Saturday, October 06, 2007

Follow-Up on Yahoo! Japan Deal for Overture Japan

In posts earlier this week, I questioned why Yahoo! had sold Overture Japan to Yahoo! Japan for $13 million when that business was doing $395 in annual revenues.

One of the rationales for the deal, explained by Blake Jorgensen on the last earnings call, was that there would be better alignment of the sales teams by combining them.

One of the questions I raised was why -- when Yahoo! Japan and Overture Japan are in the same Minato City neighborhood in Tokyo. Yahoo! Japan office is in Roppongi Hills Mori Tower, 10-1, Roppongi 6-chome, Minato-ku, Tokyo and Overture Japan's office is in 4-3-1, Toranomon, Minato-ku, Tokyo.

A colleague of mine in Tokyo confirmed the proximity of these offices:

"Roppongi and Toranomon are very close. It will take 6 minutes train and 3 to 8 minutes walk."

So, this move would be the equivalent of taking one team located in, say, Santa Clara and aligning them with another team in Sunnyvale. That would make sense if Yahoo! didn't already have expertise in working with teams spread around the state (between Burbank/Santa Monica and Sunnyvale), as well as around the world.

The point is that there must be something else much more significant behind doing this deal for Overture Japan now at this price. Shareholder will be looking for greater clarity on the next call in about a week.

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