2 Big Reasons Yahoo! Inc. (YHOO) Won’t Buy Zynga Inc (ZNGA)

In addition, the functions of Yelp and OpenTable also appear to more closely align with Mayer’s stated goals of focusing on making Yahoo! an integral part in consumers’ “daily habits,” including things like searching the Internet, checking finance, and handling email. If Mayer had any significant interest in expanding Yahoo! Inc. (NASDAQ:YHOO)’s gaming presence, you’d think she would have made more notable mentions of it to date (that is, unless they’re trying to keep a significant gaming acquisition quiet).

On one hand, however, I’m still not entirely convinced that Yelp’s ad-reliant business is built to last, especially considering its own poor fourth-quarter earnings report from last month.

On the other hand, at least OpenTable is not only cash-flow positive from operations, but also has actual trailing earnings to report — even if it is currently trading for nearly 60 times those earnings. In addition, considering OpenTable’s return on invested capital of 14.3%, the company has continuously demonstrated an enviable knack for creating shareholder value by reinvesting capital in its business. With this in mind, I should think OpenTable is the most attractive buyout candidate of the bunch.

What now?
Even given Zynga’s recent online gambling aspirations, I still can’t picture a scenario where the company can survive (much less thrive) over the long term. Let it suffice to say, then, it’d be a hard sell to convince me Zynga Inc (NASDAQ:ZNGA) is a bona fide acquisition target.

The article 2 Big Reasons Yahoo! Won’t Buy Zynga originally appeared on Fool.com and is written by Steve Symington.

Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool recommends OpenTable.

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