Bear Stearns: Yahoo Must Form A Social Networking Strategy

There is a bit of buzz around the presentation Bear Stearns Internet analyst Robert Peck gave a couple of days ago. It recommends a broad strategy for Yahoo to get their act together in the social networking space, and recommends a near term acquisition of one of the big players.

I’ve embedded the full presentation below. It is a broad overview of social networking in general, which Peck breaks down into four distinct types:

Peck also notes that social network users are not all teenagers – the largest user group is 35-54 years old:

Peck also notes that social networks have incredible reach, page view growth and boast very high engagement (lots of time spent on the sites. He estimates that by 2011 social networks will control 12% of online advertising.

He then goes on to build an argument that Yahoo should acquire Facebook, something they tried and failed to accomplish last year. Compare his valuation model below ($4.5 – $7 billion) to the model Yahoo put together last year ($1.6 billion):

There is a lot more information in the presentation to digest. See below for the entire thing. Also, while it’s easy to tell Yahoo they need to go buy Facebook, it’s not clear that the company is for sale at any price. The public markets would likely value Facebook beyond even $7 billion at this point. Somewhere down the road it might be Facebook buying Yahoo, not the other way around.