Microsoft Bids $44.6 Billion For Yahoo

The news is everywhere this morning about Microsoft's $44.6B offer to buy Yahoo. The offer represents $31 a share, a 62% premium over Thursday's closing price; and Yahoo's stock price has been rising in after-hours trading. Microsoft has been making overtures to Yahoo since 2006, according to the CNet article, including a buyout offer last February that was rebuffed. Mediapost.com has some perspective on the deal from the point of view of ads and eyeballs. Such an acquisition, which would be Microsoft's largest by far — it bought Aquantive last year for $6 billion — would need approval by US and EU authorities. A European Commission spokesman declined to comment.

Comments

Very odd

[l-ascorbic]

Seems so unlikely to ever be allowed by the regulators, yet they're willing to throw billions at it anyway. They must feel confident for some reason.

Re:Very odd

[crispi]

Well if you can't build a good search engine of your own, just buy one.

In fact just like about everything MS has ever done (eg SQL, IE, PowerPoint ...)

Re:Very odd

[jeroenb]

Considering that internet search and online advertising are exactly the places they don't dominate, I don't see why regulators would object.

Re:Very odd

[Mr. Underbridge]

Seems so unlikely to ever be allowed by the regulators, yet they're willing to throw billions at it anyway. They must feel confident for some reason.

If they allowed Google and Doubleclick, they'll probably allow this too. This doesn't give anyone a monopoly or anything close to it, since Google's still #1 in search.

The question is, how long until MS feels compelled to screw up Yahoo like Hotmail?

Re:Very odd

[Bert64]

And most of those products went down hill in various ways after being bought...

Re:Very odd

[Bert64]

Well Yahoo, like hotmail, run all their stuff on FreeBSD...
You can bet yahoo would go the same way, migrating to windows, spending a ridiculous amount on new hardware and suffering significant problems in the process.

Re:Very odd

[Ilgaz]

Well if you can't build a good search engine of your own, just buy one.

In fact just like about everything MS has ever done (eg SQL, IE, PowerPoint ...) Yahoo's power and success comes from multi platform awareness, using right tools for job without caring about what OS it runs (mostly FreeBSD), giving the same service to everyone with a recent browser regardless of OS, being open to all developers even including competitors...

I checked Live.com the day it was announced. When it bitched about not using IE (when I tried to login my passport account) , I never visited it back. That is what makes every MS attempt unsuccessful. They can't live with the fact that there is a thing called HTML standard, TCPIP standard and Internet is platform neutral from beginning. They use every opportunity to alienate other OS/Browser users.

I could never see Yahoo as a great search engine although it seems spammers/blackhats/SEO junk targets them less. For the record, Google has always been a spammer heaven for me too.

Re:Very odd

[rtb61]

Does M$ really want this deal, or is it simply a last ditch attempt by Ballmer to survive. Ballmer has staked his continued existence as the CEO of M$ on his own myopic focus on google. Not only does M$ have to bear the cost of buying Yahoo but also the cost of virtually writing off MSN.

M$ fails in the add market because they have single mindedly created a reputation of untrustworthiness. M$ is the last company you would want give information about future marketing campaigns, if they suddenly decide that you are a competitor they will use that information to their advantage. Reminds me of the Sony root kit debacle, the blogger who released the information about the root kit, his association with M$ and that M$ was fully aware of the root kit well before it's release and for some odd reason the release of the information about the root kit coincided with the launch of the PS3.

Dang it would suck to be a Yahoo or an MSN employee, if the buyout goes through, waiting for the axe to fall, as M$ works to reduced running costs and improve profit margins, especially as the yahoo owners would be crazy to take M$ stock rather than cash.

Of course the US Administration wont bat an eyelid they love monoplies (at least loyal ones) but the EU will most likely baulk at the idea.

The whole idea is crazy, M$ couldn't run MSN properly, so why would the same management team do any better with Yahoo, well at least the ex-Yahoo investors could always buy it back at a 75% discount in about 5 years.

Re:Very odd

[MECC]

Yahoo's power and success comes from multi platform awareness,

For the most part, yes, but the yahoo IM client differs significantly in capability and support from platform to platform.

I checked Live.com the day it was announced. When it bitched about not using IE (when I tried to login my passport account) , I never visited it back. That is what makes every MS attempt unsuccessful. They can't live with the fact that there is a thing called HTML standard, TCPIP standard and Internet is platform neutral from beginning. They use every opportunity to alienate other OS/Browser users.

If ms does get yahoo, they may find that their desktop monopoly won't help them leverage crap as it has for all the other products they've bought and downgraded. The Internet is turf foreign to their business model and corporate mindset, and buying yahoo won't change that. As if anything could. If this deal goes through, yahoo goes down.

Re:Very odd

[Chris Mattern]

Because they *do* dominate the desktop, the place from which internet search and online advertising is done from. And they have a legal history of abusing that monopoly to try to gain market advantage in other areas. "Google? You don't want that. Redirecting page request to www.yahoo.com."

Re:Very odd

[Khuffie]

Either call it MS, or take your childish-ness to the next level and call it M$N. Seriously, you sound like a bitter kid living in his mom's basement when you continuously use M$. Give it up, it does nothing for you but lose whatever point you were trying to make in the first place.

Re:Very odd

[MrNemesis]

I hate getting dangerously close to two Godwin's in a week, but the whole MS/Ballmer/Google thing is increasingly making me think of a certain German's obsession with a Soviet city on the Volga (but that's what you get from erading too many history books). With $45bn being almost all of MS's cash reserve, it stinks of a desperate and obsessive tactical error for the sole purpose of buying mindshare*.

The fact of the matter is, Google started out with the cards stacked against them - miniscule funding, hard drive arrays built from lego, the inability to modify their own consumer operating system monopoly to point their bundled internet browser at their own search engines/portals - and yet within a few short years google was a household name, and is now the de facto synonym for "looking something up on the internet". It's the kind of success that Ballmer can only dream of - a vastly better product than anything else that was out at the time (fast and lean, IIRC an alien concept in search engines at the time), in the right place at the right moment to catch the new "internet boom" that MS had famously underestimated. If I was the CEO of (supposedly) the worlds' leading technology firm, such upstart behaviour would piss me off too.

As it is, I suspect the deal will be approved (the shareholders will love it and I can't see the ineffectual monpoly police battin gan eyelid over this "because MS isn't a monopoly on the internet") but I don't think it's going to do MS much good in the long run. Yet another brand run into the ground.

* Yes, I'm aware that the Y! purchase would net many other gains (such as the oft-mentioned decrease in FOSS contributions from Y!), but mindshare and search hits seem to be the biggest factor here.

So This Means...

[flyneye]

So this means people will begin avoiding Yahoo with the same impunity they avoid MSN?
Theoretically Microsoft could buy up anything good about the internet so we can all shut our computers down and settle in w/a trip to the library and a good book.

And then there were two

[fictionpuss]

Considering that internet search and online advertising are exactly the places they don't dominate, I don't see why regulators would object.

Maybe, but the possibility of there only being two main search engines out there, with the next largest competitor Ask.com at a paltry 4.1%, is fairly scary.

The Empire Strikes Back

[QuatermassX]

It was only a matter of time before Microsoft decided to try to get a final regulatory pass from the Bush administration before the inauguration of a less-sympathetic President in 2009.

This deal makes a lot of sense for Microsoft (sort of - I'm assuming Yahoo!'s ad business really is worth the cash), but I can't see how this is at all good for Yahoo! or the marketplace at large.

Is the plan to re-brand everything as Microsoft Live! (keeping the exclamation mark) - thus destroying pretty much the only thing Yahoo! has going for it - brand recognition?

I would be very sad to see Yahoo! and their odd collection of services get subsumed and destroyed in a merger with Microsoft. Yes, I'm assuming much of Yahoo!'s tech portfolio would be wiped away or left to die - this wouldn't be the sort of merger Adobe engineered with Macromedia by a long shot.

flickr

[suzerain]

Shit, now this means the photos I have on flickr are going to be owned by Microsoft? Oy vey. Can we have a "good photo sharing site" thread now so I can find the alternatives?

Re:nice to see

[Kamokazi]

Yahoo is generally quite a bit more prominent than Google in Asia, and there are quite a few people there. Microsoft has a lot of money to throw around, and if they can make Google insignificant over there, that limits the markets Google can grow in and may pose some serious problems. But it'll take some time before we see any significant marketshare changes I think, and anything can happen. Microsoft might have the big money, but you never want to underestimate Google.

Re:Letter from Ballmer to Yahoo! Board

[Anonymous Coward]

Brief analysis of some key points:

1) Microsoft is indicating that they are challenging Google "Today, the market is increasingly dominated by one player who is consolidating its dominance through acquisition. ". However, This statement should apply to Microsoft. Microsoft is the 800lb gorilla yet they are making it sound like they are a bit player and Google is the gorilla - more management doublespeak.

2) Microsoft is indicating they would replace all non-Microsoft at Yahoo with Microsoft technology with phrases like "combination enables synergies related to scale economics". This is great market speak for lay off all that oppose the Microsoft initiatives and move to a common, Microsoft-centric platform.

3) Microsoft wants their search as, I guess, MSN has not been effective: "single search index".

4) Phrases like "eliminating redundant infrastructure and duplicative operating costs" are management speak for layoffs, firing middle management at Yahoo, moving to Microsoft's management and benefit structure, and similar. In my experience through many corporate buyouts, all are very negative to the employees at the company being purchases - Yahoo. However, Microsoft attempts to temper this with "offer significant retention packages to your engineers, key leaders and employees", which is more corporate double-speak.

5) The "exceptional display and search advertising capabilities" sounds like a tighter integration with Microsoft's technology, i.e., Windows and MSIE. Maybe they want to have tighter integration between Vista and their ad revenue stream. Could "new advertising platform capabilities" indicate ad-supported Vista (get a free ad when you log in, when you fire up Office, etc.)?

Overall, it sounds like Microsoft is saying that Yahoo should sell to them because Yahoo didn't meet their goals, the combined company can better challenge Google, and Yahoo has tech that Microsoft needs.

Re:Fate of Flickr?

[Chabil Ha']

That was my first thought. They can have the portal, the ad business, but PLEASE! excise Flickr from the deal...I'm kinda sorta glad that I haven't based my photo collection with them, but their service has been really nice for sharing photos with other people. Guess it's time to go some other place to host my photos...

I'm confused...

[Crazyscottie]

Reminds me of the Sony root kit debacle, the blogger who released the information about the root kit, his association with M$ and that M$ was fully aware of the root kit well before it's release and for some odd reason the release of the information about the root kit coincided with the launch of the PS3.

The Sony rootkit debacle began in October 2005. The PS3 was released in November 2006. How, exactly, did these two events coincide?