Yoo-Hoo, Yahoo! Check Out This Book

So you're graduating from college this month and you don't know what to do with that collection of empty beer bottles, the Chevy El Camino on blocks, and your exploding-burrito-seasoned microwave oven. Maybe Facebook can help. The popular social networking site that got its start as a closed network for college students to share campus snapshots is launching free online classifieds.

It's about time!

It's just a logical evolutionary step. Why let users run off to Craigslist or pay for eBay (Nasdaq: EBAY  ) auction listings whenever they have something to sell? With its college-specific roots, the site is a natural to assist with reselling textbooks, finding roommates, and landing a last-minute date for the sorority formal.

The site will be free, though that doesn't mean that it won't be lucrative for Facebook. Advertisers may have dismissed Facebook as a poorly converting social networking site that was only good for brand-building campaigns. But now they will be wooed by the monetizing possibilities of an active community with transactional expectations.

This is about more than the obvious, though. This is the bartender making a last call out to Yahoo! (Nasdaq: YHOO  ) . It has been widely reported that Yahoo! and Facebook were once in heated buyout talks.

Facebook making a move to launch online classifieds hits Yahoo! in several different places.

  • Free employment classifieds will eat away at Yahoo!'s HotJobs.
  • Dating listings will nibble at the ear -- seductively, of course -- of the popular Yahoo! Personals online dating service.
  • Yahoo! has also been working with print newspapers to beef up their online classifieds.

Yahoo! won't feel much of a sting in its premium services. It's a big world out there. No, the real loss here would be the opportunity cost of Yahoo! not being the site to help Facebook monetize its online classifieds. Yahoo! could certainly use the virtual real estate, as Google (Nasdaq: GOOG  ) keeps distancing itself by growing faster than Yahoo!.

Letting Facebook cash in on the potential internally -- or handing the keys to partners like Monster (Nasdaq: MNST  ) for job listings or IAC's (Nasdaq: IACI  ) Chemistry.com for dating -- may be just enough to push Yahoo! back to the bargaining table.

So don't focus on what Facebook is selling with the launch of online classifieds on its site. It's really a matter of how much Yahoo! is willing to pay to buy it.

Yahoo! and eBay are Stock Advisor recommendations. A 30-day trial subscription to the market-thumping stock research service is as free as a Facebook classified ad.  

Longtime Fool contributor Rick Munarriz thought that Facebook was being greedy in wanting too much out of Yahoo!, but feels that Facebook has Yahoo! where it wants it this time. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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