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Yahoo Deal Is Big, but Is It the Next Big Thing?
mattsgotredhair brings us a NYTimes article discussing how Microsoft's bid for Yahoo contrasts against one of the core philosophies of Silicon Valley: looking forward. From the Times:
"Microsoft may see Yahoo as its last best chance to catch up. But for all its size and ambition, the bid has not been greeted with enthusiasm. That may be because Silicon Valley favors bottom-up innovation instead of growth by acquisition. The region's investment money and brain power are tuned to start-ups that can anticipate the next big thing rather than chase the last one. 'This is the very nature of the Valley,' said Jim Breyer of the venture capital firm Accel Partners. 'After very strong growth, businesses by definition start to slow as competition increases and young creative start-ups begin to attack the incumbents.'"
That it ends up hurting the US economy ?
That may be because Silicon Valley favors bottom-up innovation
No, that's San Francisco.
The theory of relativity doesn't work right in Arkansas.
How is this the next big thing when MS buying Yahoo shows how frustrated they are with their MSN Live initiative? Yes, I definitely think that buying Yahoo was a smart move at a great longterm price, but other than them building it directly into Vista 2.0, I dont see how much more good it will do them. The move was simply them "buying" marketshare in an attempt to trump Google. Considering that Yahoo has already shown that they cannot compete with Google, I suspect it will turn out just like the early days of the Compaq / HP deal in relation to Dell. This is just my opinion, however...
How do search engines make money ?
Is is providing information to databases for marketing. snooping and other marketing research?,
Is is advertising ?
Personally, I ignore the advertising and so can others
Ceding any further market share to Apple (or god forbid, Ubuntu) could seriously threaten their most lucrative monopoly.
It worked when Microsoft bought DOS, it worked when Microsoft bought Hotmail, it's current biggest web service. Microsoft does try to innovate, but most often that stuff just falls flat on its face, when Microsoft buys other people's products though, that's when they hit a winner. Saying that the most wealthy, successful software company in the world is doomed to failure for going against silicon valley reasoning is futile when that's what they've always done and made more than anyone else while doing.
When Argumentum ad Hominem falls short, try Argumentum ad Matrem
Sure, Silicon Valley VC folks love startups, because they get a piece of the action. Heck, they were happy as pigs in shit around 1998, despite the fact that about 1% of those startups had any hope of seeing a profit. But it doesn't mean that MS+Yahoo is destined to lose, simply because they're not the chic pick anymore.
None of that has any bearing on whether MS+Yahoo can beat Google or any of the hordes of little companies coming from Silicon Valley.
Do you really think those two things have anything to do with each other? You're mixing up two different divisions in Microsoft.
Also, do you really think that throwing more programmers at a software project will make it be finished faster?
The AACS key is NOT 0xF606EEFD628B1CA427BEA93A9CA9773F
Microsoft has only $17 billion in cash and easily liquidatable shares (almost all MSFT stock). A $44.6 billion bid requires them to "print money" ie Shares. This deal is absolutely horrid for any responsible stock analysist or stockholder for either company. WHat Microsoft is basically offering is to produce new shares, diluting ownership for all involved, which when paired with the rapid selloff upon deal conclusion, will drive the price of the stock downward even moreso than it has been since (It still hasn't recovered from the recession of '01). Add in that their operating cash is mostly stocks which would be driven down by this, you're looking at the potential for a bite more than they can chew.
Karma Whoring for Fun and Profit.
Many investors aren't happy.
http://www.bloomberg.com/apps/news?pid=email_en&sid=am1odVZXMwjk
They're not really issuing new shares, but MSFT has been repurchasing stock over the past few years and they would have to give all those shares to Yahoo's shareholders. Many investors would likely sell, and drive down the price of MSFT.
No.. the shares that they've bought back is listed on their SEC report under cash on hand and short term investments. All of them are accounted for.
Karma Whoring for Fun and Profit.
I was inconvenienced enough when I had to switch from Hotmail to Yahoo mail. Yahoo has been my primary spam account (meaning I used to to register an email for all the websites I visited, but I still occasionally scan through emails there) for years now...
... Yahoo's spam filters (which were pretty good compared to most of the other services I've tried) would have a first pass at it before my computer ran an additional pass. I'm guessing that functionality won't last too long once Microsoft takes over, much like Hotmail went way downhill after their acquisition, not just because they switched their servers from FreeBSD to Windows server, but the spam filtering got really weak and they added plenty of their own spam.
It was really convenient with fetchyahoo.pl
Anyway, not looking forward to resetting my email address for dozens of websites I don't even remember.
Vut that is true for the small startups. For a company that used to be a big boy itself, may be it is not a very "respectable" thing. But respect is probably over rated anyway.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Microsoft wants the advertising dollar. Right now the very low usage of their search engine means they're a long ways behind Google. Add Yahoo's services to their own and expand their advert network across both, and it might start proving attractive to advertisers.
Cisco is Silicon Valley's poster child for acquired innovation -- acquiring over 100 companies in the last 10 years (see http://en.wikipedia.org/wiki/Cisco_Systems_acquisitions). Letting someone else's VCs pay for your R&D is a great way to always have the best of the best technology. And don't most of the Valley's VCs and "brain-power" cater to this growth-by-acquisition model. Isn't the exit strategy of a VC or serial entrepreneur defined by getting a Cisco, Google, or Microsoft to by the company?
Two wrongs don't make a right, but three lefts do.
Steve Ballmer must be looking at this from Lewis Black's perspective:
... and it's a fuckin' thing!
We need to build a big fuckin' thing. I don't care what it is, so long as it's big
The higher the technology, the sharper that two-edged sword.
It's only dilutive if Yahoo! is worth less than $45 Billion. The drop in the stock price is an indicator that some people think so(especially short term).
They currently have ~$1 billion a month in cash coming in, so even if it is a complete failure, they will have paid for it in a year or three.
Nerd rage is the funniest rage.
I was going to pick up some MSFT stock, but you just "squirted" all over my plans.
Sort of a roundabout way of pushing Silverlight into mainstream use?
Also, what about all the opensource stuff Yahoo is sponsoring, guess we won't see much of that anymore.
Bart
This would have been bigger news 5 years ago. You get the impression that Microsoft is so big and fat that by the time it gets it's fat bulk moving to the kitchen it's roommate has eaten all the ho-hos?
Heck of a job, Balmy!
OSGGFG - Open Source Gamers Guide to Free Games
Lots of users. Lots of places to hang signs and ads. Lots of groups. Lots of apps. Lots of little businesses.
Yahoo is a country with lots of geography. That's what Microsoft is buying.
It's not a new widget. It's not Web 2.0. It's not some sort of way-kewl social site with a new innovative bent.
It's the real estate. One more time: Microsoft is buying web real estate, not bottom feeding, not buying rotten tech.
---- Teach Peace. It's Cheaper Than War.
MS looses to Google because their management makes bad choices. At least their choices are bad when compared to Google's.
MS's management will continue to make bad choices. If they had enough money to buy Google itself, and if anti-trust concerns weren't a factor, it wouldn't matter. They would break Google and push it into the ground. They problem isn't their strategic position. The problem is in between their ears.
Look at Hotmail and Gmail. Hotmail was a very early web email service. MS bought them. Then they just let it sit there. MS people saw Oddpost coming down the road, and they should have gotten all pumped up with what was possible. That's apparently what happened at Google -- someone saw that fancy Oddpost ajax email client, and said, let's do this better than Oddpost is doing it.
MS doesn't try to do much until someone pokes them with a stick, and a lot of times they don't do much even then. Right now the world is screaming at them about all of the things wrong with Vista, and their response is -- no, you are all STUPID, and we are right, and you just don't get how awesome Vista is.
They're not fixing anything.
They're the victims of their own monopoly. They're fat and stupid and lazy, and they think the world owes them success. They're insanely profitable, but it's because they're in the catbird seat, and not because they're earning it. They don't have to earn it, and because they don't feel the heat, they can't earn it.
So you know, sit back in your lavish headquarters, and reminisce about how great it was to go out and threaten to cut off people's air supplies, and how wonderful the world was when you could bully people effectively.
I feel bad for yahoo. I remember when it was just some page on a guy's workstation at stanford. They did a lot of great things. They don't deserve this ignominious fate.
And there are stories floating around that yahoo people are saying -- there's no way in hell that we'll work for MS. So, MS, know that everyone dislikes you. And know that it's a direct consequence of your deliberately cultivated culture of bullying and thuggery.
Everyone at yahoo knows that when you buy that company, you're going to break it, and that going to work on a day to day basis is going to suck. And believe it or not, that has a lot to do with why you will not beat google.
Someday google will suck too. Their culture will rot, and dumb people will climb on top of the smart people. But that day is a long way off.
So you know, go off and think about how to make sure my monitor will prevent me from playing unauthorized videos, or how to make my computer's audio system check up on the license status of my music. Because I'm your customer, and believe me, that's what I'm really pining away for. That's what I want more than anything. You know me so well it's scary sometimes.
I really doubt that MS will disappear due to this or other missteps, but that does not mean the probabilities are nil to none.
From what I can remember the aquisitions though have always been for technology they don't already own or do own but inferior. If it goes through they get Yahoo market share, but if they tinker with Yahoo too much most likely people will leave Yahoo since if they wanted to use Microsoft Search they would do. Market share is all well and good, but even with their combined market share they would still be a long way behind Google and Yahoo has nothing that I can see that could be classed as a "Killer App". If the sale does go ahead what is going to happen? Are they going to call it Microsoft Yahoo and have the run side by side with their current offerings? Also Yahoo is also a failing company with no direction, they even brought back an original founder to get things moving again but it has n't made any difference. Personally it does n't make any sense to me, but maybe I will be proved wrong time will tell.
But Microsoft usually buys really small companies with good products where they can use their marketing skills to build up market share. Yahoo is a bit different to their usual takeover target.
You could buy some Yahoo stock and sell quickly to MS only for cash. However, I think the recent rise in Yahoo shares indicates others are pursuing that line of attack. I suggest looking elsewhere for now, or you might end up owning the stock you have decided to fore go.
have you thought about this scenario:
MS offered 60% more than what Yahoo was worth, Yahoos stock skyrocketed. The FTC might forbid the deal (for example because of Zimbra vs Exchange) or MS __MIGHT__ drop the offer... this would lead to panic stock-selling which COULD ruin yahoo (one competitor less for MS...)
I don't say this defenitely is the plan, it's just something that crossed my mind, because I don't really understand this extremely high offer
The MAFIAA is a bunch of mindless jerks who will be the first up against the wall when the revolution comes
Hotmail the biggest web service? Just cause you have 5 billion spam email accounts doesnt make it the biggest, Id say its one the biggest used for disposable email spam accounts. Id say gmail is trumping Hotmail.
I use Yahoo, it's not my favorite search engine, but I have an e-mail address there. I know exactly what m$ would do when they get their hands on Yahoo:
1. Rewrite Yahoo to use Microsoft Silverlight as much as possible
2. Redesign Yahoo Mail to look like this
3. Convert everyone's existing Yahoo Mail accounts to Windows Live accounts (which would cause lots of problems anyway)
4. Charge extra for using Microsoft Outlook, Evolution, or other mail clients (IMAP access)
5. Limit the space you have to a very small size
That's mostly true. However... Yahoo's another thing altogether.
The products you mention there were innovative. They were from small companies that were light enough to be easily assimilated. Yahoo is neither of these things. The company itself is as bloated and dysfunctional as its products. It was dying, not innovating. They've been in steady decline for at least 3 years.
If MS doesn't buy them they would go the way of AOL within 5 years. The pool on the original article got it spot on this is two dinosaurs mating. One has a chance of survival. Yahoo was already in terminal decline.
Like the DC political Village, the Valley is largely a creation of its own press corps. In buying Yahoo, Microsoft, the perennial outsider has decided to spend the money necessary to grab a real beachhead in northern California, which will, in the long run, allow it to compete directly against the Silicon Valley incumbents for talent. Microsoft's benefits, for instance, make those of any of the big (or small) Valley corporations look like trash, and their salaries are quite competitive.
I'm betting that MS expects that presenting their own services under the Yahoo label will take away the stigma of the Microsoft brand, while making the Yahoo brand more competitive. Since Microsoft's web offerings have a generally superior user interface to those Yahoo presents, that's likely to be true. It's an audacious plan, and it's far from the move of a failing behemoth that's being presented.
Former Chairman Bill could buy it and give it to Microsoft - he is looking at giving all his money away to charity after all.
I think that you will find that Microsoft does not (yet) own gmail. The grandparent said that Hotmail was MS's biggest web service, not the biggest service of all on the web.
The Yahoo deal will only kill Yahoo and make Microsoft loose more.
Since Windows OS and Office dominance on the desktop and to some degree Windows servers Microsoft does not have any "next big thing".
In fact, it has completely missed to recognize the importance of the Internet. (Bill Gates infamous comment for business leaders in Hungary: "Internet is not a serious thing, it's for college kids.")
Microsoft is the prisoner of it's own "closed" corporate ideology, which is a totally different and incompatible with the shift of paradigm the Internet brought to light.
Microsoft core and money making products (desktop OS, Office apps, mail, file server) has reached a point where there are no revolutionary next big things on the horizon, no excitement and anticipation to upgrade to newer versions. This is going to effect Microsoft revenues more and more seriously, as customers will refuse to pay for newer versions, while their needs are served with the existing and paid for products. Rewriting Vista from scratch for billions of dollars now makes Microsoft look like a fool, since they did not bring anything that makes customers want Vista. The price value of a Vista upgrade from XP is not more than maximum $25 from a customer point of view. Even for that price only geaks would bother, the average computer user is as excited about a new version of Windows as people are excited about their new washing machine. Personal computers for general users are now in the same category as any other household device, they do their things, the less maintenance, headache, the better. No average Joe is marking his calendar for Bill Gate's new keynote speech - they all know already where they want to go today and tomorrow with their laptops, phones, iPods, TVs. Nobody is looking anymore at Bill Gates as the (self-appointed) new Messiah, who will lead the masses to the bright future.
In fact, Microsoft does not have a valid vision for a long time. Microsoft has been trying to catch up with everything they have not even registered on their radar screens until it was way too late: from web-based email, iPod, web search and social networks. Once they learn from the press that those were the 'next big things", Microsoft starts a desperate catch-up: buying Hotmail, developing Zune, they were supposed to make a better search engine that never got the slightest attention of the public, bought part of Facebook and now planning to buy Yahoo.
But MS owned Hotmail and even their corporate Exchange missed the "next big thing" in email, which was brought by Research in Motion and Google's Gmail.
MS developed Zune is no competition to iPod.
MS developed search is not in the same league with Google.
Facebook after MS partial ownership got the advertising "reinvention" all wrong.
Microsoft has been pouring the famous cash reserve into reinventing itself - with very Gizmo results.
Their cash-cow product line is no longer automatic cash-cow. Their new releases are fundamentally driven by financial market expectations, instead of meeting costumer demand. Now even Microsoft-lover CEO's are starting to get the clue.
In the public view, Microsoft is an emperor without clothes - and the view is not sexy at all.
Besides, we all know how these stories end.
$1 billion gross - $1.1 billion cost == net loss of $100mil a month, which is what you are finding if you check on their growth charts since 2000.
Only way for your math to work would be for them to cancel all R&D, tech support, and shut down every server, laying off everyone.
Karma Whoring for Fun and Profit.
MS shouldn't be allowed to do this due to their monopoly status. My fear is that too much focus will be placed on the primary mission of yahoo (trying to compete with Google), and not enough on the incidentals. You can bet MS would dismantle as soon as possible use and development of many open source technologies, such as Zimbra, FreeBSD, and php. Yahoo plays huge roles in those projects, and this deal could significantly impact those projects for the worse.
At the very least, the Zimbra vs. Exchange situation needs a hard look, since yahoo drives that project entirely and productizes it as an Exchange competitor.
XML is like violence. If it doesn't solve the problem, use more.
hmmmmm..
Microsoft.... proving Slashdot nerds wrong for the last decade.
Take one company that isn't being successful at competing with Google.
Add to that, one more company that isn't successful at competing with Google.
What you end up with is one much larger company that isn't able to compete with Google.
I find it truly inconceivable that someone thinks this is a good idea for either company. If Yahoo were truly on the bleeding edge I could actually buy this proposal but Yahoo has been in catch up mode itself. The only thing I believe that this does for MS is provide a much larger market share for Google to take from them.
load "$",8,1
Where are you getting your numbers? Here are good places to look for the net income for the last quarter and last year:
http://www.microsoft.com/msft/earnings/FY08/earn_rel_q2_08.mspx#income
http://www.microsoft.com/msft/reports/ar06/staticversion/10k_fh_fin.html
I see ~$4 billion for the quarter ~$12.5 billion for the year(2006, they have not reported 2007 yet).
Note that those numbers are after taxes and such, so they are the 'net' numbers, the operating income is somewhat higher.
Maybe you were talking about Yahoo!'s earnings?
Nerd rage is the funniest rage.
If Microsoft ends up buying Yahoo, does that mean I will be a subscriber of AT&T-Microsoft DSL?
It's hard for people to tell when a turning point has been reached or when one epoch gives way to the next. Usually it's up to the historians to affix a date or determine the significance of an event. Sometimes a turning point is blindingly obvious, a turn for better or worse. The most deceptive turning points are the ones that occur when everything else appears hunky dory. For a non-Microsoft example, when will we mark the fall of the American empire? Historians mark WWI as the beginning of the end of the British empire and WWII as putting the final nails in the coffin. America, growing in power after the first world war, assumed ascendancy after WWII. The Brits could not keep up with the expense of maintaining a modern empire, the return on investment simply was not there. They had to let go of the possessions and become more realistic in their ambition. Looking back, I think historians will say that mismanagement did us in, the same as with the Soviets. Both countries are rich in natural resources and there was no physical need for decline. First, mismanagement squandered American wealth, mismanagement by corporations and by government. With the eye firmly focused on the next quarter, never the next year, little was reinvested into the country. Dependence upon foreign oil for energy and foreign investors to meet runaway public spending meant that the fate of the country was placed in the hands of others, an abdication of sovereignty. The beginning of these trends will probably be placed in the 70's even though the unmistakable collapse might be a year or a decade or more away.
To compare this to Microsoft, their profits are still very high. The quotes I've seen say that Office 2007 is making a lot of money. Microsoft is still kicking ass in one segment of the computer business. The problem, according to those of us who feel they're in trouble, Microsoft isn't doing well in other markets. The 360 is still losing money, Apple and Linux are offering more and more compelling desktop solutions every day, etc. I did a home consult on a dead computer two days ago and the lady of the house was evangelizing about how much she liked her powerbook. Her daughter's machine was the one I was fixing and she said it's replacement will most certainly be some manner of Mac. Her husband is happy with his stinkpad but said he's wanting to look into something other than Vista for his next machine. These are not geeks, these are not opinionated slashdot readers, these views represent Joe Q. Public.
Now I could be completely wrong here, that's a given. But I think that that historians will say that the 2000's were where Microsoft's edge turned into a liability. They had a monopoly for so long, they came to see it as an entitlement rather than something to be earned. Customers formed such a jaded opinion over Microsoft's way of doing things that business decisions ended up becoming personal. The anti-trust case will be used as an example of this, dozens of companies and fevered egos in the computer industry coming together to denounce Microsoft, not just because they had a self-serving interest to bash a hegemon but because their dislike of the company became personal. During the transition between Win98 and XP, only geeks complained about product activation and phoning home, fisher price GUI, etc. The average person loved it, vast improvement over 98. Vista was where Microsoft lost it in the court of public opinion. This will mark a decline, most certainly not a disappearing but more like becoming one vendor among many rather than the lone super-power in the world.
Kwisatz Haderach
Sell the spice to CHOAM
This Mahdi took Shaddam's Throne
MSFT isn't in the valley
outside of being able to leverage their position with the desktop OS, they have lost billions annually on everything else. They are fine with that too, not happy but ok with it since it keeps others in-check. It is the same for this deal with Yahoo since they need to keep Google in-check. They did it with Netscape by forcing MS IE on ISPs and OEMs. They did it to Palm by selling WinCE/PocketPC/PocketMobile/etc at losses in excess of over $10 billion. MSN was an attack on AOLs market position and that too is losing billions and the internet and broadband helped knock AOL down a notch anyways. Xbox was designed to try and box in Sony from being the digitial centerpiece of the living room. Again, losing billions.
But, Microsoft brings in so much profit from the position desktop Windows and MS Office have that they can fund these for a very long time. So this is the same tactic to be used for Google in the MSFT/Yahoo proposal. They need to knock humpty dumpty(Google) off the wall because they feel he is a threat to their market position with him looking so good where he is. And the fact that Google is built and run on Linux technology means that they'll be willing to use a bulldozer full of money to knock that wall down. IMO.
LoB
"Anyone who stands out in the middle of a road looks like roadkill to me." --Linus
If Microsoft's plan is to acquire Yahoo's customer base for assimilation into Microsoft Live services, that can only play out in one direction: Loss of some customers to Google. Yahoo, as it stands today, is pretty much platform neutral. I use it from Linux systems as easily as others do from Windows or OSX. Microsoft technologies haven't given any advantage to their online services, even though statistically most people are using Microsoft platforms. I don't see them benefiting Yahoo to any degree.
IMO, what this might be is an accounting trick to pacify irate shareholders. After years of Microsoft sinking billions into services and having few customers to show for it, for a few dollars more, they can add the Yahoo customer base to their numbers, average out the sunk cost per eyeball and come out smelling (a little) better.
Have gnu, will travel.
Why has nobody mentioned that Yahoo is still the #1 site?
No, I am going by microsofts. Look at their cash-on-hand numbers for the past 8 years. Went from over $50 billion to now under $17 billion. They're performing fancy accounting to try and show a profit, but once you crunch the numbers, there's no true profits being generated.
Karma Whoring for Fun and Profit.
Yeah, all that cash just up and evaporated(no, it actually didn't):
http://seattlepi.nwsource.com/business/309852_software02.html
There are more than 9 billion shares of Microsoft outstanding; in 2004 they paid a special dividend of $3 a share; that's a $27 billion reduction in cash at hand that went straight to shareholders, not tricky accounting. Do I need to go on?
Nerd rage is the funniest rage.
I thought Microsoft was more known for swallowing things whole anyway!
Given their poor track record on internally integrating other products such as Project or Visio, how is that anyone, especially inside MSoft thinks this is gonna work out well for them in the long run? They internally suffer from a) NIH (not invented here), b) Apple-envy, c) left-hand, right-hand, middle-hand not knowing what's going on, c) probably NO enthusiasm on the part of the MSN folks for this deal (you can just imagine the turf wars this will engender, c) the bailing-out for the best technical folks at Yahoo....HOW does this possibly work????? It's the equivalent of, if IBM had bought out MSoft in the late 80's...it just wouldn't have worked; IBM had to reinvent itself (as a services company) to remain relevant and profitable because they were dying then (their mainframe line & SAA-O/Ss the functional equivalent of Vista/Office 2007. Vista and Office 2007 are disasters that have not fully been accounted for...and they will be. And this will be a distraction (maybe it was planned that way by MSoft executives *"Hey, look over there!"...because the O/S-Office market is starting to fade on them.
No "fancy accounting" involved. They have been giving dividends to their shareholders. That's what companies do with their profits: either spend/reinvest it, or give it to their owners. Cash on hand has nearly nothing to do with profitability. Having $50 billion just sitting in the bank seems kind of stupid, because it's making no more than interest.
The real "Libtards" are the Libertarians!
I can just as well proclaim that this offer is unusual because Microsoft is more evil than all Silicon Valley companies combined. Who cares? We already know that Microsoft can't create anything new and can't sell anything unless it is a prerequisite of running the latest version of MS Office or occasionally Visual Studio. We know that its "online business" never was designed to stand on its own but was supposed to be a vehicle of pushing services that require Windows. If they suddenly want to compete with Google they have to buy their closest competitor.
Of course, if they will do that, their pride won't allow them to keep it running on their current Microsoft-products-free infrastructure, so they will try to pull Hotmail on it. The difference is, of course, that Yahoo is much more complex than Hotmail ever was.
Contrary to the popular belief, there indeed is no God.
it worked when Microsoft bought Hotmail
Is Microsoft making money off Hotmail? Is Hotmail inducing anybody to buy Windows or Office? If not, it was a waste of money. And I don't think it is: Microsoft lost $77m on MSN in 2006.
Saying that the most wealthy, successful software company in the world is doomed to failure for going against silicon valley reasoning is futile when that's what they've always done and made more than anyone else while doing.
Microsoft is making money with their near monopoly: Office and Windows. Anything else is negligible or a money loser.
http://seattlepi.nwsource.com/dayart/20041022/MicrosoftResults.gif
http://www.newrowley.com/images/blog/2006/msft_profits606.jpg
It's a joke really. Nothing the company is doing is working. Even Xbox only has high revenue because it's subsidized so heavily and the company is bleeding money on it.
Yes you do, as that would be paying out a dividend more than the net profits of the company. That cannot be sustained now, can it?
Karma Whoring for Fun and Profit.
Seriously. People in the Valley have notoriously short memories, but they do remember the Netscape/AOL/Time-Warner goat rodeo. They also know that the fact that Yahoo! is the #2 search provider doesn't make it a good fit with MSN. Struggling + Struggling != Successful. Nobody has explained how this actually makes any sense for Microsoft, beyond absurd, vague talk of efficiency. We'll see how efficient it is when Yahoo, which has had a hard enough time pulling in all its acquisitions, will be merged with MSN (if the deal in fact occurs).
This is the bean-counters getting excited at the size of the deal and not looking at the technology, culture, and competitive landscape of the two companies. This has desperation written all over it.
Read the EFF's Fair Use FAQ
If I ignore the incidentals for the moment (which I fear regulatory agencies might do), I'd be looking strictly at the online presence situation of the market. MS can't buy google, so is settling for yahoo. The fact that the resultant online presence of MS and Yahoo would still trail dramatically Google (even assuming some people wouldn't abandon yahoo, which they would). The fact is they can't buy off a majority as it stands, and most people observing don't see how MS could possibly use this as a way to pass Google, and as such, in the apparent point of the whole thing, it appears to be a dead end. The stuff that the mass media/most people don't even know about that can be classified as competitors in realms where MS maintains a monopoly will be what suffers.
XML is like violence. If it doesn't solve the problem, use more.
The offer is not what you think it is. Look at who is driving it and compare him with a guy named Phil whose company did exactly the same thing buy purchasing Ashton-Tate way back when. Amazing the similarities eh?
Board and executive egos aside there are cultures to consider. A friend who works at Yahoo tells me that up to 20% of his department would resign rather than work for Microsoft, and +20% of the rest would take advantage of it as long as they could. The way I see it is both corporate cultures are in decline. MS has not been a destination for the best and brightest, except perhaps right out of college, for at least 10 years. Yahoo still has clout but has problems with retention due to management. Unlike Google neither of these cultures has kept up with the rest of Silicon Valley for quite a few years.
But then it's most likely the money that will drive this decision, assuming it isn't derailed for the non-trivial anti-trust hurdles it won't likely survive. Microsoft has the money but then so did Borland, and so did Sun when they bought Cobalt... Like Kennedy in the Bay of Pigs, nobody is pointing out the elephant in the corner, that MS cannot handle a Yahoo acquisition (profitably). But then this isn't really about profitability is it? It's all about the next quarter, and the financial analysts will, as with the mortgage industry, not to look at it from any other angle.
According to Microsoft's latest quarterly report (available on www.sec.gov/edgar.shtml), they have 21 billion in cash, equivalents, and short-term investments. Microsoft can make up the difference by issuing new shares, but that is an unlikely strategy. They will almost certainly fund most of the buyout by issuing debt (e.g. bonds), and considering their $4.7B profit (not revenue) in the 3 months of Sep-Dec 2007, I don't think they'll have a hard time paying it off.
Well no, it can't be sustained, but there isn't any intention to sustain it, it was a one time thing to move that money off of their balance sheet.
Anyway, here is a page listing all the dividends Microsoft has paid to shareholders:
http://finance.yahoo.com/q/hp?s=MSFT&a=02&b=13&c=1986&d=01&e=3&f=2008&g=v
There are about 9 billion shares outstanding, and there has been the entire time they have been paying dividends, so we can calculate that they have given ~$40 billion dollars to shareholders since 2003.
Earlier, you complained that their cash on hand went from $50 billion to $17 billion, a decrease of $33 billion dollars, and used that to claim that they were not showing a profit. I am pointing out that they have taken more than that $33 billion off of their balance sheet in a way that is good for shareholders(this is what a dividend does, it transfers assets from the company to the shareholders), so you can't use that number to show that they are doing some sort of tricky accounting.
If you total up their net income over that same period(2003-2006):
http://www.microsoft.com/msft/reports/ar06/staticversion/10k_fh_fin.html
You end up with another $40 billion dollars. So out of $90 billion(your 50 on hand and my 40 in income), it is easy to account for the $40 billion in dividends paid, and the $34 billion that they had in cash and short term assets at the end of fiscal 2006, a total of $74 billion.
That leaves at least $16 billion to figure out what happened to(more if you want to factor in income before 2003), but that's a good deal less than the $40 billion that shareholders got paid(If shareholders had got paid $24 billion, there wouldn't be anything to figure out), so it doesn't demonstrate a loss(just some potential imprudence). It wouldn't be all that shocking for a $200+ billion dollar company to invest $16 billion back in itself over 4 years(or so, maybe more, over a longer period), so I wouldn't sweat it.
What it amounts to is that Microsoft is among the most profitable companies in the world. Their growth is amazing; they add as much new business each quarter as Google is adding in a year, but they are already so big, no one notices.
Nerd rage is the funniest rage.
Could it have something to do with Hotmail being around a bit longer than Gmail? Could it have something to do with Gmail being a bit more picky than Hotmail while Gmail was in its infancy (join by invite only)? Could it have something to do with the unwashed masses who turn on their brandy-new Windows computer and get an offer for a free email from Hotmail?
That said, I'm a Yahoo! user, and while I'd love to be all snooty and leave Yahoo! right before Microsoft buys it, I'll stick around and see what happens, since I use services like the Yahoo! disposable email addresses and Yahoo! Groups. As soon as these services break or I'm required to use MSIE 7 on Vista and my Mac and Linux boxes are shut out, then I'll leave.
DT
Is this thing on? Hello?
This will kill zimbra for sure. Microsoft won't want any competition against exchange. Nice bonus for redmond!
We were seriously considering to use zimbra as our collaboration solution before yahoo bought it. Luckily we decided to wait out a little bit to see where zimbra would go after the purhace.
Unfortunately other groupware-style software aren't at the same level as zimbra regarding end-user ease of use. Citadel will probably be our #1 candidate now, but it's web client is darn clumsy.
You just sang and danced and your way to cover, and it doesn't work. $16 billion reinvested would not be called a net profit, it would be part of the cost between gross and net. You are still talking $16 billion just flat out gone, missing, evaporated! And this is the company offering to buy another one for $44.6 billion? You tell me, how does this add up?
Microsoft is suffering, they are failing, and if I were you, I'd flee before the whole company implodes spectacularly. I saw a similar situation a few years back with a company my grandfather had a lot of his retirement in, some small firm called Enron.
Karma Whoring for Fun and Profit.
Not song and dance. 40 greater than 16. Not shareholder. Not employee. Mild exposure through S&P500 index fund. Trying desperately to cure you of your inability to understand. Failing.
(Last year net invested in company this year->profit disappear)
Nerd rage is the funniest rage.
They've paid $40 billion in dividends off of net profits of almost $100 billion, yet had their cash reserves drop by over $40 billion...
As Atari once said, Do the math.
Karma Whoring for Fun and Profit.
There are a number of Open Source contributors working for Yahoo and allowed flexibility in the office to contribute
back to little things like PHP (Rasmus Lerdorf, creator of PHP is an infrastructure engineer), FreeBSD, Apache, and Perl.
I have trouble seeing these individuals wasting time doing a like-to-like conversion from open to proprietary
tools and platforms just because there's money waved in front of them. At that point, what Microsoft has purchased
is yesterdays tools sans the minds that made them work. Balmer's business blinded rush to "shareholder value"
has him pissing in the well of Yahoo's technical culture. I speculate the folks at Google are flooding e-mail and
voice mail inboxes to internal and external recruiters and candidates, licking their chops to let Microsoft force top
technical talent into their waiting arms.
In the meantime, I guess I need to run a checklist and remember what services to possibly switch over
to the Google equivalent of if this goes through. Microsoft can't have my money, and they can't have my
eyeballs directly for marketing bucks either.
*** Sigs are a stupid waste of bandwidth.
Look here:
http://www.microsoft.com/msft/earnings/FY08/earn_rel_q2_08.mspx#cash
Nerd rage is the funniest rage.
What is there to understand. They have, since 2000, had a net profit of roughly $100 billion. They have, since 2000, expended roughly $50 billion in dividends.
I have read their SEC filings every year, as a former stockholder should. Since 2000 I've been noticing bizzare habits, bad trends, and now a company in serious financial difficulties using every trick in the book to keep itself afloat.
Giants in industry have fallen on hard times and used similar tricks in an attempt to shore itself up. I just fear that this yahoo stock-swap might be a bridge too far for the company to handle, and I've stated that fear. I have had a dozen people directly address me, trying to "make me understand" but in the end, you cannot subtract $50 billion from $100 billion then minus the $roughly $40 billion that has evaporated from cash reserves and get $17 billion out of it.
Karma Whoring for Fun and Profit.
Yes, I see serious financial trouble. They are using cash reserves (which is mostly shares held in itself) to maintain a front of profitability and dividend price. This cannot be maintained forever, and Microsoft has shown no change of direction in order to correct this.
Karma Whoring for Fun and Profit.
Quite true, a bond issuance would work, save Microsoft has already offered it as shares. 0.97 a yahoo share per microsoft share.
If this was a bond issuance, wouldn't have much to be concerned about. But when you have $17 billion in stock of your own company as part of your cash and short term investment sheet... it can get ugly if the merger does not come off perfectly.
Karma Whoring for Fun and Profit.
Taxes. See this file:
http://www.microsoft.com/msft/download/Yearly%20Income%20Statements.xls
(which shows a net income of ~$76 billion since 2000, after taxes and one $375 million accounting charge)
The reason people keep telling you you are wrong could well be that you are wrong...
Nerd rage is the funniest rage.
I have a hunch that its all about the patents Microsoft could get(next to nothing) in the process. Remember the double click pataent that Google won for somthing like $3.8B?
Love Linux and 3D (OpenGL) Linux games.
They'd have to focus on integrating the two company's offerings before they could turn their full attention to R&D. They may be able to push their respective platforms forward faster by staying separate, rather than having to devote resources to an integration nightmare.
a major issue that makes younger companies more attractive to industry talent than older companies.
Starting your own company is inordinately risky, but if you go to work for a pre-IPO company that is already profitable like facebook, or like google was it's IPO, you are basically guaranteed to be make a few million in a relatively short amount of time.
If you join a post IPO company that is still new and doing well, you can still make your own salary over again in stock options. Also, newer companies are usually hungrier and more aggressive about geting good talent than established companies, so they will generally offer better compansation, although not always in salary, for instance google offers significant bonuses and strong benefits like free meals that significantly increase total income even though their salaries aren't spectacular.
However, older companies tend to be a bit more complacent, and tend to follow the curve on employment benefits instead of pushing it. Microsoft has reasonable salaries, but I doubt their total compensation is competitive with Google, Yahoo (I know yahoo offers a *lot* of money for some of their most talented developers), and Facebook. I don't know their detailed pay structure though, so maybe someone currently working at Microsoft can post with details on what kind of compensation various developers can expect.
In addition to compensation issues, it is also true that the smartest people want to be working on something new and cool, and the fear when working at a company like microsoft is always that you will be made into a cog on the machine working on a fairly small and unimportant widget on a larger application like office.
Also, one of microsofts major disadvantages is that developers report having less freedom there i.e. they can't design and implement their own product even if they have the drive to do so, they have to get someone several layers up to sign off on such an idea before they can start working on it. This just isn't true at a lot of the newer companies. The new model is that engineers are encouraged to work on those areas that they care about, and get management support after the fact for projects they want to productize (eventually, management does have to nip some side projects in the bud if they aren't going anywhere).
In general, Microsoft has to overhaul how it compensates developers (and advertise this! if no one knows that microsoft guys are treated well, it doesn't help them) and overhaul management structure so that individual developers have more freedom to innovate on their own. Oh! and they need free food. The cafeteria food was way overpriced the last time I checked. That becomes a major cost for employees over the span of a year.
To summarize that (all of which I agree with), 2008 will be looked back upon as the year Microsoft jumped the shark.
Microsofts cash pool of just over 21 billion may appear limitless, but when you put forward 1/2 of a 44 billion deal in cash, that pool disappears quite quickly.
http://globaleconomicanalysis.blogspot.com/2008/02/microsoft-panics-overpays-for-yahoo.html for slightly more technical analysis of the deal. (i am not related to that website in any way)
Microsoft is by far not the first to change nor is it particularly good at it.
Calling someone a "hater" only means you can not rationally rebut their argument.
Ok, this doesn't bring anything to the discussion, but it was fun doing it. Yahoo! users, be prepared for the new Yahoo! home page: http://www.kaizou.org/kaizou/60
It is really funny how people brandish the mortgage payments like if it was a couple of shackles.
Honestly folks, any professional worth his salt (which I am sure most guys in Yahoo are) can change jobs without mortgage payments being an issue...
IANAL but write like a drunk one.