provider, Cincom Systems (http://www.cincom.com), announces that its Cincom Socrates® version 8.3 (http://www.cincom.com/sap3) has added deeper integration with SAP® solutions for companies that provide complex products and services. Cincom Socrates is a knowledge-based modeling system that supports SAP solutions and extends business value by providing guided-selling, product-configuration, and proposal-management capabilities for configure-to-order and engineer-to-order manufacturers.
The sales process in configure-to-order and engineer-to-order businesses requires information collaboration over and above standard sales cycles. In order to win deals and drive revenue, today's information worker must have real-time access to structured and unstructured data at all points of the guided-selling and proposal-management process. Cincom Socrates also works the other way. Text and custom fields from Socrates can easily be inserted into a quote generated within an SAP solution.
"Cincom's additional business connectors (APIs) have been designed to address some very specific needs for complex manufacturers," said Ken Noll, SAP Practice Manager for Cincom. "Complex sales proposals often evolve as knowledge is gained in the sales process. By maintaining a connection to the company's investment in SAP solutions, Cincom helps companies guarantee they are building customer solutions based on proven company capabilities."
Manufacturers with engineer-to-order or configure-to-order products have successfully streamlined sales, design, and proposal processes by using Cincom to deliver critical product and sales knowledge to the point of sale and reduce "quote-to-cash" time significantly. Cincom has helped manufacturers reduce proposal generation time from five days to 15 minutes, decrease time to close a sale by 80 percent, and cut lead times from 14 weeks to six weeks.
Today's announcement was made at the SAPPHIRE® 2008 Orlando conference. For more information about Cincom's products and solutions for complex manufacturers, visit www.cincom.com/manufacturing.
About Cincom
Cincom delivers and supports innovative software and services to simplify complex business processes. For nearly 40 years, Cincom has empowered thousands of clients worldwide to outperform the competition by providing ways to increase revenue, control cost, minimize risk, and achieve rapid ROI.
The sales process in configure-to-order and engineer-to-order businesses requires information collaboration over and above standard sales cycles. In order to win deals and drive revenue, today's information worker must have real-time access to structured and unstructured data at all points of the guided-selling and proposal-management process. Cincom Socrates also works the other way. Text and custom fields from Socrates can easily be inserted into a quote generated within an SAP solution.
"Cincom's additional business connectors (APIs) have been designed to address some very specific needs for complex manufacturers," said Ken Noll, SAP Practice Manager for Cincom. "Complex sales proposals often evolve as knowledge is gained in the sales process. By maintaining a connection to the company's investment in SAP solutions, Cincom helps companies guarantee they are building customer solutions based on proven company capabilities."
Manufacturers with engineer-to-order or configure-to-order products have successfully streamlined sales, design, and proposal processes by using Cincom to deliver critical product and sales knowledge to the point of sale and reduce "quote-to-cash" time significantly. Cincom has helped manufacturers reduce proposal generation time from five days to 15 minutes, decrease time to close a sale by 80 percent, and cut lead times from 14 weeks to six weeks.
Today's announcement was made at the SAPPHIRE® 2008 Orlando conference. For more information about Cincom's products and solutions for complex manufacturers, visit www.cincom.com/manufacturing.
About Cincom
Cincom delivers and supports innovative software and services to simplify complex business processes. For nearly 40 years, Cincom has empowered thousands of clients worldwide to outperform the competition by providing ways to increase revenue, control cost, minimize risk, and achieve rapid ROI.
Tuesday, May 6, 2008
Fidelity Fund Management Enters Into a Distribution Tie Up with Federal Bank
Fidelity Fund Management has entered into an agreement with Federal Bank, one of India's premier private sector banks, for the distribution of its products. Mr. M. Venugopalan, Chairman, Federal Bank, and Ms. Ashu Suyash, Managing Director and Country Head, Fidelity Fund Management, announced the distribution tie-up at a press conference today. Fidelity Fund Management's entire suite of mutual funds will now be available at more than 600 branches of Federal Bank throughout the country.
Speaking on the occasion, Mr. M. Venugopalan, Chairman, Federal Bank, said, "With this partnership our customers will have easier access to Fidelity's range of funds. This is another step towards offering our customers holistic financial solutions of Fidelity Fund's mutual funds for retail investors to participate in the equity markets."
Ms. Suyash added, "We are delighted with our distribution tie-up with Federal Bank and look forward to partnering them as our funds become available at their branches across India. Distribution holds the key to the growth of the Indian mutual fund industry and we believe that banks, with their extensive branch networks and close relationships with customers, have a key role to play in popularising mutual funds as a preferred investment option."
About Federal Bank Limited
Federal Bank is a leading private sector Bank in the country with a network of more than 600 branches and 535 ATMs. The Bank also has distribution tie-ups with Birla Sun Life MF, DBS Cholamandalam MF, DSP Merrill Lynch MF, Franklin Templeton MF, HDFC MF, HSBC MF, ICICI Prudential MF, Kotak Mahindra MF, Reliance MF, SBI MF, Sundaram BNP Paribas MF, Tata MF & UTI MF, to distribute their products through its selected branches all over India. Recently Federal Bank was awarded the 'Best Core Banking Project Award 2007' by Asian Banker for a project involving the replacement of a Core banking System.
About Fidelity Fund Management
Fidelity Fund Management Private Limited started operations in the country in 2004. Its first fund, the Fidelity Equity Fund, was launched in March 2005. Today, with total assets under management of over Rs.8000 crores (Source: AMFI as at March 31, 2008) and more than 1.5 million customer accounts, Fidelity offers Indian investors investment options through its five equity funds and four fixed income funds.
Speaking on the occasion, Mr. M. Venugopalan, Chairman, Federal Bank, said, "With this partnership our customers will have easier access to Fidelity's range of funds. This is another step towards offering our customers holistic financial solutions of Fidelity Fund's mutual funds for retail investors to participate in the equity markets."
Ms. Suyash added, "We are delighted with our distribution tie-up with Federal Bank and look forward to partnering them as our funds become available at their branches across India. Distribution holds the key to the growth of the Indian mutual fund industry and we believe that banks, with their extensive branch networks and close relationships with customers, have a key role to play in popularising mutual funds as a preferred investment option."
About Federal Bank Limited
Federal Bank is a leading private sector Bank in the country with a network of more than 600 branches and 535 ATMs. The Bank also has distribution tie-ups with Birla Sun Life MF, DBS Cholamandalam MF, DSP Merrill Lynch MF, Franklin Templeton MF, HDFC MF, HSBC MF, ICICI Prudential MF, Kotak Mahindra MF, Reliance MF, SBI MF, Sundaram BNP Paribas MF, Tata MF & UTI MF, to distribute their products through its selected branches all over India. Recently Federal Bank was awarded the 'Best Core Banking Project Award 2007' by Asian Banker for a project involving the replacement of a Core banking System.
About Fidelity Fund Management
Fidelity Fund Management Private Limited started operations in the country in 2004. Its first fund, the Fidelity Equity Fund, was launched in March 2005. Today, with total assets under management of over Rs.8000 crores (Source: AMFI as at March 31, 2008) and more than 1.5 million customer accounts, Fidelity offers Indian investors investment options through its five equity funds and four fixed income funds.
BTS India Private Equity Invests in Parabolic Drugs Limited
BTS India Private Equity Fund Limited has announced investing around USD 7 million in Parabolic Drugs, a fast growing pharmaceutical company based out of Chandigarh. The capital will be used for funding Parabolic's next level of growth and will be largely used for significantly expanding capacities for its existing and new products.
With this, the Fund managed by Swiss based BTS group has completed yet another investment in pharmaceutical sector which is one of its preferred sectors. Several of the pharmaceutical companies invested through its earlier Fund have been doing exceedingly well and some of these have been nominated by CNBC TV18, ICICI Bank and CRISIL for the SME awards.
Parabolic Drugs which has facilites at Derabbasi and Panchkula near Chandigarh has already established itself with several global pharmaceutical companies as an important supplier for APIs and bulk drugs ranging across several products in the betalactum and cephalosporins range. "The current round of capital raising is a step towards further broadening the product and customer base, and take the company towards its target of crossing Rs. 10 billion in sales over the next couple of years", said Mr.Pranav Gupta, Chairman and Managing Director of Parabolic.
The company has obtained type II USFDA approval and Certificate of Suitability for some of its products. It is currently in the process of filing several DMFs and CEPs for further strengthening its exposure to the regulated markets both in Europe and US. Going forward, it also plans to enter non beta lactum products in the next 2-3 years. The company has set up a dedicated research and development centre in line with its plan for future growth.
According to Mr K Srinivas, Managing Partner, BTS "Parabolic has, over the years witnessed rapid growth and has become a leading supplier of APIs to its global customers. We are excited about partnering with Parabolic, which has a long term strategy of becoming a preferred supplier of its products to global customers both in the regulated markets in Europe and US. We are bullish on the Indian pharmaceutical sector and its continued sustained growth."
YES Bank was the sole strategic advisor to Parabolic for the transaction.
About Parabolic Drugs
Parabolic Drugs is a leading API company, manufacturing and marketing a broad range of APIs, and catering to Indian and international markets. It is amongst the leading players in the sterile SSP and Sterile Cephalosporin's in India and amongst few players in world to offer Penicillins, Cephalosporins & Steriles under one basket.
With this, the Fund managed by Swiss based BTS group has completed yet another investment in pharmaceutical sector which is one of its preferred sectors. Several of the pharmaceutical companies invested through its earlier Fund have been doing exceedingly well and some of these have been nominated by CNBC TV18, ICICI Bank and CRISIL for the SME awards.
Parabolic Drugs which has facilites at Derabbasi and Panchkula near Chandigarh has already established itself with several global pharmaceutical companies as an important supplier for APIs and bulk drugs ranging across several products in the betalactum and cephalosporins range. "The current round of capital raising is a step towards further broadening the product and customer base, and take the company towards its target of crossing Rs. 10 billion in sales over the next couple of years", said Mr.Pranav Gupta, Chairman and Managing Director of Parabolic.
The company has obtained type II USFDA approval and Certificate of Suitability for some of its products. It is currently in the process of filing several DMFs and CEPs for further strengthening its exposure to the regulated markets both in Europe and US. Going forward, it also plans to enter non beta lactum products in the next 2-3 years. The company has set up a dedicated research and development centre in line with its plan for future growth.
According to Mr K Srinivas, Managing Partner, BTS "Parabolic has, over the years witnessed rapid growth and has become a leading supplier of APIs to its global customers. We are excited about partnering with Parabolic, which has a long term strategy of becoming a preferred supplier of its products to global customers both in the regulated markets in Europe and US. We are bullish on the Indian pharmaceutical sector and its continued sustained growth."
YES Bank was the sole strategic advisor to Parabolic for the transaction.
About Parabolic Drugs
Parabolic Drugs is a leading API company, manufacturing and marketing a broad range of APIs, and catering to Indian and international markets. It is amongst the leading players in the sterile SSP and Sterile Cephalosporin's in India and amongst few players in world to offer Penicillins, Cephalosporins & Steriles under one basket.
Vodafone to bring Apple's iPhone to India
India's mobile phone users will be able to switch to Apple's eagerly awaited iPhone later this year, courtesy telecom operator Vodafone.
The British telecom giant Tuesday announced its partnership with Apple to offer iPhone in 10 global telecom markets.
“Later this year, Vodafone customers in Australia, the Czech Republic, Egypt, Greece, Italy, India, Portugal, New Zealand, South Africa and Turkey will be able to purchase the iPhone for use on the Vodafone network,” the company said in a statement.
India is the world's second largest mobile phone market with 261 million users, second only to China. Indian mobile firms added a record 10.2 million subscribers in March. With the expansion of the market, the call tariffs have gone down as low as two cents a minute, according to the Telecom Regulatory Authority of India.
Indo-Asian News Service
The British telecom giant Tuesday announced its partnership with Apple to offer iPhone in 10 global telecom markets.
“Later this year, Vodafone customers in Australia, the Czech Republic, Egypt, Greece, Italy, India, Portugal, New Zealand, South Africa and Turkey will be able to purchase the iPhone for use on the Vodafone network,” the company said in a statement.
India is the world's second largest mobile phone market with 261 million users, second only to China. Indian mobile firms added a record 10.2 million subscribers in March. With the expansion of the market, the call tariffs have gone down as low as two cents a minute, according to the Telecom Regulatory Authority of India.
Indo-Asian News Service
Why Marketers Are Reluctant to Move Away from Traditional Marketing Strategies
“The future of advertising is radically different from its past. The struggle for control of attention, creativity measurements and platforms will reshape the advertising value chain and shift the balance of power. And, as in previous disruptive cycles, the future cannot be extrapolated from the past.”
- from The End of Advertising as We Know It, IBM Global Services, 2007
Today, most companies are still using traditional marketing approaches that they may have been using since the middle of the 20th century. There are several reasons for this:
- Companies are set up to sell products, not to provide relevant and valuable information to customers and prospects.
- Companies have well-worn marketing paths that are easy to follow. Going off the beaten path into uncharted territory is intimidating.
- Companies have strong relationships with media partners that may go back decades. It's not easy to break those relationships by pursuing a brand-new content marketing strategy.
- The reduced effectiveness of traditional marketing may have occurred so slowly that no alarm bells have gone off within your organization.
- Many companies aren’t measuring their marketing, so they aren’t even sure what is and what is not effective.
- Many companies lack both the right people and the right processes to implement a new kind of marketing.
- Many businesses are reluctant to abandon traditional marketing tactics for what they may believe to be unproven content marketing or new media practices.
- Most companies lack content marketing role models from whom they can learn best practices.
- Some companies place very little value in marketing versus other aspects of the organization (operations, product development). Little do they know, that every part of the organization is affected by (or actually is) marketing.
In order for a company to alter their mindset toward one of new media or content marketing, they need one of a few things to happen:
- Business gets so bad that they start trying new things.
- Voluntary or involuntary turnover creates new thinking in the organization.
- A culture change in sparked in the organization, through an internal champion, external customer demands, or the merging of a new business culture through an actual merger or buyout.
The point is that there is great opportunity. There is opportunity for small businesses who can make these changes and adaptations faster than their larger competitive set. There is also opportunity for medium and large organizations who can make decisions based on how their customers want to engage with them, not on what they've done in the past.
The IBM white paper that led off this post has an interesting set of questions to ask marketing professionals that speaks directly to the drastic changes that have taken place just in the last few years.
- Will advertisers still need a traditional agency? If so, in what capacity?
- Will traditional programmers lose significant revenue to the Internet, mobile device providers and interactive home portals?
- Will consumers reject outright the concept of interruption marketing in the future?
- Will consumer receptivity vary by medium (for example, mobile devices versus home-oriented devices)?
- Will consumers see value in advertising as a trade-off for content?
- To what extent will advertising inventory be sold through open platforms?
- Do advertising industry players have the customer analytics needed to better understand and reach target customers?
- Are companies organized correctly to create, market and distribute cross-platform content?
Most everyone has an answer to the above questions - but noone knows for sure if they will be right. All we can do is see what is happening and talk to our customers. That said, the more I interact with marketing and publishing professionals, the more I realize that the old rules don't apply anymore. What is going on right now is a revolution like nothing we've ever seen. The opportunity is great for those companies that buy into this.
Some companies think that the Internet is just another way to market. It's those companies that are in trouble.Why Yahoo Shares Lost Only 15%
From Business Week
When Microsoft (MSFT) pulled its sweetened, $33-a-share offer to buy Yahoo on Saturday, May 3, shareholders of the Internet portal braced for the worst. The concern was that Yahoo's stock price, which stood at $28.67 the day before—nearly $10 higher than it was before Microsoft's unsolicited bid Feb. 1—would head for the depths again.
At first, the worst fears were stoked in early trading May 5 as Yahoo (YHOO) shares plummeted as much as 22%. One analyst even set a new Yahoo target price of just $17. But as it turned out, Yahoo's stock closed at $24.37, down only about 15% on the day. And in fact, that's about a 30% premium to Yahoo's stock price back in January.
Why not a bigger rout? Possible reasons include lingering hope that Microsoft may return with another offer, the potential for a lucrative deal with Google (GOOG), and perhaps most surprisingly, recognition that Yahoo is doing better than it was when the deal came to light. The relatively muted market reaction may well give Yahoo more running room than many expected to make a go as an independent company.
In a May 5 interview with BusinessWeek, Yahoo Chief Executive Officer Jerry Yang declined to draw conclusions from the share performance, particularly as it relates to a goal of helping Yahoo reignite growth and recapture ground lost to rival Google. But he said Yahoo now has more going for it than a few months ago, and more than it has been given credit for. "We have more alternatives than we had on Jan. 31," he says.
A Deal's Still Possible
Chief among the options remains the possibility that Microsoft's decision to walk away is a high-stakes negotiating tactic intended to tank Yahoo's stock price and force Yang back to the bargaining table. Sandeep Aggarwal, an analyst with Collins Stewart, estimates that as much as $4 of Yahoo's stock price today can be attributed to investor hopes for a Microsoft deal.
Even disgruntled shareholders hold out hope for a deal. "I hope Microsoft's pulling the deal was a negotiating ploy," says Eric Jackson, a Florida management consultant who just launched a campaign to vote against Yahoo's current directors at the next annual meeting, possibly in July. "There's an expectation that Yahoo is still in play."
A source close to the matter took pains over the weekend to insist that Microsoft views the deal as dead. But the source also didn't completely rule out the possibility. For his part, Yang doesn't rule it out either, though not at Microsoft's stated price. "If Microsoft says, 'Hey, we'll come back and meet your price,' then we'll obviously have to talk," says Yang. "There's no lack of willingness for us to explore anything that maximizes shareholder value." Yahoo's board countered Microsoft's most recent terms with an offer of $37 a share.
Working with Google
That's not the only factor propping up the stock. Last week, sources indicated Yahoo might announce a deal as early as this week for Google to handle at least some search advertising for Yahoo, running its much more lucrative text ads next to Yahoo's search results. Analysts estimate the arrangement could bring in up to $1 billion in cash flow annually to Yahoo, improving its laggard profits and ultimately the value of its stock.
But that deal is double-edged. If it doesn't happen, investors may view its mention as a bluff, a negotiating ploy now moot with the Microsoft deal out of the picture. Lack of an announcement could weigh on Yahoo shares in coming days and weeks.
At the same time, a deal to outsource most or all of Yahoo's search advertising to Google, instead of the more limited partnership that's been discussed, would be a tacit admission that Yahoo's own search ad system doesn't work. Potentially, that could persuade investors Yahoo is worth even less than they thought and they could sell off the stock. What's more, even a trial that Yahoo ran with Google recently drew attention from regulators, who likely would closely review a more sweeping deal, delaying or even quashing it.
Faster Growth Predicted
Finally, Yahoo's shares may be benefiting in a small way from the company's first-quarter results, which were better than analysts had expected. "Even though it was done in an environment with a lot of overhang from Microsoft, we demonstrated a lot of good progress," Yang says. "And I feel we're doing better than before in terms of executing."
Yang and his executives predicted much faster growth in future years than today. Although most analysts discounted the forecast, they acknowledged that Yahoo is showing a little more stability. Some online ad industry executives agree. "I think there's a lot of intrinsic value in Yahoo," including valuable stakes in overseas Internet properties, says Nick Grouf, CEO of Internet ad agency Spot Runner, which helps local businesses advertise on television.
For all that, Yang's leeway remains limited. "We don't see any other near-term catalysts for the stock," says Aggarwal. So if Microsoft is serious in its insistence that the deal is off for good and doesn't return with even a downsized offer in coming weeks, even the tepid support for Yahoo shares this week may evaporate quickly.
When Microsoft (MSFT) pulled its sweetened, $33-a-share offer to buy Yahoo on Saturday, May 3, shareholders of the Internet portal braced for the worst. The concern was that Yahoo's stock price, which stood at $28.67 the day before—nearly $10 higher than it was before Microsoft's unsolicited bid Feb. 1—would head for the depths again.
At first, the worst fears were stoked in early trading May 5 as Yahoo (YHOO) shares plummeted as much as 22%. One analyst even set a new Yahoo target price of just $17. But as it turned out, Yahoo's stock closed at $24.37, down only about 15% on the day. And in fact, that's about a 30% premium to Yahoo's stock price back in January.
Why not a bigger rout? Possible reasons include lingering hope that Microsoft may return with another offer, the potential for a lucrative deal with Google (GOOG), and perhaps most surprisingly, recognition that Yahoo is doing better than it was when the deal came to light. The relatively muted market reaction may well give Yahoo more running room than many expected to make a go as an independent company.
In a May 5 interview with BusinessWeek, Yahoo Chief Executive Officer Jerry Yang declined to draw conclusions from the share performance, particularly as it relates to a goal of helping Yahoo reignite growth and recapture ground lost to rival Google. But he said Yahoo now has more going for it than a few months ago, and more than it has been given credit for. "We have more alternatives than we had on Jan. 31," he says.
A Deal's Still Possible
Chief among the options remains the possibility that Microsoft's decision to walk away is a high-stakes negotiating tactic intended to tank Yahoo's stock price and force Yang back to the bargaining table. Sandeep Aggarwal, an analyst with Collins Stewart, estimates that as much as $4 of Yahoo's stock price today can be attributed to investor hopes for a Microsoft deal.
Even disgruntled shareholders hold out hope for a deal. "I hope Microsoft's pulling the deal was a negotiating ploy," says Eric Jackson, a Florida management consultant who just launched a campaign to vote against Yahoo's current directors at the next annual meeting, possibly in July. "There's an expectation that Yahoo is still in play."
A source close to the matter took pains over the weekend to insist that Microsoft views the deal as dead. But the source also didn't completely rule out the possibility. For his part, Yang doesn't rule it out either, though not at Microsoft's stated price. "If Microsoft says, 'Hey, we'll come back and meet your price,' then we'll obviously have to talk," says Yang. "There's no lack of willingness for us to explore anything that maximizes shareholder value." Yahoo's board countered Microsoft's most recent terms with an offer of $37 a share.
Working with Google
That's not the only factor propping up the stock. Last week, sources indicated Yahoo might announce a deal as early as this week for Google to handle at least some search advertising for Yahoo, running its much more lucrative text ads next to Yahoo's search results. Analysts estimate the arrangement could bring in up to $1 billion in cash flow annually to Yahoo, improving its laggard profits and ultimately the value of its stock.
But that deal is double-edged. If it doesn't happen, investors may view its mention as a bluff, a negotiating ploy now moot with the Microsoft deal out of the picture. Lack of an announcement could weigh on Yahoo shares in coming days and weeks.
At the same time, a deal to outsource most or all of Yahoo's search advertising to Google, instead of the more limited partnership that's been discussed, would be a tacit admission that Yahoo's own search ad system doesn't work. Potentially, that could persuade investors Yahoo is worth even less than they thought and they could sell off the stock. What's more, even a trial that Yahoo ran with Google recently drew attention from regulators, who likely would closely review a more sweeping deal, delaying or even quashing it.
Faster Growth Predicted
Finally, Yahoo's shares may be benefiting in a small way from the company's first-quarter results, which were better than analysts had expected. "Even though it was done in an environment with a lot of overhang from Microsoft, we demonstrated a lot of good progress," Yang says. "And I feel we're doing better than before in terms of executing."
Yang and his executives predicted much faster growth in future years than today. Although most analysts discounted the forecast, they acknowledged that Yahoo is showing a little more stability. Some online ad industry executives agree. "I think there's a lot of intrinsic value in Yahoo," including valuable stakes in overseas Internet properties, says Nick Grouf, CEO of Internet ad agency Spot Runner, which helps local businesses advertise on television.
For all that, Yang's leeway remains limited. "We don't see any other near-term catalysts for the stock," says Aggarwal. So if Microsoft is serious in its insistence that the deal is off for good and doesn't return with even a downsized offer in coming weeks, even the tepid support for Yahoo shares this week may evaporate quickly.
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