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High time!
my initial gut reaction ---
the world changed between the time of the original offer and today ie now....
AND
Life is now more difficult for MSFT....
who can not afford to pay ....
Dinosaur mating failure.
Not much else to say about this episode.
Someday this war's gonna end...
...and Joe6pack Users win one.
I'm familiar with the professional staff of both corporations, and think that this would have been an extremely awkward and distracting marriage -- an unwise deal in the first place. Props to Microsoft, with all its foibles, for having the poise to walk away with his head held high.
I'm not sure how Yahoo! picks up their pieces here, though. This soap opera, its conclusion, and their ongoing slide in search and inability to monetize on remaining advantages have really emaciated the company.
The Internet is shattering a lot of business models, and the ones it's generating are much different. Knowledge and the fruits of hard work flow freely; there simply is no financial reward for most of it. NYTimes and Encyclopedia Brittanica are just the first.
Bluff called, sorry about that Yahoo! shareholders. Your leader has decided to destroy some more value for you. Stock as $18 before the offer, so it should head back down that way.
I wanted to see if Yahoo.com had a different perspctive out on this, went there, they had this headline and link:
Yahoo! 404 - Page Not Found
Highlights from this AP story: first para refers to Yahoo as "the tarnished Internet icon," and
"The software maker conceivably could renew its bid later this year if Yahoo can't bounce back from more than two years of financial lethargy.
Should Yahoo's turnaround efforts flop, many analysts believe the company's stock would sink into the mid-teens and open the door for another takeover offer that would be more difficult to rebuff."
Had this offer been made last year the price for yahoo would have been easily 40 dollars a share. Didn't MSFT say that at one point that YHOO was crucial to their strategy. This is bad for both stocks, as MSFT/yahoo didn't exactly blow away the street. MSFT will probably say that the online advertising is deteriorating or something to save face. Not good for tech and other future, MA/buyouts.
Of course, the strategic value of Yahoo would be less later in the year as well making a deal less likely at any price.
Best bet for Yahoo, Jerry Yang calls Steve Ballmer and says "we'll take it" this evening.
it would seem that both Microsoft and yahoo are the poorer for it...
however one has to wonder why the giant from redmond washington cant create a yahoo or a google of their own!?
Jerry Yang calls Steve Ballmer and says "we'll take it" this evening.
Doubt it. This has turned into a billion dollar game of chicken. We'll see which stock and company ceo can hold out the longest. Both MSFT and Yhoo are going to get punished.
Wonder how Balmer is feeling right about now...
YouTube
- Steve Ballmer going crazy
Glad I don't own Yahoo...
I'm happy to see that the comments here are ok, unlike pretty much everywhere else. Shows to the type of people who CR has attracted.
I am a Y! employee and can say that financially I would have been better off in the short term, but likely out of a job in the long term if this transaction happened.
People don't realize, but Y! makes around 1B profit per year and growing every year. And while Google has executed perfectly in search (and we have had our issues), this game just got started and its got a long way to go. Online advertising is still only a small part of the total pie, but it is quickly eating everyones lunch. Count us out at your own peril.
M
in your view
is this a case were there is only room for one or two biggies...Y and G
or could MSFT be a viable entrant
MicroHoo?
Count us out at your own peril. I agree there is definitely room for two players in the long run.
Ya'Soft?
did'nt like many of the choices.
"Glad I don't own Yahoo..."
Glad I don't own Microsoft.
"however one has to wonder why the giant from redmond washington cant create a yahoo or a google of their own!?"
The Internet is has a few natural monopolies, like that little search window in the top-right corner of your web browser. Other than that, it's quite difficult to create a lasting product. Much like TV, music, and fashion, trends come and trends go: Usenet, Napster, AOL, Second Life, Facebook -- the list is long. The infrastructure itself tends to last much longer, but there's no profit at all there. Just ask Level 3.
Best of luck to you and your colleagues, M. It's a brutal game.
Much like TV, music, and fashion, trends come and trends go: Usenet, Napster, AOL, Second Life, Facebook -- the list is long. The infrastructure itself tends to last much longer, but there's no profit at all there.
Yup. For old media, the cost of entry was high enough to keep out new players, for the most part. That and bandwidth: only so many radio frequencies or TV channels. On the web, what's the cost of entry? What's the limitation on the number of channels? Where will Google be in five years?
I use, architect, develop, project manage, fund, copyright (and copyLEFT) software and have used both MS and opensource software.
The hatred of Microsoft in "my" community is quite irrational. THAT is the issue here IMO. The issues are beyond the scope of this blog - but I'm damn pleased they refused to overpay.
Let the chips fall where they may.
We live in interesting times - as JAVA ( aka Sun Microsystems ) dumps 20% on a loss.
-K
Mock Turtle,
That is really the question. And I don't know enough yet to tell you if their is room for 2 or 3 players. The two things we know is Google is way ahead and Microsoft never quits. That's the bad news for Yahoo!.
The good news is that the whole market is growing and Y! is in a great position to capitalize globally (remember its not just the US). As an example, go to Places like HK, Taiwan, Japan, and see what search engine they use and what video sites they go to. Hint not google/youtube or MSFT.
Its going to be a battle thats for sure.
They'll settle at 35. No way MS walks. MS thinks in strategic moves about the next 25 years...
Looking at the ten year charts for these two companies: msft is flat, yhoo is up a bit - not much. Other than traders, nobody has made much money in either in the last ten years. The whole thing is about as exciting as the RockTenn/Southern Container merger.
This buyout was ridiculous
Why pay 60 times earnings in a recession, and when you're the only potential buyer ?
CR, very clever headline!
Meanwhile, here are some gripes of ex-Google employees:
Headhunter dishes on why people leave Google | News Blog - CNET News
a "mature" company loses its fun, just like any other big companies...
BFD
The market will probably rally on this too!
Actually, Yahoo is fantastic. Probably at least 1/2 of all internet free emails are yahoo.com, more people probably use yahoo home pages and stock prices than all other free sites combined. The yahoo groups are great information on topics.
If they only had a better search engine. To provide free stuff you have to sell ads, and they just cant compete with goog.
Come on !! Yahoo mail sucks
Gmail is so much better.
The good stuff is Yahoo Finance and Yahoo News, I agree. Still, paying $42 billion for that is way overpriced.
I find Yahoo finance is better than Google finance while gmail has better spam filtering than yahoo mail. I use google news over yahoo news.
Japanese search on the other hand, I use yahoo.co.jp over Google.
Why the open letter? Nobody does that unless they have something to say and a reason to say it.
I find that Google stock chart has better interface than Yahoo but Yahoo has more history than Google (like S&P 500 index) so for looking at historical patterns, I have to go to Yahoo.
I really think this is how Ballmer is feeling right now:
YouTube -
You make a salient point as always dryfly.. What's the underlying motivation. Personally, I dunno. However, from what I've experienced MSFT hates to lose. If I'd have to hazard a guess looking at it from their perspective, I'd say they are probably either trying to ding Yahoo and their stock a little, or trying the long shot and seeing if they can get the institutional Yahoo shareholders to revolt.
"Mr. Jerry Yang
CEO and Chief Yahoo"
Har! Ya gotta be kiddin' me. Ballmer wrote this? What a side-swipe.
dryfly,
The open letter is likely to solve securites regulation problems. When a company withdraws an offer, they must do it through a public medium. Otherwise, if Microsoft or any of Yahoo!'s executive commitee sold shares of YHOO before this statement became publicly known they would be trading with material non-public information.
That being said, usually a much more formal format is used and the press release would read something more along the lines of "I am writing to inform you that the outstanding offer of Microsoft Corp. to acquire Yahoo! Inc. is being formally withdrawn at this time. Micosoft Corp. believe that a strategic combination is no longer plausible given present circumstances." Some of Balmer's remarks seem quite childish, and he appears to wish to cause a revolt against Yang among shareholders. Despite being a major owner of the company, Yang may be an example of agency problem. He would rather be a billionaire with an major clout at a leading tech company than a slightly richer billionaire who has been dealt out of the game.
i also think that ms can wait out 3 to 5 years and buy yahoo at the bottom. in cnn there was an article regarding this matter and they worote how yahoo might try to merge with aol tme warner only to be later bought by ms anyway for a steep discount. so i think ms should not hurry, they need a brand but 40B is just too much, i mean its not as if they were buying cocacola, you cant ask for pepsi the price of cocacola xD
OT to the OT: Mortgage advice from a conservative website:
"Whats a borrower to do? If your loan balance exceeds your homes value, stop paying your mortgage immediately. Remember, in the Bernanke/Pelosi/McCain world, the responsible get screwed, and the reckless get rewarded. If you stop paying your mortgage, your bank will either voluntary renegotiate the terms, or Congress will force them to do it. If you keep paying on an underwater house, youre just throwing good money after bad."
PoliPundit.com
I still have a small position in YHOO.
Jerry Yang just F'd me in the A.
checker, I looked at the comments at that site. I wouldn't exactly call those folks conservatives. Frothing-at-the mouth xenophobes with an exaggerated sense of entitlement for having been born in this country sounds more like it.
I need a shower after that. Perhaps some chlorox for my brain.
i have one question regarding FED balance. i know that when usgov needs money they ask the FED, FED gets treasuries on its balance sheet and ask US mit to print the money, well put it into usgov account.
so for every dollar thyat usgovm gets there is another dollar in form of treasury
i red that recently FEDs balance is nearly completly borrowed out and that they ask usgov to borrow more so FED can lend more to banks?
do i get it right? or can someone explain this? thank you.
Here's the one worthwhile post from the yahoo message boards:
In response to recent events Federal Reserve Board voted unanimously to authorize the Federal Reserve Bank of New York to create Yahoo Lending Facility (YLF) to avoid significant stock market distruption and to support Yahoo! Inc shares. Yahoo! Inc and its authorized agents will be able to borrow from the facility to support stock price.
This facility will be available for business on Monday, May 5. It will be in place for at least six months and may be extended as conditions warrant. The interest rate charged on the credit will be the same as the primary credit rate, or discount rate, at the Federal Reserve Bank of New York.
In addition, Yahoo! Inc shareholders who are unable to sell their shares at or above Friday, May 2 closing price, will be able to swap Yahoo! shares for the US Treasuries at the set price of $29.70 per share.
This deal never made sense to me. IMO, MSFT wins and YHOO loses from no deal.
The difference between begging and negotiating is the willingness to walk away from a deal. It would seem that someone was mistaken as to which of the two was occurring. Oops.
suecris writes:
"...I wouldn't exactly call those folks conservatives. Frothing-at-the mouth xenophobes with an exaggerated sense of entitlement..."
I can tell you don't spend enough time on right-wing websites. Fun for an occasional bit of troling. You're pretty much assured some serious action with the right bait - probably even get one or two to punch out their monitors.
About two weeks ago I was at a conference where Steve Ballmer was speaking to a couple of thousand microsoft friendly folks. He asked everyone to hold up their hand if MSN search was their default search engine. Very very few did. Then he asked how many had Yahoo search as their search engine. Even fewer raised their hands. Then Google - and the audience was a forest of hands.
I think he was genuinely surprised that no one used Yahoo and mumbled something about having offered $31 a share for it. Personally I think the $33 bid was done so Microsoft could get out of the deal gracefully. Ballmer can say he did his best - while knowing that Yahoo would reject it. It would have been a painful and stupid aquisistion.
xav - you forgot Yahoo Groups...
I don't know if any of you are tech savvy but MSFT is doing some interesting things with Surface, Mesh, etc ... and my favorites WPF, Silverlight (the Flash killer) and the Expression Suite... with Ozzie in there might just be life in the old girl yet!
for a cheap laugh at Ballmers expense check out my 41 second video mash-up
@
YouTube - Masters of the Universe: Michael Douglas, Steve Ballmer, & Milos Forman
Steve will never again find himself in such rarified company!(full disclosure: ballmer sent me an email professing to like it!!)
Wow......if they only listened to Bill Miller (who still insists Countrywide is worth $35/share and was ever so "helpful" in criticizing the MSFT and YHOO negotiations)
More lackluster returns from wild Bill.
if ms fought to buy yahoo a lot of talent would have left . Ballmer must have realized this. It was about acquiring people as much as users and software. Ms only have themselves to blame they cannot possibly express wonderment that the best of the web centric rank and file don't actually want to work for them all that much, they know why, for the rest of us not privy to their internal emails and meetings, their aggressive past actions designed to support windows and office cash cows at the expense of everything else, are sufficient explanation.
Two things I loved in Ballmer's letter: "'Dear' Jerry" was one and "Thank you for the time we have spent together..." was the other. Ballmer is such a sweetie.
If I were a Yahoo shareholder, man would I be steamed.
That arrogant little prick who heads up Yahoo just cost his shareholders a bundle.
WD Verones
I can sympathize with your worries about your small position. But we do not need your homophobic rhetoric.
I think that from the getgo Yang took a protective position for his employees from the MS culture. The internet is about individuals. And to succeed you need a culture supporting and sympathetic to individuals.
Yahoo seems such a place.
I think that MS's inability to pierce the internet reflects the personality of Gates and the corporate culture he designed.
It would have been an AOL-TW merger all over again.
I am typing this on an Asus Linux-Firefox-Open office machine. All free and non-MS. And ultimately this kind of software will kill MS at a consumer level. Time is on Yang.s side- not Gates.
I almost bought some YHOO Friday but didn't pull the trigger. There will be some serious action suits over this management decision, but you won't see any cash for years...
Ballmer did the right thing by walking, and I'd hate to be Yang at the next shareholder meeting where, I predict, the billionaire player will be dragged from the table kicking and screaming. He's a horrible CEO full stop. Yahoo has languished, and now it's only hope is to become someone's prom date. Its stock should be trading at about 15 I reckon, and it's probably headed there.
The problem with G is that...ummmm...how do you make money except by advertising? What do you do when people realize that paid internet advertising on a search engine is the biggest scam on the planet (if you look at the ROI for the payments, customer acquisition cost can be quite high and, even more importantly, the "quality" of the customer in terms of rentention and engagement is low)? What happens to their revenue during a severe downturn? And do you trust their figures? I don't. I'm amazed that people give G the pass that they do. And they were evil from the beginning, btw. If you think they aren't tracking everything you do when you go to their site, you're naive.
What MS needs to do is what they did with the brower. Be the late player to the game and turn all of their resources toward their goal. They have a formidible amount of cash to spend and if all guns are trained at G, they have somehting they don't right now: recurring revenue in a solid base.I'd build search capabilities right into the operating system and bypass the need to go to the internet for anything you're looking for. but that's just me.
My call for tomorrow:
YHOO down $5-$6
MSFT up $3
YHOO: Options for Yahoo! Inc. - Yahoo! Finance
where is Mike in Long island(aka options quant) when you need him
what does this tea leave tell you?
It tells me that there are probably going to be a lot of unhappy call buyers.
On the other hand, at least the RE market in the valley won't gap down due to a blizzard of pink slips...
44k of the may 20p's trade! yowza
I advertise on Google because the ROI is good. I presume that most of their revenue comes from clients who do monitor their ROI. Where is the scam?
(I am also short GOOG; the valuation seems silly.)
Is MS buying Yahoo like HP buying Compaq?
Two dinosaurs merged. Eventually HP make out pretty well -- after a better CEO took over.
Today MS can't execute outside of their monopoly business.
If Yahoo/MS merge, it will take a better management team than Balmer's to make the merger work.
dryfly,
I think the open letter is a bit foolish. It is better to simply say 'no thank you' and walk away, keeping the lecture to yourself. But that's Ballmer and that's Microsoft.
"That arrogant little prick who heads up Yahoo just cost his shareholders a bundle."
But they could have sold for as much as $30 after the offer.
Is it just me or does it seem like a better use of $50 Big Ones would be to build say 50-60 deep sea rigs as opposed to an ad-selling, internet thingy?
I've got the feeling which asset class we're really going to need over the next 10-15 years and it ain't the one with the free email.
Steve Ballmer should have been fired years ago.
The Microsoft culture flows in no small part from Ballmer. Put simply, he's a major dick. Yahoo people, even owners like Yang etc, didn't want to work for him. That's most of the problem.
In high tech, dickitude results in stagnation. In the place I work for now, there was a former CEO who was also a stupid dick. After enough random layoffs and poor decisions, the high-end people were gone and formed startups in the same city to compete against them. Original co had a near monopoly product. No more.
2002-2008 all sorts of good people left Microsoft for Google.
Fire Ballmer, really change Microsoft, then things could be quite different. Microsoft is rich enough to afford Google-level research, but little of it ends up in products. Yahoo doesn't have that.
Bill Gates should have broken up the company when he had the chance. Right after winning the appeals, he shoudl have said, "We're going to break ourselves up anyway since it's the right thing to do. We have too much potential and creativity being stifled here."
Microsoft lucked out when Yahoo declined their final offer. Two aging internet relics do not make one dynamic competitor that can compete with Google and hurt it where it matters. Google is susceptible at a local search level and in 3-5 years a young upstart will revolutionize local search and throw Google's tameable algorithm for a loop. Until that time, we live in Google's shadow and are forced to dance with the devil du jour.
I advertise on Google because the ROI is good. I presume that most of their revenue comes from clients who do monitor their ROI. Where is the scam?
Do you know that the data they give you is true? How many clicks did you get, and I mean REALLY get? Can you tell? How? What's the exposure, other then the numbers they give you? What is their methodology for filtering out nerfarious clicks to drive up your costs? How many did you get last month?
So let's see...G gives you all the numbers and then you compute your ROI. If you can compute it, they can too beforeheand, don't you think? Does this sound tinfoil hatish?
Would you put your corporate documents out on Google spreadsheets? How about documents period? Do you think they track what you do everytime you go to their landing page and what you click on? Does this bother you at all?
And finally, what's their business model? I mean, x out ads and how do they make money? Is it sustainable?
ROI on G outstrips all other media for us right now. We spend close to 7 figures per month and KNOW our ROI. I don't know many people dumb enough to rely on G to help them compute ROI
edit: We of course rely on G in a macro sense to compute our ROI - we know what we pay them
I wish the cynical analysis directed at google by ipodius etc was directed with equality at the other players. Google offers real world ROI better than the competition, and the income per CPM for web masters is good as well, again, better than the competition. Both are really easy to quantify, easy for the publisher easy for the advertiser. Google tracks everything their customers do, but has not suffered any security disasters nor has it tripped up by mis-using that data, while being watched very carefully by every geek with an interest in such things. The same cannot be said for microsoft.
It is possible to run other networks alongside google and possible to switch off google ads and replace them with any other system within a few hours. Try doing that to your investment in windows or office. I try other ad networks now and again, and they suck vs adsense. People try other search engines now and again and for many reasons both large and trivial they suck vs google search. That is the secret of their success, and it seems a lot more honest to me than some of the other companies that own 65% market share of anything.
LOL! Not that I am a fan of MS or Ballmer, but that letter was hilarious. Let me summarize it in 7 words:
"Thanks for nothing, you f***ing ingrate ***hole."
Good luck, you Yahoo!
Google has a much better business model than Yahoo. Internet companies whose business model is making themselves part of the internet, like yahoo, always fail eventually. They have the same data as everyone else and you can't make money off an easily obtained commodity.
Google, on the other hand, has an excellent search engine that is accessed via the internet. They use the internet as a tool. There's a suttle difference that makes a huge difference in terms of profit making potential. They're more like an amazon.com that uses the internet to sell goods. They don't try to incorporate themselves into the internet.
Having your company show up on the right side of google searches when looking for a product is a great idea. I frequently click on and buy things from clicking on these adds. The concept is simple, but, for some reason, no one else does it as well as Google.
Microsoft would be better off focusing on keeping their windows monopoly and turning the XBox into the number one gaming platform. Yahoo would be a big distraction.
The msft car dealership versus the yahoo car dealership.. would a bigger car dealership have mattered at all, no! The future is all about local consolidation not global expansion.