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Joshua Cho
Shares of eBay Inc. and Yahoo! Inc. rebounded late last week after a precipitous decline sparked by merger/alliance rumors between the two companies.
CNBC first broke the story that eBay and Yahoo! were discussing various partnership scenarios. But as the week progressed, those stories turned out to be rumors and the share prices of both began to resume their upward spiral.
Lending credence to the speculation: online auctions are one area that Yahoo! has not been able to capitalize, while eBay has the market fairly well cornered.
"Yahoo! probably needs eBay more than eBay needs Yahoo!," was how PaineWebber analyst Sara Farley put it last week in a research note on the companies.
A Yahoo! source refused to talk, citing company policy against commenting on rumor and speculation. eBay representatives likewise did not comment.
At a recent conference call to discuss fourth quarter earnings, Yahoo! chairman/CEO Timothy Koogle said the company really didn't see the necessity of owning traditional content and brands. Rather, the company would build on the strong relationships it has with its content partners.
Then again, a buyout of a company like eBay would not be out of the question as well, Koogle intimated.
"It's not to say that we won't grow on a targeted basis very special relationships with certain brands and content partners out there," Koogle said. "But we'll do that on a category-by-category basis."
Ever since the America Online Inc. - Time Warner Inc. merger was announced, speculation has run rampant about the fate of Yahoo!, the largest independent portal company on the Web.
In midday trading last Thursday, Yahoo! shares were at 169 53/64, up 11 21/64. eBay was trading at 199 1/8, up 9 39/64.
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