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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...
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
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.