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Microsoft Withdraws Yahoo Takeover Offer
mksmac writes "According to the KOMO TV Website, Microsoft has withdrawn its bid for Yahoo after presenting them with an increased offer that was subsequently declined by Yahoo. Frankly, this seems like a smarter decision on Microsoft's part, but I'd like to hear how other people feel about the deal. Should Microsoft have walked away, pressured Yahoo via a hostile takeover or sweetened the pot until Yahoo gave in?" For those who prefer it, the NYT also has coverage, and the story is also at news.com, among many others. I like the Beeb's version as well. And for the Microsoft-centric explanation of why the courtship is over, see Steve Balmer's letter to Jerry Yang.
On one hand, I'm of course happy I can stay with Flickr. On the other, it would have been a great deal of fun seeing Microsoft get bogged down and distracted for a good few years as it struggled to digest Yahoo (and, likely, killing any value of that company in the process).
Trust the Computer. The Computer is your friend.
After Google and Yahoo announced their advertising "experiment", i'm sure that was what killed it for Microsoft, i'm sure a few chairs were sent across meeting rooms in Redmond too.
Frankly the general idea is correct, the reasoning is not. MS (publicly) doesn't want Yahoo because they effectively loaded themselves with a poison pill to keep Microsoft from taking them over. They've done things like partnering with Google and giving executives very large golden parachutes that make it very unpalpable if not outright hard for Microsoft to acquire the company and not end up with a mess and/or FTC troubles.
It is bad news for Yahoo employees and shareholders though. The company really is going nowhere, it's going to limp on for years like AOL or get picked up for pennies by Google if it could be cleared by the FTC. The best deal for the shareholders would have been to approve a buyout, but Yahoo's poison pill plan did a pretty good job of stopping that.
I think the deal was sincere, that basically MS was genuinely trying to buy Yahoo as a way to get a lot more presence online and try to slow down Google. I suspect they believed most Yahoo execs and stockholders would have been excited at the prospect of getting so much money, and never anticipated Jerry Yang really being able to get so much of the board to think it was a bad idea.
Without an alternate reality time machine, we'll never know if it was really bad or good. Yahoo is not a leader in much of anything at the moment, but I don't think it's crazy for such a company to believe their best days might yet be ahead of them. It's not like they're AltaVista or Ask.com, they have quite a bit of clout and a lot of popular services despite Google's dominance.
MS was certainly not getting much of anywhere with MSN or whatever they're trying to push this week. With their new "Live!" stuff being integrated into Windows and Office, they finally have a decently compelling online product to try and spin off of, but they don't have anywhere to spin people *to*, in a way that would keep them in an all-MS ecosystem. Yahoo could give them all that in one deal.
Recursive: Adj. See Recursive.
Honestly, do you possibly think you could recover that much money with goods from Yahoo? This crazy idea to buy Yahoo was a combination of two things: ignoramus upper management and pressure from Google. Too many businessmen only understand how to make money from advertising. Who put them in charge? You need to weed them out and put in upper management that understand the beauties in your software that is currently making you money. Let Google make the money in the internet. Quit worrying about them or your silly MSN or other sundry internet ventures.
Instead, you should invest that money in your operating system, the APIs for your OS, the tools to make it easy to create applications for your OS. Make a serious real time OS. Unify your OSs. Architect them so that you can crank them out faster and safer. Make your driver model easy to understand and code for. DirectX seems to do good for you, but you had better keep up on it. The same is true of C#. Give these Java folks some stiff competition in language, libraries, and tools. Make the speed of your CLR rock. Make it vectorize, use the SIMD, automatically use multiple cores, etc.
In summary, make businesses want to run on your platform, develop for your platform. You want every office to use your software tools. It won't matter if every office uses your search engine when they go to get info off the internet. That's not the most effective way for you -- a company with an already vast installation base -- to make money.
That's what I've been thinking. If I were a Yahoo shareholder right now I'd be very, very pissed off. The board of Yahoo was really looking out for itself here and not for the shareholders - no way no how Yahoo was even worth what Microsoft offered originally.
No machinations, at least nothing subtle. Basically MS is walking from the deal because Yahoo threatened to do a long term alliance for search revenue with google, which would have completely ruined any possible value for Microsoft.
The audience for the letter wasnt Wang though, it was the shareholders. Lots of people in the Yahoo camp are pissed they didnt already accept the deal. Lots more are going to be pissed they turned down 33$ a share. Even more are going to be pissed when the stock price plummets on Monday, as its been going up on the assumption that the acquisition would happen. I wouldnt be suprised to see a single day 6 - 8 $ a share drop. That will lead to even more shareholder lawsuits and I don't doubt that in the near future Wang will be out on his ass, as his position was hanging by a thread already.
If this happens, MS could actually swoop back in and buy Yahoo for a discount ( see BEA/Oracle for example ) in the future. Otherwise Microsoft may have managed to damage a rival by causing such chaos and internal strife.
Personally as someone who holds MSFT shares and watched them drop 3$ the day this (horrible!!!) deal was announced, I say THANK GOD! My only prayer is that this is finally the thing that gets Balmer ousted. I can only pray.
I personally am kind of sad that Microsoft didn't buy Yahoo. I had a kind of deja vue about the whole thing which I couldn't place, and it only occured to me yesterday: Time-AOL.
When AOL was so bloated with cash they didn't know what to do with it, they bought time. It was a marriage made in hell. Time didn't have anything that AOL needed and AOL couldn't offer Time anything. When the dot bomb crash happened, AOL lost value quickly to eventually become the struggling company today that only exists because of a legacy of users who never switched to better offers.
I had the kind of feeling that that would have happened to Microsoft as well had they bought Yahoo. They would have parted with almost half their operating capital for something that would have given them nothing. Given the fact that Microsoft is not exactly rapidly gaining marketshare at the moment, it could have hurt them badly.
MS and Google don't just sell ad space on their own pages, they both handle advertisement on a variety of pages. That's how they make money and generate traffic. Yahoo does this as well, and actually have the highest traffic generation worldwide still today, so it makes sense that MS would try to acquire Yahoo to try to compete better with Google. I do agree that MS should try to stick what they are good at, but the fact is that almost everything is shifting online and MS needs to stay competitive.
Newsflash: the media wouldn't give a fuck about OOXML no matter what Microsoft did. Another newsflash: Microsoft stopped being spelled with a capital S over twenty years ago.
Do you really think Microsoft needs the free press? They're a huge company, with a huge presence, and they have the best advertising around: every time you go to buy a program, a game, a DVD, a CD, a peripheral or really anything to do with a computer the box announces that Microsoft Windows is either required or recommended.