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News Corp in for Yahoo?

February 15, 2008

According to the WSJ, Rupert Murdoch's News Corp has joined the fight for control of Yahoo. The idea seems to be Yahoo will combine with News's Myspace business and News will take at least a 20 per cent share in the combined business.

The deal might well make sense for News Corp; MySpace which it bought cheaply some years ago now has a massive value thanks – ironically – to the huge amount paid recently by Microsoft for a small share in Facebook. But it remains relatively uncertain how the social networking sites are going to turn value into earnings. Yahoo, on the other hand, had earnings but a declining value because it suffers by comparison to Google – this despite the fact it actually has five times as many email customers.

However, most analysts don't rate News Corp's chances and expect Microsoft to raise its offer sufficiently for the Yahoo board to approve it.

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