Have you gotten your invitation to the Yahoo!
Yahoo! Food was launched yesterday, aiming to be the culinary destination of choice for hungry Internet users seeking recipes or celebrity chef commentary. The site is stocked with home entertaining tips from Martha Stewart Living Omnimedia
The site also sharply incorporates some of the other Yahoo! features. Local eatery reviews are presented from Yahoo! Local, and Yahoo! Answers lets the community tackle food-related queries.
Yahoo! Food is as timely as it is tasty, but it's not necessarily original. The move comes just weeks after CNET combined Chow Magazine and the Chowhound.com restaurant review forum to create Chow.com.
Coattails? Table for two?
More than just wedding cake
Chow is a small part of the CNET empire. Yahoo! Food is also bound to be a small piece of the proverbial pie. They represent logical moves toward expanding existing lifestyle offerings, but the timing has to feel suspicious.
If that doesn't get your conspiracy-theorist juices flowing, consider that Yahoo! also recently launched Yahoo! Tech, a clearer shot at CNET's tech news and consumer electronics reviewing stronghold.
Though CNET relies mostly on its in-house staff for content, while Yahoo! serves up third-party offerings, the companies seem to be targeting the same areas for future growth. This is often either the prelude to a boxing match or the prelude to a kiss.
Me? I'm guessing that they will pucker up before they come to blows. It just makes too much sense. Wouldn't Yahoo!'s Flickr and CNET's Webshots make a good fit, combining the best that each photo-sharing site has to offer? Wouldn't CNET's software hub Download.com, video game enthusiast GameSpot, and News.com be perfect fits for the Yahoo! audience?
One can only imagine the kind of magic that Yahoo! could work out of some of the choice CNET domains in its portfolio, like TV.com, Kids.com, and Search.com. Instead of wondering why everyone is turning to Google
While CNET has a working relationship with most of the country's top advertisers, it also turns to Google to help fill some of its ad space. And Yahoo! would love to grow its reach, especially if it comes at Google's expense. CNET's properties serve up 86 million daily page views, attracting 125 million unique monthly visitors in the process.
The price is right
The timing of a potential deal couldn't be any better. Still reeling from its stock options backdating scandal, CNET finds itself with a share price back in the single digits and no seasoned CEO at the helm. It's the perfect environment for a little disruption, and Yahoo! has to know it. In fact, if you were the grassy-knoll type, you might even wonder if Yahoo! Tech and Yahoo! Food were tactical moves to devalue CNET and make an eventual purchase even cheaper.
And, yes, the price would seem right. Even if Yahoo! were to pay as much as $12 a share for CNET, a reasonable premium to the $8.64 mark where CNET closed yesterday, it would be getting a lot of bang for its buck. Yahoo! trades at roughly eight times sales, and it would be acquiring CNET for less than five times its top-line production.
On an earnings basis, the deal would seem slightly dilutive at first glance, but it wouldn't take long for Yahoo! to improve on CNET's margins and work the operating efficiency in its favor.
The timing is also ideal for Yahoo!; with the ad market drying up in CNET's key IT and video game markets, the company has been slumping. CNET expects that situation to right itself come early next year, once Microsoft
That would be a pity. I'd hate to be stuck holding a fistful of rice at an empty wedding hall.
CNET is an active recommendation in the Rule Breakers growth stock newsletter service. Yahoo! has been singled out to Stock Advisor readers. Microsoft is an Inside Value pick.
Longtime Fool contributor Rick Munarriz is a fan of CNET who finds himself getting hooked on CNETTV and scouring Chowhound for area eatery reviews. He does not own shares in any of the companies in this story. Rick 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.