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Carl Icahn Takes on Yahoo's Board
narramissic and several others have written to point out that Carl Icahn has initiated a proxy battle with Yahoo's board of directors over their rejection of Microsoft's bid for the company in February. Icahn has purchased millions of Yahoo shares over the past week and assembled a group of nine other investors (including Mark Cuban) to persuade the board to resume talks with Microsoft. Yahoo remains unimpressed. Icahn's letter to Yahoo accuses:
"It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72% premium over Yahoo's closing price of $19.18 on the day before the initial Microsoft offer. I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company and more importantly would be a force strong enough to compete with Google on the Internet."
What are the odds that the FTC would actually allow a merger like this anyway? I mean the evil power of Microsoft coupled with both of Yahoo's users could mean serious trouble.
"Never let your sense of morals prevent you from doing what is right" - Salvor Hardin
Cue Shatner screaming "Icaaaaaaaaaaaaaaaaahn!"
Program Intellivision!
... having boatloads of cash doesn't make you smart. Icahn is an idiot if he believes that a) Yahoo and MS can merge peacefully, and b) Yahoo brings anything other than a brand to MS. MS doesn't want anything other than Yahoo email users, Yahoo portal users and Yahoo search engine users. Note to MS: users come and go. You tried it before with various other web companies, and it didn't work then. It won't work now.
Those who can, do. Those who can't, sue.
I'm not even convinced that this is a legitimate play by Icahn to make MS/Yahoo be more competitive with Google. If I'd have a billion dollars to invest, and I'd know that a merger would pump a company's stock price by 72%, I'd try to buy enough influence to make that happen. Icahn would make out like a bandit even if MS/Yahoo go down in flames the day after the deal is signed.
Those who can, do. Those who can't, sue.
"I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company and more importantly would be a force strong enough to compete with Google on the Internet"
Right..like they do care about that..they only want to cash out...money slaves.
If Microsoft does to yahoo what it did to hotmail and other companies, google's number 1 competitor is history.
I can only imagine what would happen by taking yahoo's infrastructure off free bsd and putting it on windows.
Google might just be loving this.
Contrary to popular belief, Unix is user friendly. It just happens to be particular about who it makes friends with.
I had given up hope that Microsoft would fire their legendary footgun at a Microwho? deal. I hope they blow all their available cash on this.
The synergy of this opportunity rivals a .com bubble for the ability to vanquish vast quantities of value.
Now I can look forward to reading about this in the news.
Help stamp out iliturcy.
I can see how Yahoo would help Microsoft compete with Google. But how does Microsoft help Yahoo?
He doesn't care about a merger, he wants Yahoo to pay him to fuck off. Look up "greenmail" on wikipedia.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
How come FTC hasn't looked into the antitrust implications of this merger? If Microsoft and Yahoo are allowed to merge, the US search engine market will be split between only two companies, a dangerous situation. Moreover, one of them, Microsoft, had been already convicted of possessing a monopoly in the desktop OS market and using its market power in operating systems to tie its secondary products with the OS, thus gaining an unfair advantage over other software and service vendors. Even if the FTC allowed Microsoft and Yahoo to merge, they should seriously consider forcing Microsoft to give the consumer a choice of creating a gmail account and say getting google bar instead of automatically getting the standard MSN setup.
Though luck Icahn, betting on a single stock is stupid, go back to your books and study what "idiosyncratic risk" means.
What offer is this idiot talking about?
From TFA: "I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company"
Microsoft, on the other hand, says it is no longer interested http://www.microsoft.com/presspass/press/2008/may08/05-03letter.mspx
I've followed the /. headlines over this lack of a deal, and have been generally surprised by the neoliberals ordaining that the yahoo board had a duty to sell the company for short-term advantage. Despite the fact that under any decent discount rate, the whole proposal represented little more than a bet.
Even if regulated accounting doesn't float your boat, the ideas of Fischer Black (eg. http://www.amazon.com/Fischer-Black-Revolutionary-Idea-Finance/dp/0471457329/ref=sr_11_1?ie=UTF8&qid=1210920867&sr=11-1
) can't be ignored. Under that light, the entire deal seems to be more involved in noise trading than any solid economic expansion.
Icahn isn't Yahoo. He sees the coin, and only the coin. Who cares with Yahoo?
Patents Drive Free Software as Hurricanes Drive Construction Industry
Oh man. Microshaft AND yahoo, you can imagine the search results... and the "toolbar" that will occupy 400+MB of ram...
VRML buddy icons laid over broken XML... good god man!
...the big cheese until a couple of guys in a garage fucked it up for them. Yahoo failed to adapt.
Microsoft was the big cheese until they fucked it up themselves by releasing an unstable (moreso than they usually do) product. They'll probably fail to learn their lesson.
Merging a company full of fuckups with a company full of fuckups will still give you a company full of fuckups - just bigger. Even so, Google doesn't have its own OS, and that would significantly contribute to Yahoosofts's power. (I'd say Microhoo, but it sounds dirty.)
Random Thoughts From A Diseased Mind (Not For Dummies)
Even before Apple's iPhone came out and smacked Moto's RAZR out of the park, it was clear that Moto needed to be doing R&D for the next-gen handsets. Oh, and you might want to keep some cash around in case of a rainy day. Icahn got handed his hat. And Moto did a bunch of weird acquisitions.
These days, it's raining pretty hard at Moto. I'm sure that pile of cash is helping them through the lean times.
All of which is a roundabout way of saying: Carl Icahn is a vocal, over-exposed pain in the ass. Whenever he talks, put your hand over your wallet, and pay very careful attention to what he's doing with his own.
Schwab
Editor, A1-AAA AmeriCaptions
If Icahn can get the merger to go ahead, the value of his stock will skyrocket. At which point he will become even more filthy rich.
That's his only reason.
Anyone really thinking that yahoo plus Microsoft can really take on Google is fooling themselves. I don't think he's a fool.
Nor is he necessarily a nasty person. He is a capitalist, and very good at it.
Like it or not, this is exactly the sort of behavior that is viewed as being correct and successful in a capitalist society. Most of us little people only resent it because we aren't rich ourselves.
A learning experience is one of those things that say, 'You know that thing you just did? Don't do that.' - D. Adams
When is free trade too free? The summary itself says that Icahn bought a bunch of shares in the last week--after Yahoo rejected MS's bid. How deep is his stake, really, when he's a speculator and not a true investor?
I don't know...just doesn't seem completely right to me. I know he's acted well within his rights. But I also know he's looking for a short term gain in turning these shares around, as opposed to actually helping Yahoo the company survive. Which it does not if MS injests and wastes it, which I think (and apparently Mr. Yang thinks) would happen.
expandfairuse.org
investers were investing in the long-term health of the company. Dividends were the method they gained as the company did better.
Now it's a complex poker game and you aren't buying shares because the company will do well but so that you can sell those shares on quickly and make a profit.
Which isn't *necessarily* wrong except that, since this money is not gained from the output of the company, can only come from the poor investment choices of other people.
In other words, it concentrates the wealth into the hands of the wealthy.
"You rarely see a merger announcement with the phrase, 'So long, suckers.'"
http://dilbert.vtools.net/Dilbert%201998/images/dilbert19980627.jpg
The BIGGEST reason MS wants Yahoo is to exploit their new Silverlight technology which currently has no venue to spread itself onto everyone's Windows based PCs. I repeat, Windows based PCs. Are the cobwebs clearing now? Does anyone get it? Its a stupid ploy and Adobe has pretty much crushed MSs vision by recently creating the "Open Screen Project." Read about it here:
http://www.adobe.com/openscreenproject/
Oh, and BTW, mark my words... MS will become a Linux software development company some day.
My wife tried to register big_trash as a user name for Yahoo email. But that name was already taken.
Why is it that I know a merger between Yahoo and Microsoft won't be successful, but Steve Ballmer doesn't? Microsoft has proven, over many years, that it does not know how to run a search engine. Yahoo has proven, over many years, that...
When a mediocre, adversarial company merges into an another mediocre, adversarial company, what will be the result? Cute puppies?
It has been reported that Yahoo employees are against the merger. Maybe that is because many of them will lose their jobs.
MS wants Yahoo primarily so it can infect everyone's Windows PCs with its Silverlight technology (which was dubbed the "Flash Killer"). That won't happen due to this initiative: http://www.adobe.com/openscreenproject/ Give up MS, you are destined to become a Linux software development company. The MS Windows era is coming to an end. Hypnotic dreams of Switzerland are calling to you Mr. Balmer... shortly it will be time to materialize those dreams.
You have to understand the economics of the situtation to understand why this would probably be a good combination. Yahoo has a very large web audience, but has had difficulty generating advertising revenue from it, i.e. its technology isn't very good, so it isn't making as much money selling advertising as it otherwise could. Microsoft has the opposite problem, i.e. good technology that can convert traffic into advertising revenue, but it was much too late to the game, so it lacks a sufficiently large audience, and there's no reason for Yahoo or Google users to switch (even assuming Microsoft's content is as good, which is questionable).
A Microsoft/Yahoo combination (assuming it's even on the cards any longer from Microsoft's view) would allow Microsoft to replace Yahoo's ineffective technology with Microsoft's superior technology, whilst keeping Yahoo's popular content and websites. Google already has both high traffic and the technology to generate a high amount of advertising revenue from it, which is why Microsoft and Yahoo really can't compete in advertising on their own: Microsoft needs a bigger audience and Yahoo needs better technology. This is the logic behind Yahoo's approach to Google too (i.e. combining Yahoo's audiences with Google's superior advertising technology), but it's nevertheless insane from a business point of view, because in almost every area Yahoo operates, Google is its chief competitor. It really looks like a principal-agent issue, with Yahoo management more interested in securing their own power than in doing what's best for the shareholders who employ them.
If the Yahoo employees behind the company's lagging technology are less than thrilled about a Microsoft takeover, I can certainly understand why: Microsoft have no need of Yahoo's inferior technology, only its audience, so a lot of Yahoo engineers are surplus to requirements. At best these engineers will end up working on technology designed by someone else (i.e. Microsoft's current technology), and at worst they'll lose their jobs. That doesn't mean the deal doesn't make a huge amount of sense for Yahoo shareholders, and the long-run viability of Yahoo as a whole, which it does. If Yahoo continues to be run by inept management, and continues to use technology that isn't competitive with its rivals, it's only a matter of time before it fails, and then these employees will lose their jobs anyway.
The BBC has a reply to Mr Icahn from Roy Bostock today - http://news.bbc.co.uk/2/hi/technology/7404012.stm
in which Mr Bostock states that it is not in the shareholders interests to allow Icahn and his "handpicked nominees" to take over.
This is going to get very interesting!
Awful UID - but I have been here ages...
Yahoo is not the #1 search engine and even if microsoft took it over they still wouldnt be.
Whatever you think of microsoft as a company doesnt matter.
The yahoo board is supposed to represent its shareholders, if I hold stock in a company and someone offers 72% more than the shares are worth, and the company wont even let me consider the offer id be pissed too!
Icahn doesnt have a duty to yahoo, yahoo has a duty to its shareholder to act in their best interests
even if it means selling out to microsoft and losing their cushy jobs.
Sometimes not everything is black and white.
A wicked thought passed through my mind: could some major Google shareholders have put him up to this? Google could be the only winner in this, shirley?
threadeds blog
When somebody says, "It's not the money, it's the principle."
It's the money.
So according to this guy:
...
Microsoft + Yahoo = "Dynamic" ?
I think he's way off base. If Microsoft is going to be a Dynamic Duo with anyone, it would be more likely some organization that thinks like them and can compliment their business practices, such as:
Microsoft + Halliburton
Microsoft + SCO (oops, already happened)
Microsoft + Phillip Morris
Microsoft + the Mafia
Microsoft + Dow Chemical
Microsoft + Exxon Mobile
Microsoft initiates a proxy battle, everyone cries foul about monopoly/etc.
Ichan initiates a proxy battle, everyone grabs popcorn.
Microsoft doesn't need to be picking fights with all the litigation they've been through in recent years. They were smart to back down & wait things out.
Wanna fight ? Bend over, stick your head up your ass, and fight for air.
In 2005, Icahn was worth $7.6bil and increased his wealth by another billion the subsequent year. Today, he's estimated at around $14bil. Icahn has a long history of buying up shares in a large array of industries to scare the management into adopting his suggestions (e.g. Make us both some money or I'll hire another executive team to do it for me).
Some people call him an activist but in the end, he's looking to boost the closing price by 40-60% and make out like a bandit. Yahoo remains unimpressed but he's already causing problems for Motorola in order to divide the company and/or sell their assets. In fact, take a look at Enzon Pharmaceutcals (NASDAQ: ENZN) in Jersey, down the street from their buddies at ImClone, and you'll see that at Icahn's recommendation (he recently purchases ~5%), the company split from being a biotech/pharma company into two separate entities. Yahoo is likely to succumb to the powers that be..Carl.
How do I get archived email off of yahoo?
I can see how Icahn angers just about everyone on this forum, but look at it from another angle. He buys 59M shares, walks right up to the chief and says fuck you, pay me. This is a textbook example of greenmail, and he will probably force a nasty proxy battle which will result in him destroying Yahoo by giving it to Microsoft. That's what happens when you take a company public, so everyone including Yang should stop crying. He knew exactly what he was getting into.
I think you are on the right track, but I'd posit MS does not want just the USERS; they are as muc, if not more, interested in the DATA.
Targeted ads are more effective so Google, Yahoo, etc. can charge advertisers more for each one. Microsoft wants some of that income stream. They've tried to build their internet presence but have stumbled so far (e.g. look what happened with HotMail.)
Sure, Microsoft would prefer to have the users stay on board with Yahoo, (they need to put the ads in front of *someone*), but I think they are ultimately looking for more data upon which they can decide which ads to post to which users. So, to employ a classic /. meme, Microsoft:
P.S. early morning rambling with insufficient coffee - interpret accordingly. :^)
A problem with publicly held companies is that their focus is on improving shareholder value. They all put it right in their mission statements. Going public shifts a company from market focus to shareholder focus. Shareholders don't give a crap about anything but increasing their share value. They don't care about product quality, customer service, company infrastructure, etc. Yahoo stockholders want the merger because it will be a short term boost in value. Pump and dump.
"A wicked thought passed through my mind: could some major Google shareholders have put him up to this? Google could be the only winner in this, shirley?"
.. :)
No Bill, that's what you would have done if the situations were reversed
davecb5620@gmail.com
Microsoft + Yahoo = MicroHotHoo :)
.. :)
Not exactly, remember they were in the search and email business before Google. MS strategy for success is invariably, buy up some vibrant company, like Hotmail, re brand it as Microsoft Whatever, use the Windows desktop monopoly to leverage it. Eg, every software update, installs Outlook, adds Microsoft affiliate web sites to Favorites and makes Microsoft.com your home page.
Design Microsoft services to make using third party services a jolting experience. Eg. Disable links to Youtube.com, filter third party greeting cards in Outlook and so on.
Present the ubiquity of such Microsoft product as evidence of the popularity of same. It must be good, everyone chooses it
davecb5620@gmail.com
Why is it that I know a merger between Yahoo and Microsoft won't be successful, but Steve Ballmer doesn't?
And what multi-million dollar business do you run? Personally you sound like someone who has absolutely no business experience at all.
So why Steve Ballmer know a merger would not be successful? For the obvious reasons...people don't know thing like this, they can make educated guesses, (or uneducated stupid statements like you have done), but knowing the future is hard. And I am going to make a bold statement here, that people in Microsoft have actually looked at this acquisition, and see a lot of value in it. They have actually looked at ways they can make/save money if they had Yahoo. They probably spend months on this.
Fucking moron.
Icahn is an idiot if he believes that a) Yahoo and MS can merge peacefully, and b) Yahoo brings anything other than a brand to MS.
He doesn't believe any of that.
At least, I won't believe he believes it until he promises to buy and hold a large amount of stock in Microsoft for a decade or so, should they buy Yahoo.
What I think he believes is that he can either (a) be an arbitrageur on Yahoo for fun and 60-70% profit or (b) get Yahoo to pay him to go away.
Tweet, tweet.
"How come FTC hasn't looked into the antitrust implications of this merger?"
Because when MicroHOO does it that means that it is not illegal. And MS didn't make all those donations on capitol hill for nothing, DOH !!!
davecb5620@gmail.com
Thrust: Carl Icahn's letter to Roy Bostock Parry: Yahoo tells Icahn that its own board knows best
"Microsoft has the opposite problem, i.e. good technology that can convert traffic into advertising revenue, but it was much too late to the game, so it lacks a sufficiently large audience..."
What is the "good technology" from Microsoft?
I just used Microsoft's Live.com to search for "aardvark". Interesting: Google returns a link to Firefox's Aaadvark add-on as the second entry. But Microsoft's live.com never lists the Firefox extension in the first 10 pages.
Can Microsoft be trusted not to be adversarial to customer interests in its search results? Apparently the answer is a big NO. Just that one random search convinced me to never use live.com.
There is an online petition to stop Icahn, Cuban and other Yahoo stockholders from trying to force Yahoo to sell itself to Microsoft, and to "Let Yahoo Be Yahoo"!
http://www.LetYahooBeYahoo.com/
Oops..here is the link to the online petition to stop Icahn, Cuban, and others from forcing Yahoo to sell itself to Microsoft: http://www.LetYahooBeYahoo.com/
So I decided to try to send Mr. Icahn an email to let him know my true feelings about his idiotic plans. This is what I wrote him: To: carl.icahn@ielp.com, carl.c.icahn@ielp.com, cicahn@ielp.com, icahnc@ielp.com, carlcicahn@ielp.com Mr. Icahn, Just stop messing around with Yahoo!. Yahoo! is well enough as it is right now. We do NOT need Microsoft interfering with Yahoo!. Microsoft fucks up everything they touch. The last thing I need right now is having to ditch the Yahoo! email account I have had for the last 5 years because of some greedy dipshit asshole who would step over his own grandmother to pick up a dime (yes I am referring to you). The worst part is that you don't even really care about Yahoo! as a company or about Yahoo! customers. This is all about your needs to fill that huge gap in your soul with money. Fuck you asshole. Robert I just guessed at possible email addresses, and I haven't received any bouncebacks yet so who knows if he will get it. Even if he doesn't it still felt good to send it.
Turn javascript off. You lose all the ajax suck that way (also immediately makes your surfing much more secure). It is surfers choice on the net, keep running with scripting on, you'll keep seeing more and more ajax suck. Same with Flash. Webmasters see their stats, if enough people pop in, see it is ajax and flash sucky and just leave and don't partake of that bloat, maybe they will get the message. If you are seeing suck, it is because you choose to authorize it by running with scripting on.
As to the merger and instant huge profit, that can only be realised if all those shareholders decide to sell and some other "greater fools" buy, which is highly suspect of ever happening. The stock market numbers can never equate actual cash in total, just isn't possible. Remember the dot bomb crash? That was because of (one reason), there was no actual total cash behind all those bid up numbers, and for the most part, no way to ever produce the cash with most of those companies having zero wealth production plans.
I read (on Yahoo News, actually) that he currently owns around 4.3% of the Yahoo stock (worth $1 Billion) and he's planning on acquiring $2.5 Billion worth. So how exactly is 10% going to allow him to boss the Board of Directors around? He still doesn't have a majority. Not even close. Is anyone else agreeing with him, or is he just blowing hot air?
"Blue Horseshoe LOVES Yahoo."
Icahn "misunderstands" Microsoft proposal
Sent from my desktop computer
While Icahn made a lot of money on the BEA deal, this time he's going to lose. Microsoft is not going to terrorize Silicon Valley like its Jurassic Park.
Thanks. Yes, I misspelled aardvark.
Parent is currently moderated +5 insightful.
+5 Funny would be more appropriate. It is a wonderful joke.
The joke is confusing Microsoft's fantastic marketing prowess, built upon freedom of encumbrance of any form of ethics, with good technology. Besides, everybody at this point knows that Microsoft's developers developers developers have all cashed in their stock options and gone to more interesting work at Google, IBM, and yea even unto Yahoo. The whole point of that Microsoft - Yahoo deal is that Ballmer misses having some developers around.
Good technology will be successful on its own merits, especially with a company like MS funding it. You could make a decent argument that Google was late to the game, when they came on the scene Yahoo was already well established, and there were other players like Altavista.
Google didn't win by somehow levering legions of users, they won by having better search technology that convinced people to move.
If MS has a better search engine than Google, then why doesn't anyone know about it? It's not like MS is some obscure company that's new to the scene. And beyond searching, what other web "technologies" does MS really shine in? Is hotmail any better than yahoo mail? Are either of them better than gmail?
I understand the basic principle that you're getting at in why the merger might seem to make some sense, but I don't think reality really backs it up. It's more likely to me that MS just doesn't know what the hell to do about Google, so Ballmer just decided to do something. He chose something big and bold to make it look like he has some sort of master plan, and he used the same logic that you're describing to try to convince investors that it'll work.
But when you really look at it closely, it's a silly plan. MS doesn't have any magical technology that they just can't get people to look at. Nor do they have any sort of awesome internet plan that just needs eyeballs to take off. Add in the reality that the process of merging two companies of that size would likely involve a couple years of disarray, and you're creating a great opportunity for Google to increase their lead even further.
The merger has been a terrible idea from the beginning. And I'll bet most MS employees frowned at the potential deal just as much as most yahoo employees, whether they feared for their jobs or not.
One time I threw a brick at a duck.
Ok, I'll give you "crappy operating system" but you'll have to work a little harder to convince me that Office is crappy. Office might be over prices, but it certainly isn't crappy. What would you propose is better? Open Office? The only reason Open Office even comes close to Office is because it is free.
Flaimbait at it's finest.
Have you read his slate of proposed new board members? They are all non-tech industry related people, often either lawyers or econonmists and one was Mark Cuban, who I've heard bad things about here on /.
Firefox is the problem, with it's ability to block images from server, and flashblock to block flash advertisement. Add this to a good hosts file, and you get NO adds. Looks lik Yahoo needs to promote Opera with it's built in adds to really get adds working for them!
Price isn't the only thing that values a company. Why should share price be the sole determination of whether to sell? What about independence, vision and corporate compatibility?
Yeah, Microsoft kinda wants to be in the advertising business, but only because of their typical 'me-too' approach to competition. And normally, they'd go slow and let the monopoly do its magic, but they're a teeny bit restrained these days.
And all of this is because of Google's success. Google's got enough mindshare to get the DOJ to look when Vista tries to lock them out.
But the ultimate reason Microsoft is so hot to compete with Google is that Google's using its profits to invest in cloud computing. Microsoft doesn't particularly want to be in cloud computing either, but they understand that it's a potentially serious competitor to their Office cash cow. It's Google Docs that must be killed. Not because Google Docs is so great, but becuase it's a new enough paradigm that it gets people thinking. And thought is the enemy of blind "use MSOfice because everyone uses MSOffice" logic.
Posted from my Android phone. Oh, I can change this? There, that's better...
I think the fallout from this is hillarious. All teh MS-haters have been shrilly yelling about how this was a huge mess up, and Balmer will be fired, blah blah... all while MS's stock price has continued to rise since they walked away from Yahoo's bloated carcass.
On the other hand, Yahoo's stock price has continued to plummet since MS retracted their offer... and Jerry Yang is going to end up crawling, hat in hand, begging Balmer to please, please, please buy his stagnating and unprofitable company. IMO, Balmer should off them $17 a share, final offer. And Yang would have to take it, too, since he mismanaged his way into this situation to begin with... and the shareholders are no longer willing to let him mismanage his way out of it.
Yep, it's a sad, sad day for Microsoft haters. Maybe tomorrow will look better... but I doubt it.
Google wasn't really late to the game, especially compared to Microsoft, which for years used search results from outside firms for MSN (an obvious sign they didn't have any idea of how important it would become). The web search/advertising market was still relatively small in 1998, and with rapid market growth it's entirely possible to rapidly gain market share by winning new users, rather than converting existing users from alternatives. Recall also that AltaVista was a project at DEC, which was in the process of imploding at the time of Google's rise. Secondly, Google's major achievement, even more important than generating better search results than the competition (which it did too), was to successfully turn search traffic into advertising revenue, which provided a basis for profitability (as opposed to most .com-era firms, which ran up enormous losses).
As I've pointed out in another post, the technology question here refers to the advertising system, i.e. the software that turns web traffic into advertising revenue. Google figured out how to do this extremely well, and that's a major reason why it's where it is today. Yahoo never managed to do this very well, so never had as strong a financial position as Google, which is one of the reasons its competitive position has continued to weaken. It still gets a lot of traffic (I suppose the content is good), and this is overall, not just in search, but just can't convert that traffic into revenue at a level comparable with Google.
As for Microsoft, it has apparently managed to produce competitive (with Google) levels of revenue from its web traffic, but doesn't get enough web traffic to be a serious competitor. If it can increase its traffic through either a Yahoo acquisition (possible) or organic growth (doubtful), it will at least have a chance of competing with Google. Conversely, if Yahoo can develop an advertising system that works as well as Google's or Microsoft's, it has a chance as well. The problem is, the longer Yahoo continues with a sub-par advertising system, the weaker its competitive position vis-à-vis Google will become. To the extent that Microsoft has a platform that would solve Yahoo's problems now, a lot of institutional investors who hold both MSFT and YHOO think a merger will produce more value than the two firms can alone.
To reiterate, this has absolutely nothing to do with how good Microsoft's search engine's results are. I've no idea how they compare to Yahoo's and Google's but that doesn't really matter, because if Microsoft can connect its current advertising system to Yahoo's current traffic, it will produce a huge increase in revenue for Yahoo, without the need of any additional traffic. At the same time, that extra revenue will help to support development of content to potentially increase Yahoo's market share.
Finally, the idea that better technology will win on its merits isn't supported by economic theory when there are things like network effects and switching costs. These are arguably quite important in the search market, where a large amount of user data is necessary to accurately target advertising, and to optimise search results, and where there are undoubtedly some switching costs involved for firms that have come to rely on a particular supplier of a web advertising infrastructure.
I searched for the word "aardvark", and got valid hits, but when I wrote the comment, there was an extra "a".
Furthermore, greenmail basically doesn't exist anymore. From Wikipedia: Prevention
Changes in the details of corporate ownership structure, in the investment markets generally, and the legal requirement in some jurisdictions for companies to impose limits for launching formal bids, or obligations to seek shareholder approval for the buyback of its own shares, and in Federal tax treatment of greenmail gains (a 50% excise tax)[1] have all made greenmail far less common since the early 1990s. Can you point to a single recent example of Icahn taking greenmail?
Microsoft's Live.com What? People still use that? It's a joke..
OR
What? Microsoft has a search engine? I'm not serious. It's a joke too.
What technology would this be?
Their OS sucks.
Their servers suck.
Their database sucks.
Their mail client sucks.
Their office suite sucks.
Their search engine sucks.
And as an advertiser spending over $100k/mo in PPC traffic (no, really, I do), I can say that MS's "Adcenter" REALLY sucks. It is an absolute piece of garbage. What's in production today is so bad it's as if they let some interns write a proof of concept on a Friday and Monday someone pushed it into production.
What's left?
Oh yah, MS customer service sucks, too. Almost missed that one.
As a shareholder of Yahoo!, I believe this buyout is an absolute horror. This is nothing more than a short term stock pop for one or both companies. There is nothing for either to gain long term. Nothing.
Oh, and my stock is down ~25% since I purchased it, but I still don't give a darn about MS's premium price. It's just a bad idea.
Ok. I'm calling you out. You're a Microsoft shill. No, really. I sincerely believe you're a shill. Prove me wrong and unmask your identity.