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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.
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.
A consolidation of the Microsoft and Yahoo networks could shift a massive amount of infrastructure from open source technologies to Microsoft platforms.Microsoft said that "eliminating redundant infrastructure and duplicative operating costs will improve the financial performance of the combined entity." Yahoo has been a major player in several open soruce projects. Most of Yahoo's infrastructure runs on FreeBSD, and the lead developer of PHP, Rasmus Lerdorf, works as an engineer at Yahoo. Yahoo has also been a major contributor to Hadoop, an open source technology for distributed computing. Data Center Knowledge has more on the infrastructure implications.
Yahoo confirmed that it has received an unsolicited offer and said that its board would evaluate the proposal, "carefully and promptly in the context of Yahoo's strategic plans and pursue the best course of action to maximize long-term value for shareholders."
Judging by this blurb, I think the answer is going to be a big, fat yes.
SEO Copywriter. Just Say ON
Now MS should bid for Pirate Bay aswell!
With an astonishing 62% premium price of its current stock price, Microsoft sent this proposal to the Yahoo! Board of Directors. Here's the . Actually, part of the premium price is explainable by the recent sunk of Yahoo! stock.
January 31, 2008
Board of Directors
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089
Attention: Roy Bostock, Chairman
Attention: Jerry Yang, Chief Executive Officer
Dear Members of the Board:
I am writing on behalf of the Board of Directors of Microsoft to make a proposal for a business combination of Microsoft and Yahoo!. Under our proposal, Microsoft would acquire all of the outstanding shares of Yahoo! common stock for per share consideration of $31 based on Microsoft's closing share price on January 31, 2008, payable in the form of $31 in cash or 0.9509 of a share of Microsoft common stock. Microsoft would provide each Yahoo! shareholder with the ability to choose whether to receive the consideration in cash or Microsoft common stock, subject to pro-ration so that in the aggregate one-half of the Yahoo! common shares will be exchanged for shares of Microsoft common stock and one-half of the Yahoo! common shares will be converted into the right to receive cash. Our proposal is not subject to any financing condition.
Our proposal represents a 62% premium above the closing price of Yahoo! common stock of $19.18 on January 31, 2008. The implied premium for the operating assets of the company clearly is considerably greater when adjusted for the minority, non-controlled assets and cash. By whatever financial measure you use - EBITDA, free cash flow, operating cash flow, net income, or analyst target prices - this proposal represents a compelling value realization event for your shareholders.
We believe that Microsoft common stock represents a very attractive investment opportunity for Yahoo!'s shareholders. Microsoft has generated revenue growth of 15%, earnings growth of 26%, and a return on equity of 35% on average for the last three years. Microsoft's share price has generated shareholder returns of 8% during the last one year period and 28% during the last three year period, significantly outperforming the S&P 500. It is our view that Microsoft has significant potential upside given the continued solid growth in our core businesses, the recent launch of Windows Vista, and other strategic initiatives.
Microsoft's consistent belief has been that the combination of Microsoft and Yahoo! clearly represents the best way to deliver maximum value to our respective shareholders, as well as create a more efficient and competitive company that would provide greater value and service to our customers. In late 2006 and early 2007, we jointly explored a broad range of ways in which our two companies might work together. These discussions were based on a vision that the online businesses of Microsoft and Yahoo! should be aligned in some way to create a more effective competitor in the online marketplace. We discussed a number of alternatives ranging from commercial partnerships to a merger proposal, which you rejected. While a commercial partnership may have made sense at one time, Microsoft believes that the only alternative now is the combination of Microsoft and Yahoo! that we are proposing.
In February 2007, I received a letter from your Chairman indicating the view of the Yahoo! Board that "now is not the right time from the perspective of our shareholders to enter into discus
Apple iProduct. Non importa cosa sia, lo comprerete!
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.
*Repent!Quit Your Job!Slack Off!The World Ends Tomorrow and You May Die!
What would this mean to Yahoo E-mail? Or Flickr? Or the great web developer toolkits Yahoo has release? Just imagine the migration of all Yahoo services over to Windows Server. Unless they leave it alone, whatever Microsoft does would be the kiss of death to what Yahoo is.
Interesting that - imagine building a business using online apps, only to have your supplier go under and get bought out in some botched effort, and then lose history...
I think there are a number of serious implications in this MS/Yahoo deal. The monopoly aspect is actually the least problematic: the loss of history is a greater problem.
But then, maybe the Feds under a Democratic Admin will say "nuh uh!" and kill the deal...
RS
Shoes for Industry. Shoes for the Dead.
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.
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.
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?
gameDB
Just in case you just now got out of the DeLorean, Yahoo bought Zimbra back in September.
"I think an etch-a-sketch with an ethernet port would beat IE7 in web standards compliance."
Microsoft is looking to put google out of business.
One nice thing about Live.com, at least in my humble opinion, is that people haven't gamed the hell out of it. People have SEO'd the crap out of meaningless pages on google, so within the first five to ten results for any given search, I find crap. I haven't seen that with Live.
I try and mix it up, I still use Google a lot but unless they find a way to get people to stop gaming the system, I think Google will have some problems. Seeing pages filled with banner ads in your first ten results for an engineering or computer science topic is disheartening.
I wrote to the FTC to complain because since Yahoo now owns Zimbra, this means that Microsoft will have the ability to kill the only serious competitor to their Exchange platform.
I know about the other solutions, but none are as feature complete IMHO as Zimbra. Two words: Blackberry integration.
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.
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I for one... welcome our new yodeling software overlords.
[signature]
In this story:
http://www.thestar.com/Business/article/299523
Ballmer makes this comment:
" Signalling Microsoft doesn't intend to take no for an answer, Ballmer wrote that the company "reserves the right to pursue all necessary steps to ensure that Yahoo's shareholders are provided with the opportunity to realize the value inherent in our proposal.""
My question is how many chairs does that involve?
This is my opinion. To make sure you don't steal it, it's covered by the DMCA.
For a heavy internet user like me, this news comes as a crisis of conscience. Having been a loyal Yahoo! Mail user for over a decade (the world's largest webmail service), and having so much of my online presence on Yahoo's comprehensive services - Contacts, Flickr, online document storage, Messenger, Y!Finance, Groups, (the list is endless) - I am obvioulsy deeply loyal to an independent Yahoo! ...But one reason that I've allowed Yahoo! to gradually become such an important part of my life is that it's NOT Microsoft. The same sentiments are felt by millions: will loyalty to a very useful Yahoo! be enough to overcome our distaste for Microsoft and the inevitable changes a takeover will entail? This is not insignificant nor a "religious platform issue" - note how Hotmail has fallen from #1 spot in email users after the MS takeover, for example. Yahoo! webmail alone reportedly accounts for 255 million of the world's 543 million webmail accounts, and webmail is only one of a vast range of internet & open source items Yahoo! is involved in.
Yahoo News itself is reporting this as a hostile takeover, but seemingly with Microsoft willing to pay such a large premium, one that will be hard to resist. It's interesting that Microsoft is willing to use up almost all of it's cash reserves for this takeover, largely sacrificing it's flexibility to make strategic investments in the future. But from the perspective of Yahoo! users the more important question is whether a MS takeover will turn Yahoo! into tepid porridge? And will the long, slow decline of Microsoft now drag Yahoo! down too?
If this deal goes through, expect to hear a gigantic sucking sound coming from the direction of Flickr.
blog
I cannot comment on the entirety of Asia, but I am an Indian and from a state called Andhra Pradesh (Hyderabad, in case you have heard of it). We speak a language called 'Telugu' here. I doubt if more than 1 or 2 percent of the world has heard of it.
The amount of Internet penetration here is very very less, apart from Hyderabad. Google is so popular that it is part of our songs [Like Bollywood, which are Hindi films, we have our own industry of sorts with Telugu films and yes they all have songs].
When a movie song has Google in it, it is because the average movie-goer knows what it is.
Google has become a part of our language. The same with some other regional languages include the National language Hindi.
... and I shall strike upon thee with great vegeance, furious anger and a slightly positive karma.
Hotmail has been really bad in the past but the current version of Microsoft Live! Hotmail is actually pretty good. I think Microsoft--if they want good PR--should keep Yahoo! running as a separate subsidiary instead of integrating it into Microsoft itself
the real reason to buy Yahoo is to kill it.
I can see this in a two prong attack to get to Google.
First, by buying Yahoo, they get access to all of Yahoo's users which will be migrated over to MSN. This will give MS the strength to talk to Madison Ave and have the technology that is good enough.
Second, MS will then offer cut rate advertisement (or perhaps a new click model which is deeply discounted), which will force Google to react or lose market share.
Remember that Google is primarily a advertisement firm with some killer search technology, not a technology firm that also does ads- so to use a Ballmer quote from the past, to kill a company, you "cut out the air supply". Google's air is adverts.
Finally, this will cut into Yahoo's open source projects; just a little benefit for MS, but still, it's there.
To a monopolist, $40b is cheep money for killing 2 birds with one stone.
Now, will it happen?
That's another question.
III.IIVIVIXIIVIVIIIVVIIIIXVIIIXIIIIIIIIVIIIIVVIII
OK, Yahoo isn't a small company. This isn't like other acquisitions MS has made. This is more like a Compaq buying DEC. Think about it, Yahoo is sort of losing against Google. So Microsoft is buying a faltering competitor to (a) merge income and (2) reduce the competition by one player.
That makes the game Microsoft vs Google.
Now, can Microsoft really take on Yahoo without destroying it? Will it be like when Compaq bought DEC? Or will it work? Yahoo is all FreeBSD, the engineers there HATE and laugh at Microsoft and its products. I know for a fact that moral will sink and people will leave Yahoo.
There is something different going on here. FAST, Fast Search and Transfer, previous owners of www.alltheweb.com, a search engine competitor to google in the late 1990s split from its search engine business which it sold to overture, which was bought by Yahoo. Microsoft is currently in the process of buying FAST, and next on the agenda is Yahoo. Bringing back together, the two halves of the old company.
It may be a coincidence, but it is curious. Why would Microsoft buy technology that it arguably already has or could build cheaper? What is it they are out to get? Are there patents or other "intellectual property" owned collectively by the two parts of FAST that they can use to sue Google?
Also, Yahoo is a HUGE open source user/contributor. A purchase by Microsoft will almost certainly reduce the number and amount of contribution to the open source environment.
Lastlt, isn't this *exactly* what the Sherman act was designed to prevent?
Reminds me of the Sony root kit debacle, the blogger who released the information about the root kit, his association with M$ 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?
Just because it can't be explained doesn't mean it isn't true. Science fits into reality... not the other way around.
When you scramble up the letters in Microsoft and Yahoo it spells Hot Roomy Fiasco. That can't be good.
Wait, it can also spell Ciao, Frosty Homo. That's not so good either.
Our intelligent designer has never created an animal that we couldn't improve by strapping a bomb to it.
As of a half hour ago, there were multiple anti-Microsoft threads in the help forum and elsewhere. Now they're nowhere to be found...
The M$ moniker is perfectly legitimate and weakens nobody's position in the slightest.
Arguments are weakened by false or inaccurate premises, writing M$ gives a perfect idea of the bias of the poster
Durr. Those two statements contradict each other. Yes, writing M$ DOES give a perfect idea of the bias of the poster...that is, a blind Microsoft hater that takes any opportunity to criticize them.
because they do business in the EU and they have subsidiaries in the EU.
Years ago Microsoft said they would be the #1 search engine and set up Microsoft Network using their best and brightest tech staff and the cutting edge of Microsoft technology innovation, they released many new features bought up some services and integrated them and the best they have achieved is #3 and they seem to be stuck there.
Before MS buys something more successful than they are - I think they should do some serious introspection as to why exactly they were not able to achieve such a lofty goal on their own given how much more value they are (in their words) to the customer. If they just buy #2 there's probably a good chance they will sink back to #3 again as they integrate their #3 ideas on a business operating at #2.
I would think if they really wanted to be #2 they should pay Yahoo to 'buy MSN' and let Yahoo figure out what is wrong with their #3 problem and overlay the staff, technology and features that could make MSN #2.
"Enjoy what you're doing! If it becomes drudgery, you're doing it wrong!" - Jim Butterfield
In what way is "M$" perfectly legitimate?
Look, you have a few choices:
1) You can type Microsoft like a normal non-cretin
2) You can type the stock-ticker abbreviation, MSFT
3) You can type the accepted acronym, MS
All three of those options work. M$ isn't any of them.
Comment of the year
When you're talking about the Microsft's evil twin from the mirror universe... See, an $ is just a S with a goatee.
;-)
The only problem is that M$ actually makes money on OpenSource software and services, and it's founder is a bald and well shaved Robert Stalman, AKA M$ Bob.
---- You know how some doctors have the Messiah complex - they need to save the world? You've got the "Rubik's" complex
...to watch from a great distance!
I remember how many goes it took to get hotmail off of FreeBSD, and I expect Yahoo! to be even harder.
I hope this deal will not go through. I use Google's products over Yahoo's as a matter of taste; I find Yahoo's pages too cluttered to be aesthetically pleasing. Be that as it may, the last thing I want to see is Yahoo going under; which, in my humble opinion, is exactly what this deal would amount to in the long run. Microsoft has a long history of buying out innovative companies and products and subsequently turning them into Passport/Live/insert-buzzword-here clones with vastly inferior functionality than their previous iterations. If Microsoft buys Yahoo! and slowly runs it into the ground, slowly replacing Yahoo's key engineers with Microsoft people, what major competitor will be left to offer (real) innovative competition to Google? I respect all the good that Google has done the Internet as a whole, but I am not blind to the fact that the corporation is now a publicly traded company, and thus subject to the whims of shareholders. If Google's most threatening competitor becomes stagnant, or even regressive, how will Google justify research and development costs to its shareholders? Maybe I'm wrong and Microsoft will retain Yahoo!'s management and employees more or less as they are, but I doubt it. I see this deal as injurious to innovation in OS-independent web technologies.
Look, you have a few choices:
- You can type Microsoft like a normal non-cretin
- You can type the stock-ticker abbreviation, MSFT
- You can type the accepted acronym, MS
All three of those options work. M$ isn't any of themNo. "M$" is a perfectly cromulent disambiguation. Otherwise, we would have trouble distinguishing between
MS==Metric System
MS==Multiple Sclerosis
MS==Mississippi (the state)
MS==Manuscript
MS==Master of Science
And the list goes on and on...
But in contemporary global society, there is only one M$.
Why does it mean he's a blind Microsoft hater? He could very well be a knowledgeable Microsoft hater like the rest of us who have to suffer through the nightmare of Microsoft because they managed to get control of the market despite there being much better alternatives out there that the knowledgeable Microsoft haters have been using for years. The bias is likely for very good, supportable reasons.
Who is John Galt?