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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 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...
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.
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
Yahoo is more than a search engine. The search part of the house is much smaller than the other properties.
Slashdot - The great and glorious cluster fuck of Internet wisdom.
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
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.
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.
I doubt this will impact the economy much. Granted that if this deal goes ahead, many redundant jobs may be cut, but in the end I think that market forces would have forced further contraction in either Microsoft's own web initiatives or on yahoo's causing these people to be removed from there job anyways - look at the layoffs at yahoo that have already occurred. Despite my distaste for MS, this would probably be beneficial to the US economy. The real question is if there is still enough name recognition and resources within yahoo to merit such a move.
Unfortunately for MS, the real threat to Google will most likely be from another startup kind of like what this article is getting at. What I find intersting is that if the patent system actually worked, one of the early search engines such as web crawler or alta vista would still control the market and companies such as Google and MS would have had to bow out secondary to valid patents. - and this would allow these companies in theory to grow their technology - plus they could use the patent clout to recruit the appropriate talent (in theory).
In the end the thing that will hurt the US economy the most is globalization and the realization that intelligence and the ability to "create" isn't as valuable as it may seem. It can be converted to a commodity along with almost everything else.
If soft engineers in this country want protection, they will most likely need a union and a licensing exam like lawyers and doctors
When all else fails, try.
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
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.
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.