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eBay + Yahoo!: Billion Dollar Online Auction

eBay (EBAY) is an amazing company. Virtually anything can be auctioned on the site. Actually, eBay itself might be up for auction.

It appears that Yahoo! (YHOO) is interested in making a bid to buy eBay. A Wall Street darling -- a company that even has profits -- eBay's stock price has recently been treading water -- that is, until the Yahoo! rumors.

While a deal with Yahoo! will be positive for eBay, it should also be positive for Yahoo!, another company whose stock price has been treading water. What accounts for the slow-down in the stock prices of Yahoo! and eBay is basically that both companies are business-to-consumer plays, which Wall Street has been shunning. However, both companies are Internet blue chips. While all blue chips stall, they eventually come back.

Despite what the market is saying, e-commerce is definitely a viable market and eBay and Yahoo! will continue to be huge beneficiaries. But by joining forces, the synergies can be much more powerful.

Yahoo! has registered users that exceed 100 million. Although an overused word, Yahoo! can "monetize" its user base. By adding the brand and infrastructure of eBay into the Yahoo! community, the results should be instant.

What's more, eBay is developing a sophisticated payment system called Billpoint. It leverages the tremendous technical resources of eBay and has a chance of, in a sense, becoming a currency for the Web. Of course, this will happen much quicker by adding the user base of Yahoo!

The recent merger deal between AOL and Time Warner is definitely placing pressure on portals to merge or engage in broad strategic partnerships. What's more, it has been about a year since Yahoo! has had a major acquisition (the last two were Geocities and Broadcast). So, it would not be surprising to see Yahoo! make a bold move. While it would definitely be positive for the stock price of eBay, it should also jump-start Yahoo!, and perhaps the business-to-consumer space as well.