Shares of OpenTable (Nasdaq: OPEN ) and Millennial Media (NYSE: MM ) moved slightly higher yesterday, bucking the general market's downturn after a Reuters article stirred up speculative buzz.
In appealing to Yahoo!'s (Nasdaq: YHOO ) growing cash hoard, bankers have been approaching the revenue-starved dot-com pioneer with buyout candidates.
A source is telling Reuters that CEO Marissa Mayer appeared to show interest in OpenTable, PubMatic, Turn, and Millennial Media.
PubMatic and Turn aren't publicly traded, but the whiff of buyout potential naturally worked out well for shareholders of OpenTable and Millennial Media.
Online dining reservations leader OpenTable saw its shares climb 6% yesterday on its heaviest volume since early August. Smartphone display advertising specialist Millennial Media treated its investors to a smaller 3% pop.
Both moves make sense.
OpenTable is a growing leader attracting well-to-do foodies. They're obviously not afraid of technology, and bringing that audience closer to Yahoo! should benefit the company's monetization efforts elsewhere. Millennial Media is growing even faster, and it would thrust Yahoo! into a market with familiar heavy hitters. When Millennial Media went public earlier this year, it had recently overtaken Apple (Nasdaq: AAPL ) to become the second-biggest player in mobile display. Only Google (Nasdaq: GOOG ) is bigger, largely because of its Android roots. Millennial Media has the advantage of being the only major player of the three to not be operating system-agnostic.
Investors shouldn't chase either of these two companies on the basis of an unnamed Reuters source. However, both companies are dynamic growth stocks.
Perhaps more importantly, Yahoo! will go shopping sooner or later. Yahoo! closed out its latest quarter with a whopping $9.4 billion, and flattish revenue growth is making it clear that the company isn't going to excite investors organically.
Sure, there are taxes to pay after a recent asset sale, and a good chunk of that money is parked overseas. It doesn't matter. Yahoo! has plenty of money to embark on a shopping spree. It would be a surprise if OpenTable and Millennial Media are the companies that Yahoo! ultimately does buy, but they would both be smart moves.
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