First they close a deal with Microsoft that guarantees them about $200 million over three years, then they piss off about a million of their users by “infringing on their privacy”, and finally they enter serious talks to sell for $1 Billion to Yahoo!

What gives?

I just have a hard time understanding what people are thinking some times. For example, what is Yahoo! thinking when they make an offer to buy a website for $1 billion dollars very soon after about a million of its users boycotted the product? Yes, the users more than likely came back and used the site after the boycott was over, but if this is not a good indication of how fickle the market is, I don’t know what is.

At the end of they day, those guys are rich and I am not. So they must know something I don’t know. I started thinking about it, and here is what I came up with:

Five Reasons why Yahoo! would want to buy Facebook

1. 500 million users worldwide that spend at least one hour on the site a month
guaranteed

2. $200 million from Microsoft over the next three years

3. an amazing channel for Yahoo! to push its products to a vibrant demographic

4. Yahoo!’s own social networking effort, Yahoo! 360, sucks and is not widely used or known.

5. being that Yahoo! is a content provider, and developing content is expensive, what better way to continue to be a content provider and not have to do any of the content generation (since that’s done by the users themselves)?

So, go for it. My 19 year old cousin said he is using it less and less - this market is very moody and quick to quit. My advice: approach the deal with a good strategy for what happens after kids graduate or get bored.

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posted by Andres Zapata @ 11:28 AM