Make It Stop: Microsoft Still Maybe Possibly Potentially Maybe Kinda Interested In Yahoo

from the please-make-it-stop dept

Mon, Jul 7th 2008 9:48am — Mike Masnick

It's the merger story that never dies. Despite however many times that Yahoo and Microsoft have insisted that any potential deal between the two companies is over and done with (despite trying a few times), there's indications (once again) that Microsoft isn't out of this yet, and could potentially come back in and do a new deal if Carl Icahn gets the board slate that he wants. Again, though, it seems like Icahn's talkative nature actually devalued the deal a bit. In talking about how much he wants to sell Yahoo (if he gains control over it), he's making it that much easier for Microsoft to buy at a lower price than otherwise. It's difficult to see how that's possibly in Icahn's own best interests. Still, the longer this goes on, the more of a mess it becomes -- and the happier Google gets.

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Filed Under: carl ichan, mergers
Companies: microsoft, yahoo

9 Comments

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paintballbob, 7 Jul 2008 @ 10:46am

*headsmack*
I absolutely can not get my head around why they play cat and mouse. How could this possibly be helping anyone?
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Anonymous Coward, 7 Jul 2008 @ 11:13am

Im pretty sure Yahoo went up this morning over the news. Not sure about MS though. Everytime there is talk of a large merger, the stocks hic-up. All this talk is certainly helping someone :-)
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for far too little, 7 Jul 2008 @ 11:30am

Paying too much
By the time M$ gets any part of Yahoo it will pay too much for far too little. From the very beginning the idea of paying $40+ billion to move from a very distant third to a very distant second seemed astoundingly stupid to me. And the idea that Yahoo could sell off search, which is most likely one its largest revenue stream, and still remain viable sounds like wishful thinking. M$ will get a short term boost to its search share but I think that will quickly diminish back to levels around what Yahoo has on its own now.

The cost of this acquisition goes far beyond the initial acquisition of Yahoo: more talent heading for the exits, the culture clashes, the enormous effort required to merge operations, the inevitable lawsuits. It will be years before M$ could effectively leverage Yahoo's resources, and all the while Google churns on making money in market where M$ must spend money just to remain competitive. Totaling up the true cost of this acquisition should give M$ shareholders pause.

Add to that M$'s cash cow is under attack from all sides as more and more consumers and businesses realize there are viable alternatives to Office: Open Office, Zoho, Google Docs, etc. None have much impact now but the news is out - time will tell how much market share these offerings take.

The real problem is M$ is rapidly turning into a market follower rather than a market leader. Can you think of any recent consumer offering where M$ created the market rather than followed other innovators? [I know there's been quite a bit down with development tools but I'm focused on consumer offerings.] Zune? Copy Apple. Xbox? Copy Sony. Search? Copy Google (poorly). Paid search? Desperation. Surface? Apple already has a product on the market. Go look - http://www.microsoft.com/en/us/default.aspx?pf=true&navGroupName=All%20Products. Anything there strike you as truly original and innovative?

M$ needs to become innovative again and to do that it needs to become more nimble. M$ should split into separate independent companies that can chart their own course in the market: O/S & development tools, Consumer Software (get it on the net boys), Entertainment. Get out of search, they suck at it. They don't need Yahoo to be successful.
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- Anonymous Coward, 7 Jul 2008 @ 11:37am
  
  Re: Paying too much
  Great analysis, but next time try fact checking first then you will have valid analysis.
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  - Anonymous Coward, 7 Jul 2008 @ 1:20pm
    
    Re: Re: Paying too much
    I don't see any glaring inaccuracies in his opinion piece. Why don't you list some specifics? I don't agree with his opinion microsoft needs to split to be competitive but his statements aren't inaccurate.
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Abdul, 7 Jul 2008 @ 11:42am

Why the desperation???
Why these ruthless acts of desperation by Microsoft?Is Microsoft telling us that its online future is now solely hinge on striking a deal with yahoo?Are there no potential viable options besides this acquisition path to make its online presence count?May be those at the hem of Microsoft don't but others still believe that Microsoft can carve out a very successfull online future besides this yahoo deal:Why Microsoft Should Forego the Acquisitions Route(http://www.internetevolution.com/author.asp?section_id=625&doc_id=158193&F_src=flftwo)
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Josh T, 7 Jul 2008 @ 4:33pm

True life story
This is like that ex that keeps coming back into your life-- deep down, you know it won't work, but you keep going back.

Everythings fine until some day her dad drops the bombshell and casually says he's going to be a grandfather over a high class dinner of split peas, macaroni and cheese and Busch Light. A shotgun wedding later, you end up staying together. Unhappily ever after. You could have done better, oh yes, you could have...
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BRADLEY STEWART, 7 Jul 2008 @ 4:35pm

WHAT IS MICROSOFT THINKING?
It seems apparent to me that this whole deal is based on greed over advertising dollars. I can understand this. Here is the problem as I see it. The World has about six and a half billion people on it. Approx two thirds of these people can't even aford to buy food. We havn't found any other civilizations in our galaxy yet let alone any other civilizations in any other galaxys. So who the Hell are these companys going to sell all this crap to. This buy out deal seems to have all the promise of putting a commercial jet engine on a 1965 Volkswagan Beatle and driving it.Don't get me completly wrong I have a lot of Microsoft Products and really like them. I use Yahoo and I really like it. Maybe at some price this deal would make sense to me but 43 to 45 billion dollars. Microsoft has to have gone a little funny in the head. As W.C. Fields once said. It was such a nice hotel. They even had matreses on the walls.
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nonuser, 7 Jul 2008 @ 8:04pm

not sure this is a bad deal for MS
Yahoo is probably way overpriced, but Microsoft might be the one company for which they'd be a great fit. Remember Microsoft has been trying for fifteen years to establish their online business. IIRC the first "reset" of the MSN architecture and strategy was brought on by the release of Netscape Navigator; before that they thought they'd be competing against AOL and Compuserve.

Embrace-extend-extinguish didn't work, bundling and branding tricks didn't work, playing nice with the W3C didn't work, buying up all the streaming video startups in Silicon Valley in the '90s didn't work. Hailstorm didn't work. Meanwhile MS has routinely peeled off a billion USD here or there just to head off the threat of antitrust suits from distant competitors. So they have the cash to do this deal, what they lack is direction and vision.

They would immediately get a brand name, a big Silicon Valley campus with lots of Stanford/USB type engineers, and some properties which might not exactly be red hot, but at least have a pulse compared to MSN/Windows Live. They can start thinking about moving the center of gravity of Microsoft from Seattle to SV, or at least the "growth" part of the company.
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