• MarketWatch, Friday, October 6, 2006 11:30 AM

Yahoo hasn't bought Facebook, and eBay hasn't bought StubHub, the online ticket marketplace that it has been courting for several months. What's the holdup? There are far cheaper options out there, for one thing. Facebook wants $1 billion; StubHub wants $300 million. Meanwhile, there are 100 Web 2.0 companies out there that have received roughly half a billion in venture-capital investments since the beginning of 2005, and that doesn't include independently wealthy angel investors.

A few weeks ago, MarketWatch argued that Yahoo, given its recent troubles on Wall Street, needs a big-time acquisition like Facebook so it can mine new areas, such as social media. But the Web giant, of late, has shown its savvy in the M&A market by buying young companies rather than more mature, expensive ones. Facebook, while only a few years old, would be a departure from that. The reticence being shown by Yahoo and eBay has to do with the uncertainty in their core business. Yahoo has warned the Street twice about lower-than-expected third-quarter earnings--one of the main reasons it pulled its offer for Facebook.

eBay, on the other hand, faces slowing growth in its auction business, and its board--several of whom resigned this year--has come under criticism for shelling out $2.6 billion for Skype, a price that's looking really expensive these days. Some promising startups don't seem to mind that the bigger fish are turning their noses up at acquiring new assets. YouTube has said several times that it would like to remain independent and perhaps go public some day. Photo site Shutterfly just completed its IPO last week.

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