Why a Yahoo/eBay Merger is on the Horizon!

With the announcement that Terry Semel is leaving Yahoo and founder Jerry Yang will be coming on board, I think the timing is right that for a Yahoo/eBay merger. I believe a merger between these two Internet behemoths makes sense on a number of levels.

There have been rumors of a merger before but now both companies are at a crossroads in their respective businesses; Yahoo is losing ground to Google and IMO eBay needs a new corporate brand (I will explain this later) The two companies need each other -- even though eBay still believes they can go it alone.

The Case For a Merger:

- The Timing is right: Both companies are struggling to get traction for their stock. While eBay continues to post fantastic quarterly numbers the stock is stuck in neutral and Yahoo's poor performance has kept its stock in the cellar.

- Meg Whitman, is on the move soon and this would be the perfect move for her to run the company she wants to build with eBay but can't. IMO, the eBay brand is getting in the way of her vision. BTW, I know I have been critical of eBay in the past but I do know that Meg Whitman is an excellent Chief Executive. This will also keep her out of government via a Mitt Romney Presidency.

- eBay and Google are having a major tiff and this would position eBay to stay off of Google for good causing a $100 million annual swing in ad spend from Google to Yahoo. That alone would improve Yahoo's position. Update: eBay is back on Google but has deuced its exposure benefiting Yahoo, MSN and others.

- The two companies share a similar corporate culture unlike a Microsoft/Yahoo combination.

- With Terry Semel stepping down it clears the way for Meg and her management team to run Yahoo, though I'm not sure which executives would survive the merger. Meg, would have been the logical choice to run the company anyway but with Semel out of the picture it becomes a no-brainer. I also believe this would be an excellent move for John Donahoe, President of eBay Marketplaces and eBay Chief Strategist (that's a title I gave him, it isn't official).

- eBay needs Yahoo (though I don't thing eBay managers believe that) I believe that eBay needs a new corporate identity (but what do I know, I'm a freakin' blogger). eBay is a fantastic brand for a Marketplace business but not for a corporation. eBay needs the Yahoo brand which is why I believe the combined companies should be called Yahoo not eeHoo or YaBay or some other iteration. This would allow the eBay brand to once again be an auction brand and allow for new marketplaces to be branded separately without having to dilute them with the eBay brand. eBay is part of popular culture but is the butt of as many jokes as it is positive mentions. I realize this idea is radical and the personalities involved would never go for it but doesn't it make since? Doesn't Yahoo's brand make a better corporate brand than eBay?

- The combined companies would have over $6 Billion in cash and very little debt so now is the time to strike while the balance sheets are hot.

- eBay would once again have access to Asia through a Yahoo merger which will add significant growth for their marketplace businesses.

- Yahoo Auctions are ending and a combination of the two companies would help the eBay brand reinvigorate Core by getting access to the yahoo traffic directly from a link on the homepage.

- Yahoo Small business could fold easily into the eBay Marketplace business with its number one webstore platform along with hosting and marketing services. The combined companies would be the place to go if you were a small business. eBay could spin off their trouble stores platform and replace ProStores with a much better solution in Yahoo Stores. A combined company would once again make eBay "King of eCommerce".

- eBay could benefit from the many Yahoo properties in expanding their marketplace reach.

- The Skype purchase would actually make sense if it was part of Yahoo.

- In a combined company PayPal would become the #1 payment solution on the Internet and Google's checkout would become a thing of the past. (Ok that was a slight stretch but PayPal would benefit greatly from the merger).

- This would be a great move for online sellers because eBay would now be a part of the whole rather than the whole thing and the marketplace the opportunities for sellers would be greater.

There are many more reasons this would be a great move but I think you get the point. Finally, a merger between eBay and Yahoo would give me a reason to write some positive posts for a change. I would love to write some positive news for once.

Just my 5 Cents!