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Microsoft Withdraws Yahoo Takeover Offer

Posted by timothy on from the brinksmanship-in-the-pac-no-west dept.

mksmac writes "According to the KOMO TV Website, Microsoft has withdrawn its bid for Yahoo after presenting them with an increased offer that was subsequently declined by Yahoo.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.

18 of 336 comments (clear)

  1. My question is... by kithrup · · Score: 5, Interesting

    This doesn't seem to have been a particularly well-handled, or deeply-sincere, attempt by Microsoft... so what were they really doing?

    This is a sincere question; I've seen a lot of acquisitions (and even hostile takeovers) happen, and this seemed lacking in many ways. Maybe I've missed some of the machinations; maybe not.

    1. Re:My question is... by j0nb0y · · Score: 5, Informative

      Where did you get that idea?

      The general consensus on the street seemed to be that Microsoft was offering *too much* money... which is why Microsoft stock dropped when the offer was first announced...

      I'm not a big fan of Microsoft, but it really looked to me like they wanted Yahoo. It was Yahoo's executives who didn't want the deal to go through.

      Maybe I just watch too much CNBC.

      --
      If you had super powers, would you use them for good, or for awesome?
    2. Re:My question is... by NMerriam · · Score: 5, Insightful

      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.
    3. Re:My question is... by smittyoneeach · · Score: 5, Funny

      which is why Microsoft stock dropped when the offer was first announced...
      Very Interesting Statement That Almost
      Ventured Into Suspicious Territory And
      Vital, Insightful Stock Threat Analysis.
      --
      Get thee glass eyes, and, like a scurvy politician, seem to see things thou dost not.--King Lear
    4. Re:My question is... by Anonymous Coward · · Score: 5, Interesting

      Microsoft is in the process of buying back stock with their oh so massive capital. They just got to spend months doing this with a defalted stock price because of the buyout offer. Now that the offer is off the table, the stock price should start to go back up.

    5. Re:My question is... by 3HackBug77 · · Score: 5, Insightful

      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.

    6. Re:My question is... by CodeBuster · · Score: 5, Interesting

      It wasn't just the Yahoo executives who weren't interested in the deal. There was no way that Microsoft could win a proxy fight for Yahoo at anything approaching a reasonable price. The founders and various other individuals (including the board) owned about 34% or so of the outstanding shares and there was at least 25% more owned by individual investors (who rarely bother to vote in proxy fights which means that the board would get to vote those shares too). So the board and the individuals opposing Microsoft controlled at least 60% or so of the outstanding shares, making any hostile takeover direct shareholder tender offer a non-starter (unless Microsoft offered an insane price which they obviously weren't going to do). Microsoft did the only thing that they could do, they made the prudent decision and walked away.

    7. Re:My question is... by hairyfeet · · Score: 5, Interesting

      Actually I believe that MSFT wanted yahoo because Yahoo mail is the number one web mail,followed by Windows Live mail. That combination would not only give them a big chunk of the web mail but tons of new data to mine. I am personally glad they quit as I would have hated to see my Yahoo mail end up some nasty Hotmail copy. But that is my take on it,YMMV.

      --
      ACs don't waste your time replying, your posts are never seen by me.
  2. I'm torn by JanneM · · Score: 5, Insightful

    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.
    1. Re:I'm torn by Anonymous Coward · · Score: 5, Interesting

      Well, as an employee, I saw it as a win-win, assuming I could find another job. Either Microsoft would turn over a new leaf and actually make the combo work well. Or it would be the death of Microsoft.

      And, unlike a lot of the folks there, I'm fairly confident that I'd be able to find a new job the second it became official.

      It's one of those dangerous ideas that you really need to be a nerd and know microsofties, googlers, and yahoos in order to understand exactly how stupid of an idea it really is.

  3. Cant say I didnt expect this. by phat_goat · · Score: 5, Insightful

    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.

    1. Re:Cant say I didnt expect this. by kesuki · · Score: 5, Insightful

      I still remember when yahoo was worth $500 a share... sure they've had 2 2:1 stock splits since then, and plus the internet bubble collapsed int he interim, but still at yahoo's Highest valuation, adjusted for stock splits they would be worth $125 a share, or 180 billion dollars... true, it was a bubble, but if the company was at one point worth over 378% more than what was offered... and the execs for whatever reason believe that they are currently undervalued by the street... well... they are, the stock market is way down, on concerns over the economy, and yahoo is worth way more than 47.5 billion dollars, when you consider that every year the technology they rely on is getting cheaper and better, while the over head costs are going down, and demand for their services are rising...

      really the stock market DOSE NOT currently value yahoo for where technology is going, because for all the computers they use to keep track of stocks, they don't fundamentally understand how to value a company that will halve it's operating costs ever ten years, so long as certain technologies get better every year...

      nobody knows exactly when or how technology prices will bottom out, because even if we no longer can shrink the size of transistors etc, the economy of scales might still drive prices lower, as they already have for microprocessors... just 5 years ago, a viable single core server processor cost $1,000 but today, a quad core server processor costs $230-$300 because of economies of scale for both multi-core consumer and server products...

      honestly in another 5 years, when a 16-core mutli-processor sells for $49.99 and uses the same electricity of today's quad core processor, do you really think that then, in that far away future land that yahoo or google will have fewer customers than they do today? they will have more, and the cost per customer will be lower, and the cost of advertising higher.

      Even if google or some other competitor is ahead of yahoo, yahoo will still have an enormous customer base... and technology keeps kgetting better.

      --
      https://www.gnu.org/philosophy/free-sw.html
  4. Re:No future. by rsmith-mac · · Score: 5, Insightful

    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.

  5. Savvy move by MillenneumMan · · Score: 5, Interesting

    Yahoo's market cap takes a hit, shareholders initiate lawsuits against the Yahoo board. Microsoft may be able to swoop in next quarter and accomplish this via hostile takeover for significantly less. Surprised Microsoft didn't do this sooner

  6. Re:Credibility lost? by Linus+the+Turbonerd · · Score: 5, Funny

    Well, losing credibility generally implies that it was present in the first place, so...

  7. MS, you lucked out by Verity_Crux · · Score: 5, Insightful

    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.

  8. ...and Ballmer wrote as such. by game+kid · · Score: 5, Informative

    ...

    We regard with particular concern your apparent planning to respond to a "hostile" bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo! today. In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo! undesirable to us for a number of reasons:

    • First, it would fundamentally undermine Yahoo!'s own strategy and long-term viability by encouraging advertisers to use Google as opposed to your Panama paid search system. This would also fragment your search advertising and display advertising strategies and the ecosystem surrounding them. This would undermine the reliance on your display advertising business to fuel future growth.

    ...

    No need to speculate on what Ballmer has all but confirmed. :)
    --
    You can hold down the "B" button for continuous firing.
  9. Re:Credibility lost? by Anonymous Coward · · Score: 5, Insightful

    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.