3 M&A Targets for Yahoo

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Since Marissa Mayer took over Yahoo, she's only done a few small acquisitions, known as "acqui-hires." However, that might change very soon.

AllThingsD reports that Yahoo's Jackie Reses, who heads the tech giant's M&A team, let slip at a company event that Yahoo is working on two "significant" acquisitions and perhaps as many as six smaller talent "acqui-hires." (Reses, incidentally, also heads HR and was part of the firm's controversial work from home policy).

Mayer has bought Stamped, a mobile review site, Snip.it, an online content organization company, and OnTheAir, a videoconferencing startup. These were all tiny transactions, though, and Yahoo has a growing cash pile. The company's cash haul was around $6 billion at the end of the fourth quarter, thanks in large part to a partial sale of its Alibaba stake.

With an increased cash pile, continued optimism surrounding the company, and the prospect of more money to come (from additional sales of its Asian assets), Mayer is eager to strike. Here are a few companies I think she could acquire with all her new found money, before it burns a hole in her pocket.


Pinterest, the hot content sharing service that allows members to "pin" images, videos, and other objects to their pinboard, recently raised money that valued the company at $2.5 billion.

Pinterest hasn't generated any significant revenue yet, but the possibilities for the company are endless. I've long thought a heavyweight like Amazon.com would wind up buying Pinterest. You pin something you like, whether it be clothing or furnishings, and then go over to Amazon and buy it. It makes too much sense.

Buying Pinterest could help keep it out of the hands of rivals, as well. During this week's News Feed announcement, Facebook mentioned Pinterest several times, which I thought was rather odd.

(Read More: Facebook Is Better Than Google in Near Term: Analyst)

Facebook CEO Mark Zuckerberg also described the new News Feed as "trying to give everyone the best personalized newspaper," which felt to me like a slight against Yahoo's newly redesigned home page.


The problems with Zynga have long been known, but the company is starting to turn the ship around.

The San Francisco-based social gaming company recently turned a profit, earning 1 cent a share on $311.1 million in revenue. Daily active users (DAUs) climbed 12 percent year-over-year, and Zynga is still fairly cheap, when you strip out the $1.65 billion in cash and the huge San Francisco headquarters, which it owns. Having been to San Francisco a number of times over the past year, that real estate is not cheap, and it's in a prime location, 650 Townsend Street.

At a market cap of $2.77 billion, despite the recent run up in anticipation of online gambling, perhaps it could make sense for Mayer and her team to think about adding this "dog" to its portfolio.

Shares of Zynga have jumped 50.2 percent year-to-date.


Yelp and Yahoo just seem to mix.

Aside from the obvious fact that both companies start with the letter Y (there have been stranger reasons for mergers), there are aspects of Yelp that Yahoo wants to emulate. Yelp is an online urban city guide that helps people find the best local businesses, rate and review them.

Discussing Yahoo's fourth-quarter earnings, Mayer alluded to the fact Yahoo needs to be more personal. "The combination of more personalized content and increased product innovation will be key in getting us back to a path for Display revenue growth," she said. The CEO also added that Yahoo would have "some content costs, which you'll see as we make some of these developments."

That screams Yelp to me, and though the San Francisco-based firm is still not profitable, revenue during the fourth quarter rose 65 percent year-over-year to $41.2 million. Yelp expects a 53 percent rise in the same time frame in 2013 revenue, to between $210 million and $212 million.

Yelp could also make sense as Yahoo seeks to strengthen its ties with Apple. Yelp was recently integrated as part of Apple Maps, and Yahoo already provides a load of content to Apple, including stocks and weather. Mayer has previously said partnering is the key to Yahoo's future, and a closer integration with Apple certainly couldn't hurt.

By TheStreet.com's Chris Ciaccia

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