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Should Apple Just Buy Yahoo!?

By Rick Munarriz - Apr 10, 2013 at 7:30PM

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Apple and Yahoo! are reporting exploring the expansion of their existing iOS relationship. They need each other more than you may think.

Apple (AAPL -2.46%) and Yahoo! (NASDAQ: YHOO) are reportedly discussing expanding their relationship.

Wouldn't it be wild if Apple's next move was to put a ring on it?

Let's be frank. The chances of Apple and Yahoo! hooking up are slim. Yahoo! turned down Microsoft (MSFT -0.37%) at a much higher price point several years ago, and the stock's been a market darling since Google (GOOGL -1.35%) executive Marissa Mayer took the helm after a long line of unsuccessful CEOs.

However, each company would have plenty to gain by warming up to the other.

Folks "briefed on the matter" are telling The Wall Street Journal that the two companies are discussing ways to prominently integrate more of Yahoo!'s services on Apple's iPhone and iPad devices.

That's a no-brainer. Yahoo! already provides some of the default iOS apps for stock quotes and weather. Perhaps more importantly, Yahoo! isn't Microsoft or Google.

Mr. Softy and Big G are Apple's two biggest rivals, though these days Google has become the bigger enemy as Android conquers the smartphone and now tablet markets. Apple tried to distance itself from Google last year, going with a homegrown default solution to Apple Maps.

Right. We know how badly that played out for Apple. Any bone that Apple could throw Yahoo! is one less bone that it would either throw out to Google or possibly mess up on its own.

Yahoo! could also use Apple. Forget Yahoo!'s recent buoyant stock price. Ever since Yahoo! struck a deal to outsource its flagship search business to Microsoft Bing, revenue growth has been stagnant and Yahoo!'s been shedding market share. There isn't a lot that Yahoo! can do to change that. It struck a deal for its search portal to be Bing's trophy wife for the next 10 years, and folks will naturally wean themselves off of Yahoo! to get their results directly from the source. Yahoo! knows this. It lived through it when Google powered its queries.

Let's cut to the chase: Apple may find itself offering a search product to remain competitive with Google without assisting the enemy. Why not dust off Yahoo!'s cobwebbed yet once-effective search technology? This would likely violate the terms of Yahoo!'s deal with Bing, but obviously there has to be a way out -- and a shotgun wedding with Apple may do exactly that.

Apple would benefit from nearly every aspect of Yahoo!'s wide array of online properties and Asian investments. Yahoo! would benefit from being a part of the world's most popular mobile operating system outside of Android.

Don't run off to check the bridal registry. A deal isn't really likely to happen. However, under different circumstances, Apple and Yahoo! would've looked so good walking down the aisle at a point when Apple investors need a spark and Yahoo! investors need growth.

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
AAPL
$137.35 (-2.46%) $-3.47
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$253.14 (-0.37%) $0.94
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$2,207.68 (-1.35%) $-30.31

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