Skepticism in the LatAm Market Regarding a Possible Yahoo!-AOL Merger

Portada spoke to some of the most important Managing Directors and Country Managers in Latin America about their thoughts on a possible merger between Yahoo! and AOL. The overall consensus among those interviewed is one of limited expectations, as well as a negative outlook on the success of a potential merger.

In any event, Yahoo! has not formally received any kind of purchase offer. According to the Wall Street Journal, in addition to AOL, there are also several companies interested in forming a team to acquire Yahoo!, among them Silver Lake Partners and Blackstone Group LP.

Yahoo! has announced its third quarter earnings, which indicate a modest recovery in profits but its revenues remain low, a far cry from the Sunnyvale, California company’s glorious past.

Yahoo! net income for the quarter more than doubled in comparison with a year ago, from $186 million to $396 million. On the other hand, revenues for the quarter increased only 2%, to $1.6 billion.

What do executives in the Latin American market think about the merger?

Daniel Veron, Managing Director of DV Advertising, thinks the merger would not be appropriate, since Yahoo! has a stronger brand image, especially in relation to the Latin American market.

Paul Meyer, VP of Digital Media for Publicitas, also thinks the merger would not prove to be a successful venture. "I think this operation will be as successful as the merger between AOL and Time Warner, and we all know what how that ended," he says, referring to the companies’ separation in December 2009. "I do not see a happy ending here. I doubt that Yahoo! wants this merger or that it would increase its income significantly on search engines. Would it help Yahoo! on social networks or cell phones? No," adds Meyer.

Fernando Monedero, Managing Director of Havas Digital, concurs with Paul Meyer. “It’s obvious that AOL wants this merger more than anything; what is not so clear is whether this will solve Yahoo!’s competitive problems.” Regarding the advantages of a possible merger, Monedero adds that “it would help strengthen Yahoo’s current e-mail and instant messenger product.”

Carlos Vazquez, Country Manager of Publiquest in Mexico, also agreed that a merger would not go a long ways in solving the problems currently affecting Yahoo!. “Both Yahoo and AOL are losing ground every day in the digital world. If the two join forces, it will be a desperate measure to avoid losing more ground to Google. In my opinion, it would be more of the same and within a couple of years, when both are still lagging behind, Microsoft will sweep in and buy Yahoo!, but for a lot less than it offered in 2008.”