A Hostile Microsoft Bid For Yahoo! Would Likely Be A Pyrrhic Victory
from the culture-clash dept
Marc Andreessen has an interesting post looking at the consequences if Microsoft officially goes hostile in its bid for Yahoo! Thus far, the two firms have been engaged in a careful dance where each side has left the door open for a negotiated settlement. But with neither side showing any sign of backing down, it's looking increasingly likely that Microsoft will be forced to make an overt bid for control of Yahoo's shares. There are two basic strategies Microsoft could pursue. One would be a tender offer, in which Microsoft attempts to purchase a majority of Yahoo!'s stock. The other would be a proxy fight, in which Microsoft nominates a competing slate to Yahoo!'s board of directors, on the understanding that the new slate would accept Microsoft's existing offer. Either of these options would spark litigation from the losing party. Then, it would have to clear regulatory hurdles, and after that would come the hard work of actually integrating the two companies, something that will be made more difficult if Yahoo's senior management is still bearing grudges from the takeover fight. I've pointed out before that culture is extremely important in high tech firms. Companies need to attract the best talent, and talented programmers want to work where the most innovative work is being done. Right now, Google already has an edge over Yahoo! and Microsoft on that front, and the gap is only going to widen if they spend the next two years beating each others' brains out. It's not at all clear that the Microsoft-Yahoo merger would make sense even if it were done with the support of Yahoo's current management; it's a doubly bad idea if it involves all the nastiness that would come with a hostile takeover.
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Filed Under: acquisitions, hostile bid, integration
Companies: microsoft, yahoo
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No idea
1) How can litigation be sparked by the losing party, when the losing party's directors board (and/or shareholders) are on the side of the winning party ?
2) Really ? Two giant tech companies beating each other's brains out for two years will cause less innovation ? Perhaps you didn't notice all the things Yahoo did over the past three months.
3) An engineer that really wants to work on innovative things is far more likely to work for Toyota, IBM, Sun, Nokia, Cisco (due to actual innovation involved, and not just Internet psudo-innovation) or just work at CERN, MIT, Technion institution, or the military.
95% of all Microsoft/Yahoo positions are irrelevant for such people, regardless of your imaginary "gap".
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Re: No idea
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What?
1. Until the merger legally takes place, there are still two sides.
2. Perhaps your remarks indicate that you have no idea how long such work takes to do behind the scenes, and you don't realize that the last three months' 'work' you speak of is the result of probably a couple of years of behind the scenes work.
3. you really don't understand innovation, or reality, do you? Software work is as real as it gets. Just because it's on the web, doesn't make it less real. Software runs a lot of stuff, and most of the companies you mention use it to run their basic processes, much less their own products. And more and more of that will run on the web in the future. There is a lot of internal, collaborative software that runs over intranets now.
The only thing about your post that makes sense is the last sentence, because the more innovative software engineers will find the top 5% of Microsoft/Yahoo positions just fine, assuming the company doesn't just implode.
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Yahoo prepared to abandon ship
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1. Dump search and search advertising. Microsoft sucks at it but that's OK. Their core competency is in Application and O/S software, not advertising. They would be better off selling their search business TO Yahoo.
2. Re-engineering O/S. Vista is a failure and will likely remain so. Adoption rates are abysmal - only about 6% of the business community has adopted it. Microsoft should admit is made a mistake, reset, then concentrate on re-engineering all it's various O/S offerings into one O/S architecture that EASILY scales across platforms - Zune, Mobile phones, Handhelds, Appliances, PC's, Servers.
3. Concentrate on moving the desktop to the webtop. Microsoft has taken steps in that direction but they need to make it their core strategy rather than what a appears to be a 'me to' reaction.
4. Split the company. Microsoft made a lot of money by dominating the PC software market but that very success is working against it now. The regulatory scrutiny it faces around the world is turning that success into liability. Split the company into independents: O/S, Applications, Entertainment, etc. As it stands now the whole is not greater than the sum of its parts. Splitting the company will allow the new entities to focus on their respective core competencies, become more entrepreneurial, innovative and competitive.
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Re:
2. EASILY scales? Like Linux? It runs on anything from watches to supercomputers. I'd love to see a Windows OS (or technically, kernel) that could do that, but we'll probably never see it.
3. Microsoft has always been years behind on Internet technologies from the get-go. It is only be sheer dint of them being able to throw insane amounts of money at any problem that they have made any headway whatsoever since they have consistently been late to every party on the Web.
4. I'm not so sure this would have any effect (as I said with the DoJ was threatening it). Clearly the left hand already has no idea what the right hand is doing and Microsoft is already dozens, if not hundreds, of little companies with little real integration and no overarching vision. Having to pull XP SP3 at the last minute for one of their own apps is just the most recent of a plethora of examples of this. And let's face it, this would eliminate the last vestiges of their unfair competition by undocumented features, which while greatly diminished from the Bad Old Days, still goes on. Microsoft would much rather be a bully and a cheat than compete on a level playing field, even when it's likely they could actually do well at it.
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Re: Re:
>>own apps is just the most recent of a plethora of examples
>>of this.
What the hell is a "Dynamics" anyway? Is that some sort of MicroSpeak for "Let me manage your financial records"?
Scary!!
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Re: Re:
It's a behemoth that can't be tamed with incremental changes nor can it sustain growth through acquisitions. Microsoft has been snapping up companies for several years now yet none of those acquisitions has significantly improved Micorsoft's position in the competitive landscape. It has to take to large of a bite (see comment 7 - "will move M$ up in the search rankings all the way from distant third to distant second...") to make any real difference to the bottom line and those large bites almost always fail (See Time Warner/AOL).
Ballmer can't do it. He's led Microsoft to a screeching halt and stewarded a O/S rollout that is almost universally panned as a bad design, poorly implemented. It is time for the chair-chunking chump to leave.
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Re:
Did you see the professionalism earlier this week when Continental turned down United Airlines offer?
UAUA dropped it, and looked elsewhere. They were very professional.
Proxy fight? Do you think the Business Community would want to be associated with such a hostile company for very long?
Your right with splitting the company into multiple, focused businesses. It allows concentration of each part's true core.
I wonder if Hotmail is still worth what MS paid for it years ago when it was king of email.
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Great
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Re: Great
This latest attempt by Mickeysoft to be all things to everyone will move M$ up in the search rankings all the way from distant third to distant second, and for only $40+ billion. It's sure to work out just as well as AOL-Time Warner.
Genius!
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Re: Re: Great
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FRANKLY I BELIEVE THIS WHOLE DEAL IS BEWILDERING
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Want More money? How about More Performance?
So find some business or performance-based item to key on and set 6 12 and 24 month goals.
Granted, not a new concept, but how it's executed could be one of those "Tipping Point" items. If they don't accept, Well, let 'em go!
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Steve, Steve, Steve!
WSJ:
Saturday, May 03, 2008 5:16 PM
"Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo has not moved toward accepting our offer," said Microsoft Chief Executive Steve Ballmer in a press release. "After careful consideration, we believe the economics demanded by Yahoo do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal."
Ah, man!
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