Will Yahoo! Buy OpenTable or Millennial Media?

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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Longtime Fool contributor Rick Aristotle Munarriz owns shares of Millennial Media. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services recommend Apple, Google, OpenTable, and Yahoo!. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (3) | Recommend This Article (2)

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  • Report this Comment On October 24, 2012, at 7:38 AM, appface wrote:

    Mimvi (MIMV) is another buyout candidate that Yahoo could be considering:

    Top 5 Takeover Targets In The Mobile Internet Space

    http://seekingalpha.com/article/713111-top-5-takeover-target...

  • Report this Comment On October 24, 2012, at 9:44 AM, Bot1 wrote:

    In your zeal to FOMENT, you forgot one teansy weansy little detail that Marissa Mayer said on the conference call.

    SHE IS LOOKING FOR START-UPS THAT WOULD COST IN THE AREA OF TENS OF MILLIONS TO LOW HUNDREDS OF MILLIONS.

  • Report this Comment On October 24, 2012, at 9:49 AM, Bot1 wrote:

    There is no evidence that Marissa said at any time that she would be willing to pay $2 billion for OPEN or MM. That was added by the media.

    Marissa is looking for technology. Does OPEN or MM provide technology that YHOO need? Obviously not.

    However, one has to wonder about the condition of a media who takes a simple statement by a CEO that they are interested in small technology adding companies and blow it into an article such as this.

    "She appeared to show interest" OH, COME ON REALLY! Why not just come out and say that you are trying to influence the price of the stock.

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