Can Yahoo! Inc. (YHOO) Buy Enough Companies to Compete With Google Inc (GOOG)?

But Google Now can only function because it’s tied in with Google Inc (NASDAQ:GOOG)’s other services — Google maps for traffic information, gmail for tracking deliveries, sports-related searches done through Google’s Chrome browser.

In order for Yahoo! to be able to provide anything like this, the company must be able to effectively surround a person’s digital life, offering some sort of product in all the major areas.

Google competitor

For most analysts, the bullish case for Yahoo! has been built on the company’s ability to return cash to shareholders — monetize Alibaba and/or Yahoo! Japan, then buy back shares or issue a dividend.

But, as Yahoo! begins to spend money on acquisitions (and given Mayer’s stated goals, it wouldn’t be surprising to see more going forward) the investment story shifts from capital returns to the company’s core business.

That core business is about bringing Yahoo! back to its former status as major rival to Google. While Yahoo! can’t compete in standard desktop search, it could conceivably find a foothold in the rapidly developing world of preemptive search.

Investors buying Yahoo! today are buying into this vision.

The article Can Yahoo! Buy Enough Companies to Compete With Google? originally appeared on Fool.com and is written by Salvatore “Sam” Mattera.

Salvatore “Sam” is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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