Microsoft + Yahoo! = Microsoft - $44,600,000,000 ?
Oy.
My first reaction: "That's a lot to pay for flickr."
I'm surprised yet not surprised. Internally, a number of us had heard reasons from Steve Ballmer why a Yahoo! acquisition didn't make sense. One that sticks in my mind right now is how if we acquired Yahoo! - such a big company - we'd have to naturally have layoffs within Microsoft to accommodate it.
Maybe there are HR people wandering around Microsoft this morning asking, "What color slip did you say? Pink?"
Man, if I was in the Online Services Division I would be worried. Especially if Yahoo! did something my team did and did it well.
I guess you can track down the 10:00am meeting and see if you can get your question answered.
Forty-four point six billion US dollars. In long hand: $44,600,000,000 USD.
So, if your team is naturally at risk due to the acquisition I would start checking in on your local network and see what's going on elsewhere in Microsoft. If there's someone within Microsoft you've always wanted on your team that has some turbulence ahead due to the acquisition (yeah, I know, Ballmer's telling us "stay on target") check in with them and tell them the groovy things your group is doing.
If the buy goes through, it will be one huge turning point for Microsoft: I think we'll either turn it around brilliantly and our mega-investment will be worth it, or we'll be torn asunder and revert back to our core cash cows. It will be a story worth telling, one way or the other. In the meantime, that big huge money-chest is going to go empty, and that might bring a new sense of clarity to our operations.
Initial posts:
- Mr. Todd Bishop: Microsoft's big Yahoo bid Behind-the-scenes details - nice flow of updates over time and info on the Yahoo! board. Follow-up story by Mr. Bishop: Microsoft offers $45 billion to buy Yahoo
- Ms. Mary Jo Foley: Microsoft to become Micro-ad All about Microsoft ZDNet.com
(more later.)
204 comments:
«Oldest ‹Older 1 – 200 of 204 Newer› Newest»Opening the discussion up here during the day to have productive reactions.
Troll-watch: I will delete off-topic / asinine comments. Don't take the bait and react to them because I'll delete the follow-ups, too.
Mini.
Spending $44.6B to buy a company with revenue of $7B and profit of $700m leads to some pretty challenging math. They must really be hoping on some strong synergy. If there is zero synergy (or negative, as often happens with big mergers) then it's putting a very large pile of money into a very small fire.
wow! I think it is pretty cool, part of me says "hmmm, maybe not the best thing" but another part says "all things being equal - and MSN/Live Search works just as well as Google search, so that part is equal" now it is just about share and surface area, and making use of our cash, we can buy share and surface area. And the chance to maybe, uh, 'reinvigorate' MSN, I'd have to say this could be where we turn the corner. Definitly a shot across Google's bow, and maybe the torpedoes are in the water... Aquantive makes more sense now, it ties all this together.
You are right, it will be cool to see this unfold!!
So name me one Mega Merger or Aquisition of this size that has not completely destroyed the sharholder value of the aquisition cost or equity of the aquired with 5 years?
Two ugly parents getting together make ugly children. Two losers in search do not make a winner.
And there seems to be many divisions or product areas that are managed poorly now. How will adding a ton of more people going to help?
So name me one Mega Merger or Aquisition of this size that has not completely destroyed the sharholder value of the aquisition cost or equity of the aquired with 5 years?
Amen brotha
As far as I can tell, nobody understands this.
One person cited 'maybe this is an attempt to get Google to dump cash into it to keep it out of Microsoft's hands' to me, but Google isn't that dense.
I've believed for several years that Microsoft executive management had no real strategy and never acted, only reacted. This does absolutely nothing to change my mind.
IMHO this is the worst business decision steveb is doing. It's a lot of money for a lousy business and I just hope that Y! will be stupid enough to decline the offer (get me right, deal is good for flickr and really bad for us). PLEASE PLEASE PLEASE!
So name me one Mega Merger or Aquisition of this size that has not completely destroyed the sharholder value of the aquisition cost or equity of the aquired with 5 years?
Exxon-Mobile
Seems to me that it's an awfully expensive way to acquire 16% Search market share. I'd feel much better about the future of this company if we were able to attract those users based on the strength of our products & marketing.
And of course as Time-Warner discovered, you can't really "buy users" anyway. There is no guarantee whatsoever that Yahoo's 16% will continue to hang around post-acquisition if we aren't able to deliver compelling reasons for them to do so.
It's purported that Steve Jobs once said: "A" people hires "A" people, "B" people hire "C" people.
Today, SteveB put a twist on it "A" companies aquire "A" companies, "B+" companies" hire "C" companies.
No this isn't a major case of NIH. I know lots of current Y! and ex-Y! folks. How can SteveB say that there are a lot of "complementary assets" when at Y! alone there are multiple competing assets? For years teams would compete to crush other teams - think Y! Photos vs Flickr. Of course that's happened here too, but those were typically out of lack of coordination or charter creep - not outright customer theft. So take those competing assets and merge them with our competing assets (think Mail) - can you say 8 years of synchronization meetings? Especially given the fact that every acquisition we make, we spend the first few years converting their systems to run SQL and Windows, instead of delivering value to the customer, this is going to take years to digest.
I hope we closely interview every Y! employee. Not to say that they aren't great people as there definitely are some. But let's face it, like us, most of their top talent left for Google. The only difference is that for Y!ers, it was just taking a different exit on the freeway, for us it would mean uprooting our families. On top of that, let's just say that Y!ers are frustrated with title inflation, a typical comp. You'd be surprised at how many people there would prefer our ladder level systems, and SteveSi's patented title transparency.
I predict that history will look back on this as:
1. Time Warner+AOL
2. Ebay+Skype
3. Microsoft+Yahoo
I only hope the DoJ can step in to prevent this from happening.
"The only difference is that for Y!ers, it was just taking a different exit on the freeway, for us it would mean uprooting our families."
Hey, for SVC (Silicon Valley Campus) Microsoft, it's not even a different freeway exit.
It will be interesting to see how the increased SV presence changes things. One reason SVC has lost a lot of MS folks to Google is because there just isn't very far to go down in SVC, or that many thigs to do. It might help retention at SVC, though, as Mini says, I'd hate to be in a reduntant group right now.
....from its November high of $747 a share - wiping out more than $72 billion in market value. That’s more than half again as much as Microsoft (MSFT) is offering for Yahoo (YHOO), for instance.
As someone else said, this is some pretty challenging math. We're paying something like a 70% premium for the shares? And how exactly is this going to be major payback for us? It duplicates efforts we already have underway, rather than bringing something new to the table.
I don't get it at all. Does anyone have a link to ANYONE who thinks this would be a good idea? (SteveB and anyone who reports to him don't count, obviously.)
Left to its own devices it looked like Yahoo! would slowly fail and fade.
Q:If that happened would the 16% market share move to MS or to Google?
Given Yahoo! is ona downward spiral, that MS has a relatively small market share and that jointly they would represent ~30% then DoJ intervention seems unlikey.
How many peeps does Y! employ? so we will grow by that amount for at least a year or two (prolly longer)until we get our collective closets cleaned out. so beyond the synergy and the payback schedule, we got a bunch more folks to organize, motivate and communicate to, and MS struggles at time to do that now...
"How many peeps does Y! employ?"
11,400 (Dec 2007). They just announced 1,000 employee layoff this week.
Yeah, my hope is that the DoJ steps in and puts a stop to this madness. And you know if they don't than the EU will have something to say. The shitty thing about that is that we lose 10% in stock value on the announcement and then when the DoJ says "no" we'll lose again. Ballmer is such an incredibly bad businessman.
I also hope that if this goes through that it comes with a wholesale layoff of the entire online services division. I mean isn't this just an utter admission of failure in the space?
This is assinine.
My personal comparison:
John Edwards and Rudy merging with each other!
Sure they'd have more votes, but they'd be totally incompatible and they're still going to get crushed by the 800# gorilla!
This is the worst thing that Microsoft ever did. I am making a declaration of divestment from Microsoft and here it is.
I Can no longer remain invested in a company with such disregard for shareholder value.
http://financesummary.blogspot.com/2008/02/declaration-of-divestment-from.html
Here is the link to my commentary on Microsoft yahoo merger. I cant describe how disappointed I am.
http://valueinvestmentblog.com/
MSFT down 7%, YHOO up 48% - and that is why i hate Microsoft, everyone but its own employees get paid
i should have sold everything at 37 a share when i had the chance
Yahoo employees receive a sweetheart deal after posting disappointing earnings. Microsoft employees see their stock go down 7% in a single day after posting record earnings. Something is wrong here.
MS is paying for $44.6 Billion for roughly 16% market share. Now, lets pretend that these 16% (users) are tied in (i.e., locked in to yahoo via contracts), I may see a little value in adding Yahoo. BUT these 16% are fluid, they are just users with no real ties to Yahoo. So in essence, MS will be paying $44.6 Billion for less then 16%.
Yeah, that's a great comment. Most of the users on Yahoo! are also on MSN. So we're not even getting new unique users, I'd like to see the overlap. So we get a few properties/content and some new ad eyeballs. This is NOT worth $45B. What sort of fuck-nuts do we have in M&A that can't do the math?
The audience overlap point is critical. Since this is an advertising business, buying audience is critical. How do you create an integration scenario that doesn't gut the existing audiences? Or, if you are able to retain as much of that unduplicated audience as possible, how do you keep driving engagement (ad impressions) at the same level. Take just the home page experience for both portals. There are people who go to MSN and Yahoo! every day. If there is only one home page for the two in the future, we won't get the same level of impressions from these cross-over users.
"Exxon-Mobile"
ok, idiot. First, any moron can make money selling oil (except Dubya - but lets not go there). Supply and demand. Our supply is squeezed, demand is up thus more $$$ for any oil company.
Technology is different, there is no finite supply, it is always changing (oil is oil - pump it from the ground, refine it, sell it) and consumers have a choice and oh yeah guess what we can live without Yahoo or Google or MS. My nice Macbook Pro and XBOX is a luxury. But I need Exxon to get to work, to heat my home, to make stuff I need (i.e., energy to make my food)
Lol, I can just hear Ballmer: Must kill Google. Google make steveb mad. Make throw chair. All laugh steveb throw chair. Must kill Google...
"But I need Exxon to get to work, to heat my home, to make stuff I need (i.e., energy to make my food)"
And one could argue that you need software to do many of those things. However, and you make a great point, you don't need ADS or ad impressions. And this is where we are failing. If we focused on true life changing software, we'd be in that camp of people "needing" to buy our stuff, but this deal is pure ads, audience and eyeballs and at the end of the day, it's total fluff. In a tight economy it will be the first thing to go (see also GOOG's latest report) and probably eventually face a consumer revolt. This is just WRONG on so many levels.
I think MS employees ought to look at this as a really golden opportunity. Instead of wringing your hands, why not see if you can help out to integrate YHOO folks, make them feel welcome, happy, and energized about joining the world's largest software company? Why do you assume it's all going to go badly and it's all gloom?
IMHO, any time you feel anger/hatred/angst, I suggest you put that energy on helping with the fight against Google.
If I were in your shoes, I'd be sending an email to your CEO, offering to help with merger integration. I'd suggest helping on the technical analysis of merging technologies, and not let dogmatic top-down direction take hold, like 'must switch over to Windows' (unless that's the right technical solution).
So get in, help out, and regain the shine Microsoft had in the 90s. It's in your power. Go do it.
As I see it, your CEO and Board has opened up the door for you to regain the Microsoft shine in Online Services and Ads! He's using stock/cash as one of many tools, just like Google bought YouTube with its cash when its online video service was flailing. You should be cheering Steve Ballmer on, and offering to help him with human capital to complement the financial capital.
Godspeed folks, this is a golden opportunity to stop the onslaught of Google and their utter hatred of Microsoft. You are the ones who can do it. Support your CEO/Board and go make this happen. Positive energy, not whining. Abundance, not scarcity. Opportunity, not threats.
I'm really tired of seeing MSFT not get the respect it deserves -- and I wish the moderator on this blog would delete the flat-out disrepectful comments towards MS's employees (whether it's steveb or a rank and file employee). I think it's counter productive and likely written by MS haters (slashdotters, Google/Sun/Novell/etc employees). Those comments just don't help the debate.
Guys/Gals, step up. You can do it. Your shareholders are counting on you.
The strange, incessant fixation Microsoft has on Google is just plain bizarre. I understand that Google is very similar to Microsoft in terms of its DNA or that at least some see it that way. Its a new, serious and smart competitor that apparently reminds some MSFT execs of themselves. Ok. Got that. Understood. HOWEVER, back in the real world, Google is in a completely different sphere than Microsoft. Instead of MSFT focusing on its core business (windows, applications and to some extent enterprise) and organically going to the web THROUGH superior execution in its core, MSFT has been throwing around money on XBOX (which it strangely uses to undercut its own Windows gaming/DirectX efforts), and has similarly followed a seperate, wild-eyed strategy of becoming an "internet company", whatever the costs. It is chasing to clone the Google business with all its might instead of using the internet to complement its existing products and services in a smart way for customers. Basically, it either forgot its strengths, doesn't care about them or has the arrogance and the hubris to think that it can build a core businesses "ad hoc". Ballmer writes about synergy. I would start looking for and building that inside the company first. The whole thing reminds me of AOL/TimeWarner in terms of management delusion. The sooner MSFT rids itself of the MBA Ballmer who hasn't had a technical or creative vision in his life, the better. He may make a heck of a marketing exec, but as the CEO of a software company (software, after all, besides being a business, is still a creative effort) he seems unsuited. My opinion.
Why pay 44 Billion to upgrade yrou web apps to platforms that aren't your own?
Look we're MSFT and we have Flickr! It's awesome. It runs on this thing we call LAMP, with the very chic YUI.
Now, please buy Windows, SQL Server, IIS, Sharepoint, and write all your code in .NET with Silverlight on the front to make it look all cool. We don't use it, paid 44 billion to get away from it, but you should!
my first reaction was, and still is, "what a desperate manuever to compete with google". We can't create something unique and wonderful? Let's buy something and re-brand it!
Much of the discussion and coverage has to do with finances.
What about the technology? Microsoft's MSN/Live properties and Yahoo have completely different technology stacks. How do you get to the "operational efficiencies" that Kevin Johnson talks about? Yes, for different areas, you can eliminate duplicate properties, migrate existing users, and pick one platform for future investment. But in the end, you still will have some stuff built on the Microsoft platform and remaining on the Yahoo! platform. And you will be staffing for expertise in both.
"The strange, incessant fixation Microsoft has on Google..."
EXACTLY...I don't get it. And you've hit the nail right on the head. I look at even 1% of the cost of this acquisition in some of the areas that I've struggled to beg for money and that 1% could have yielded so much more in the enterprise in ROI. And yet we keep throwing money down this rat hole. Maybe Ballmer is still pissed about Kai Fu Lee?
With this offer, Ballmer and Kevin Johnson are basically saying:
1.) MSN is an utter failure. After spending untold billions on a failed online strategy, we are now going to compound our mistake by spending tens of billions more.
2.) MSN employees are a failure. Yahoo employees are worth a premium. MSN employees can look forward to either being let go or to welcoming their overpaid Yahoo colleagues to do similar work as them, but with far higher compensation.
It is amazing MSFT price is holding up so well in the face of this offer. Probably everyone is still numb from the aQuantive deal.
"The strange, incessant fixation Microsoft has on Google..."
Google represents the erosion of the desktop platform, boxed software, 5-year update cycles, patching, maintenance, restrictive licenses and vendor lock-in. Why should small business pay for and maintain something like a Sharepoint server when they can get it next to free from a cloud service like Google?
Also - Google is sucking up money from online advertising. It's a huge, growing pie and Microsoft wants its slice.
Both YHOO and GOOG disappointed their investors in their latest earning reports, so maybe this is the best time to buy YHOO and hit GOOG?
1. YHOO's stock was at 4+ year low before the news was out. That makes YHOO share holders much more willing to accept the offer and MSFT doesn't have to pay more than the proposed 70% premium.
2. It might be the first time GOOG is showing its weakness and the best time to attack?
The distraction from integrating Yahoo will take Microsoft's eye further from the ball in its core Windows and Office business.
Microsoft should be focusing on fixing the abysmal Vista situation, not buying an also-ran Internet media company.
As a former MS employee from the IPO days, I'd had a large holding of MSFT shares for many years. But during calendar 2007 I finally divested 100% of my MSFT shares, on the theory that once BillG was gone there would be no assurance of sanity. This Yahoo takeover seems to confirm my fears. I can't say how pleased I am to no longer have any significant investment in MSFT; I feel I got out just in time.
Well, in order to make a "productive" comment, all I can say is:
I REALLY hope this goes through!
What happens when a loser marries another loser? We get a winner? No, we get a loser squared. Microsoft's bid to buy out Yahoo seems like a similar marriage to me. Yahoo has long demanded high valuation based on promise but while Google advanced and made online advertising a extremely lucrative business, Yahoo faltered. And lets not talk about Microsoft, they have been increasing their loses at the rate Google has been increasing their profits.
"Advertising, Advertising, Advertising", was Steve Ballmer's war cry this year. He just seems too obsessed with Google. We all remember the unforgettable chair throwing and "I will f**** kill Google" incident. Is killing Google more important than creating shareholder values? With all the technical brain power and billions of dollars in war chest, this is the best Steve Ballmer could come up with? If they wanted to compete with Google, they should have spun off live group, not buy Yahoo. Whatever little profit Yahoo has been making in past would also evaporate once Yahoo is a part of Microsoft. By spinning off live, Microsoft would have given enough creative control to live and by the virtue of capitalism, Live would have been more successful alone then it is under Microsoft flagship. Microsoft claims they will save 1B per year on infrastructure alone but they did not mention the administrative costs of merging the companies. Once Yahoo is with Microsoft, they would start shoving Windows down Yahoo's throat and eventually killing it.
Microsoft is getting desperate and it is running out of options. Google is encroaching in to its desktop market slowly but should Microsoft spend 44B + billions more in merger cost to give Google a scare? Steve Ballmer can not leave Microsoft with the stigma of Google on his legacy. Hence Microsoft is ready to participate in this internecine war with Google. Right now online ad is highly lucrative because Google has no competition but if by one in a hundred chance Microsofthoo! Managed to put up a competition, they will only derive the prices down and Google's blue ocean will turn into a red one. Microsoft is playing by Google's rules on Google's turf instead of changing the rules or the turf.
As far as Google is concerned, the somber mood that this earning miss brought to Googlers, immediately changed into a cheerful one by Santa Ballmer. Some of my friends who work at Google called me up and made fun of Microsoft's desperation.Microsoft had live.com, msn.com and hotmail.com. Now Microsoft wants to add Yahoo.com to its eclectic dot com collection. Google must feel like Gulliver on the island of Lilliput.
The enormity of this stupidity can only be undone by a bigger stupidity and it should come from Yahoo! Shareholders by not accepting the offer. I am counting on it. In the end I am making the declaration of divestment. I can not remain invested in a company that has a leader with such disrespect for shareholder values. I will sell my Microsoft stocks. All of it.
Micro-Hoo? (Microsoft + Yahoo!)
As a former softee...I have to say those of you still roaming the halls of Microsoft should shudder. Don't get me wrong...MSN is truly an assortment of B players and little fiefdoms (I had the misfortune of being orged into MSN for about a year before going back to Windows) however this merger will negatively impact all of microsoft and the broader seattle region. Here's why:
1. layoffs will drive down housing prices: honestly the stock isn't brining in cash, the one hope you had was to sell your 1800sq foot 1970 rambler in bellevue and move to montana when your ms career is finished. If you slice off 10000 MSN employees it will droven down house prices. we really didn't need another excuse to be bearish on real estate in puget sound
2. Didn't the stock just break $32 recently: Trust MS management to find a way to block the momentum of the stock price (full disclosure: i have no ms stock anymore)
I just remember recently hearing my friends 'behind the veil' beam that the future was bright and stock price was up (wow almost to 2002 levels) but Wall Street hates a buyer, expect that momentum to stop.
3. So much for answering that pesky question 'what the hell is Live'?
Integrating 2 large companies is painful, expensive in the best case...putting the great minds that gave you MSN on top of an integration project of this scale is truly doomed. Valuable time and money will now be invested in land grabs and org charts instead of products (all tho too be frank, the product planning didn't really net much either)
Well, Google just released disappointing quarterly results -- http://www.reuters.com/article/marketsNews/idUSN3135468920080201 and today's info helped drive their stock down even further -- almost $50.00 off, which isn't anything to sneeze about.
One might suggest that based on the above there's also some anxiety on the other side of the fence.
Let's swell Microsoft into an extreme Google-killing profit-swilling machine! Microhoo!, Microhoo!, burst-that-seam!
It has been conventional wisdom for the past ~7 years that the sky is falling on boxed software. If Microsoft didn't move to get all its offerings "in the cloud" and offer everything as a "service," complete with social networking and ads, it was doomed.
Anybody with any technical knowledge knew this to be BS. Any spreadsheet, word processor, or development environment written in HTML/AJAX is going to be far inferior to its boxed equivalent. You can't make operating systems or video games using HTML. etc.
7 years is a long time to be doomed. During this time, Microsoft has been making record revenue from its core offerings, which Google has failed to encroach on. Google has been making record revenue from THEIR offerings, which Microsoft has failed to encroach on.
Anybody with any common sense can clearly see that the companies are in different markets and can succeed independent of each other.
Microsoft's (and especially Ballmer's) need to compete with Google has always been misguided and has dangerously diverted attention from core businesses. This is just the most recent (and biggest) mistake in that direction. I personally think Yahoo! does a very good job at providing many services and am pessimistic about their future quality.
well i hope this doesnt turn out to be AOL+Time Warner Version 2.0.
Yahoo just laid off 1000 workers, and we are paying a premium on the stock ...
things that make you go HMMMMM??
I am sooo glad pets.com went under before we could offer to buy at a 250% premium.
Is there any sane acquisition that we've used our stash for in the last 5 years?
Are the companies directors paid with put incentive options?
and today's info helped drive their stock down even further -- almost $50.00 off, which isn't anything to sneeze about.
One might suggest that based on the above there's also some anxiety on the other side of the fence
The drop in share price for GOOG has nothing to do with the "other side being anxious". It has to do with a bunch of cocky wall street Mo-Fos who just sees as far as next week to make a quick buck. They do not understand anything about technology, or R & D, or anything at all. Remember these are the same Mo-Fos that created the tech boom and bust of 2000 and now the current boom and bust of housing. Need I remind you that $ Billions and $ Billions are vanishing away. Please do not allow yourself to believe these guys know anything about anything, they just know to F people over to make themselves a quick buck.
Is the other side (Google) anxious? Maybe. Maybe not. More then likely they are just waiting for MS to self implode by having Ballmer do its dirty work for them, (i.e., spending $45 Billion on a failing disorganized company) Why waste your own time and money when you can have Ballmer do what you want.
The strange, incessant fixation Microsoft has on Google is just plain bizarre.
The dude or dudette is dead on. He/She makes one of the most compelling statements on here.
In the last 5-10 years MS has spent all its time on distractions (Zune, and XBOX anyone?) and look at the result (Vista anyone). Even BillG and other upper management is calling Vista "bloated" and they cannot wait for the next version. Ok, if Vista is the result of the distractions, what will happen when MS writes the $45 Billion check and has to integrate over 10,000 people. And think of it this way, if all these Yahoo engineers (the really good ones) really liked the idea of working for MS don't you think they would already be in Redmond. But no they are in Sunnyvale working for Yahoo to compete against MS and Google. My point being is that all the stars will probably take there big bag of cash and retire and create a start-up to compete with MS. So what will MS be left with 9000 "ok" people looking for guidance from you guessed it, MSN.
Apple is making shit load of money making great products people want. It is not rocket science, there is no secret formula to make tons of money. MS does not need to spend $45 Billion on another company. MS just needs to spend a bit of money to find out what people want. And if you deliver a great product, people will have no hesitations paying you lots of greenbacks for it. Look at the MacBook Pro, IPOD, Starbucks. People pay anywhere from 2.50 to 6.00 depending on your location on coffee. Why? Because Starbucks delivers a great product (good drink but more importantly great customer experience). So I along with everyone else walk into that store everyday and hand over my hard earned money. So MS make a great product (user focused) and I will gladly hand over my money to you. That is all. And until then Steve Jobs can have my money.
I really hope this works out well, although I've always been confused as to why we need to go head to head against google. Still, I'm hoping that the execs and analysts know what they are talking about.
And yet, considering the wierd economics of this merger, I keep wondering: is Steve Ballmer the George Bush of high tech?
This isn't a bad deal if they can go through and do all the cost cutting that supposely will save $1B a year.
You are always having to pay a bigass premium when you buy a company, unless you are buying a bankrupt company. At least half of Yahoo (or dup. MSN) need to go. Cut 7000 from the combined operation.
Otherwise, this is just going to MSFT fatter and fatter
The drop in share price for GOOG has nothing to do with the "other side being anxious". It has to do with a bunch of cocky wall street Mo-Fos who just sees as far as next week to make a quick buck. They do not understand anything about technology, or R & D, or anything at all. Remember these are the same Mo-Fos that created the tech boom and bust of 2000 and now the current boom and bust of housing. Need I remind you that $ Billions and $ Billions are vanishing away. Please do not allow yourself to believe these guys know anything about anything, they just know to F people over to make themselves a quick buck
I am *so* tired of this crazy double standard. When GOOG stock drops due to a bad quarter and a key strategic move by Microsoft, it has nothing to do with anything other than fickle investors who don't know sh** from shinola. When Microsoft stock does *anything*, it's always because we suck and everyone knows it.
C'mon -- if you're going to bash, you need to apply the same rules across the board.
MS is done. A group of strange people running the show.
Isn't Yahoo! run on Linux servers with open source software such as Apache, PHP, etc?
My point is that will Microsoft spend the time and effort moving the Yahoo! business to Microsoft products, or will it be a "steady as she goes" management, keeping Yahoo! on competing technology?
There are huge risks either way. To change Yahoo! to MS tech is a massive challenge, and not to change Yahoo! to MS tech is a vote of no confidence in MS's own products.
C'mon -- if you're going to bash, you need to apply the same rules across the board.
Dude, you miss my point. Just meant that people read to much into the stock price. Where as they need to focus on what the company is doing and what is planning to do (development of new products - and by developing I actually mean developing not buying NEW QUALITY products).
Stock price fall in MS in the recent history is due to ZUNE and XBOX.
+=+
If I were Page and Brin, I would bid $50 billion for Yahoo, rather they have the cash to or not just to screw with Ballmer.
Isn't Yahoo! run on Linux servers with open source software such as Apache, PHP, etc?"
No. BSD servers. But your point is correct. the question is whether Bill's mandate to run everything on Windows Server still holds.
If MS keeps the BSD infrastructure it will be embarrassing. If they don't it will be a lot of work. Only alternative really would be to simply tell existing Yahoo users that they have so many days to migrate themselves to MSN alternatives.
Users love that.
Time for a stockholder revolt to get right of Mr. Balmer!! This is the last crazed move he should ever get to make at stockholder expense. What in the h*ll was he thinking??
Surely there must be some financial advisor out there who agrees with him (and his advisors - unless he running solo/cowboy here) that this was a good idea, for some kind of solid reason or two? WHERE ARE THOSE PEOPLE?
(Uh...that is...get RID of Mr. Ballmer...)
Lets pretend this is a good idea. Lets also pretend it goes through and most things are firing on all cylinders. Even with that said, it will take MS anywhere from 2+ years to fully integrate and "synergize". By that time what is now will be dead and what is new will be old. So what is left is MS still not innovating and competing.
I use to work for a bank and there catch phrase was synergy this synergy that and now what is left is there stock prices down by more then 75% and it is struggling through the sub-prime mess. Beware of Synergy.
+=+
yeah that worked:
http://uk.finance.yahoo.com/q/bc?s=MSFT&t=5d
No wonder Ozzie sounded like he had a gun to his head during the announcement.
I’m still undecided about this deal. We played this same game years ago when we bought hotmail. That migration was a huge project. It took years to finally get all the Unix boxes out of the datacenter. I don’t think playing that same game with Yahoo assets will work. In the end I think the true value add is the advertisement platform we get from the deal. I don’t think anybody expects us to ever become the #1 search engine but at least we can give Google a run for their money in the Ad game.
I don't understand why Ballmer thinks he doesn't have to get employee OR shareholder buy-in on his wacky plans. I'm not exactly in mergers and acquisitions, but I could have told you that the response to this idea wouldn't be positive.
Yeah, online is a problem. I get that. Do we seriously have to be EVERYTHING to EVERYONE? And even if we decided that we did have to be, others have mentioned that Yahoo isn't exactly a glowing golden-child of a company.
I want a point-by-point plan as to how the process would go. I want to know what would happen to all the properties. All the groups. All the technology. Someone, somewhere has to have thought about that, and I think they should have to share this great plan with us before they get to spend everyone's money.
Just imagine if you went to your manager and told that that you were going to spend your entire budget in a questionable way and gave them nothing but a short (choppy) speech in defense.
Ballmer acts like an employee that deserves to be fired.
One thing's for certain, if this thing goes through, everyone, and I mean everyone, on the Office Live, OneCare, AdCenter, and Hotmail teams can just pack it up. Their products are so embarrassingly inferior to those that Yahoo! offers it's not going to be any contest.
As a shareholder, this annoys me...a lot. I still have some MS shares from when I worked there, and I was hoping the nice, steady cash flow would make it a nice place for my money to camp out and get some return in a down market. I wasn't really looking for capital appreciation.
Now in an insane attempt to turn MS back into a growth company, $45bn of that cash pool I was hoping to get as dividends is going away. MS will spend the next few years with complex business integrations instead of milking Windows and Office.
MS hasn't shown an ability to find new growth businesses. MSN, Xbox, Windows Mobile, all losers. Just pay me out some dividends and let me invest them elsewhere and I'll be ok with that. Stop trying to pretend you can recreate the 90s. Companies should grow when they can do so efficiently--when they can't they should return the cash to their shareholders.
anonymous said at 8:44:
"There is no guarantee whatsoever that Yahoo's 16% will continue to hang around post-acquisition"
Amen. I have been a Yahoo user since 1995. However, if Yahoo becomes a Microsoft property, I fully plan to abandon Yahoo and move to GMail.
I am not simply saying this to piss off the MSFT crowd here - but to back up the previous poster's comment that there will probably be Yahoo users who will defect. There is a reason that they aren't MSN users now, and that reason will not change for them.
I think SteveB is loosing it. His fixation on killing Google is beyond understanding.
Sometime he reminds me Francis Costello from The Departed, no compromises, going his way to the end.
Any doubts that Google is Ballmer's white whale got cleared up today..
Microsoft's (and especially Ballmer's) need to compete with Google has always been misguided and has dangerously diverted attention from core businesses.
This statement is so dead on, imho. The whole post is dead on.
The blatant and utter disregard for shareholder value over the last 7 years is unfathomable. As an employee I've lost complete faith in our leadership. They are more concerned with establishing their legacy in the technology industry than anything else.
To the person who said MS employees should step up: Stepping up is a 2-way street. Many of us have stood by this company with measly ~2% raises over the last 6+ years. I make less money today than I did in 1999 - 2000 when I worked for another hi-tech giant. Our leadership has had opportunities to raise shareholder value yet they've clearly made decisions against achieving that goal during a period where other technology stocks had relatively stellar gains. Now with the average S&P stock's "normalized" (10-year trailing average inflation-adjusted) earnings at around 25% above GDP growth, we're heading into some very challenging times. So, step up??? We did step up and the door was slammed in our face.
Assuming Microsoft isn't laying off all of MSN\Live and giving up to Google, what else can it do to compete right now? The amount you make per click on an add comes from a bidding process. Since MS has such a small share many advertisers ignore it and just use google. This leads to less $$$ per click. Now, since you get less $$$ per click on the same ad from MS vs Google, who are you going to go with?
The only way to get out of this hole is to aquire a big chunk of page views using MS's ad platform. You can either pay the company off like Facebook, buy one out or increase your page view share on your own pages.
Live search is getting much better from before, but even if they catch Google technically, they won't get much more share. With Google toolbar installed by just about everything, getting search share back is a lot harder.
That leaves buying search share\page views, which means Yahoo. They didn't want to partner a year ago, so ms needed to buy them.
That being said, $44 billion and change is a lot of money to pay to stay in the online ad business and almost certainly will never be paid back after interest, much like Xbox. But assuming Ballmer refuses to give up, this is ms's the best chance to be competitive at all. Most of the other things ms would try instead (smaller aquisitions, more in house R+D spending, etc) would never hit the critical mass.
Is it a waste of money? Yeah. Will management screw up the merger with narrow thinking and ongoing fear about open source? Probably. Can Microsoft do anything better with the cash than just sit on it at 4%? Probably not.
Well, the people who hoped to get rid of MSN got their wish. Should have been more specifc what they wished for, though.
By any standard, this is a massive slap across the face to MSN; an outright statement that nothing MSN could do even with an additional $44 billion to burn would be worth more than buying Yahoo. I can't honestly say that SteveB is wrong in his assesment. (It also adds some ominous significance to the cancellation of the MSN move; why spend money on people you no longer need...)
On the other hand, buying Yahoo is committing suicide for MS; Yahooicide, if you will. Combining Yahoo's fading marketshare and mediocre management and MSN's completely ineffecual managment is going to propel us into a position to compete with Google? I don't think so. On top of that, mergers of this size tend not to work. DEC + Compaq or AOL + Time-Warner, anyone?
We would been much better off selling MSN and starting from scratch than buying Yahoo.
The blatant and utter disregard for shareholder value over the last 7 years is unfathomable. As an employee I've lost complete faith in our leadership. They are more concerned with establishing their legacy in the technology industry than anything else.
Um... where does "and Microsoft's focus on consistently making a handy profit year-over-year" come into play when it comes to disregarding shareholders?
The company is not losing money, or maybe you haven't kept up with financial news...
SteveB isn't fixated on killing Google, he's fixated on making Microsoft into an Internet superpower. And he's right, too. The Internet has not even come close to hitting the peak of it's penetration in the U.S., let alone worldwide. Whoever is dominant will be raking in money for a long time to come.
That doesn't make buying Yahoo any less asinine, though.
I had first hand experience with the Hotmail migration off Unix and I can't imagine it on a much bigger scale with Yahoo Mail, much less the rest of their infrastructure.
At a higher level I fail to see the gains given the customer loss expected as Yahoo properties are migrated to their MSN equivalents.
As someone else commented, if people wanted Hotmail/Live Mail, they'd already be using it. It's almost as if we bought Apple, converted all the systems to Vista and expected to retain a happy customer base.
I have a better idea for a strategy. Let's SELL our online services group to Yahoo! and use that money to invest in the enterprise software business, where we're currently making money and could make 10 fold the additional investment. Wall St. would love us.
There is a reason why people use Yahoo. They do not want to use MSN. So with MS buying Yahoo, many of those people will go to Google. PAge and Brin will probably be sending Ballmer and Co. nice holiday gifts this X-mas for presenting them with this awesome gift, new customers.
+=+
The Internet has not even come close to hitting the peak of it's penetration in the U.S., let alone worldwide. Whoever is dominant will be raking in money for a long time to come.
The internet is a computer network. How is anybody supposed to "dominate" it? There is no such thing as "the" internet company the same way Microsoft is "the" operating system company. Google is the closest anybody has come and all they really do is search and ads.
Therein lies the fallacy of Ballmer's logic. You do not become "the" internet company by offering yet another free photo service, yet another free e-mail account, etc.
Yahoo Live! sounds good huh?
Layoff? Don't have to worry at all. It won't happen. Even the recently 1k layoff won't happen since MSFT is paying for it.
See YHOO as an entity is making profit. I don't see why layoff is needed. Redundancy happens even today.
I worked at MS for many many years (left few months ago) and recently working with YHOO devs on something. I felt that YHOO is much more agile - MEANS ** HACK HACK HACK **. Glue-ing things together. Overall lower quality devs.
I think this acquisition make sense BUT come on NOT 44.6 billion.
Wait for 3 more months, you YHOO will naturally be $14 - why not pay your F-king premium then???
A few things that come to mind.
For all its faults, YHOO actually makes money from the online business. And many posters are saying that they'd rather stick with YHOO than switch to MSN. Logical and least disruptive course of action in this situation is to move MSN and Live users to YHOO without moving YHOO to Redmond.
Someone else posted about Office Live in the same breath as MSN. Unlike MSN, Office Live is orged under big daddy Office and the cost for the effort is a round-off error for the org.
Anonymous:
There is a reason why people use Yahoo. They do not want to use MSN.
Exactly. I agree with the guy who said there will be fairly large-scale customer defection from Yahoo if it becomes part of Microsoft. And Yahoo's ad-business is NOTHING without its page-views.
This is kind of like ten years ago, when Apple bought NeXT...except that it's completely different.
Apple in 1997 was in a similar predicament to MS today, They couldn't create a competitive operating system, after trying for years with various failed internal projects. So they decided to buy a competitive system wholesale from somebody else. They bought NeXT.
But that made sense. In retrospect it was one of the most fortuitous moves in the history of technology. Buying NeXT meant buying Steve Jobs, of course, but it also meant pushing the company into a new UNIX-based infrastructure and paradigm that has been incredibly rewarding for the company. Now, that technology's in the iPhone, in WebObjects (and therefore running iTunes) and in all their new enterprise servers and desktops.
I remember reading message boards at the time. The diametric opposite to this discussion thread, today: everybody was pleased. The more you knew about NeXT, the happier you were.
Of course, it helped that Apple had the agility (strictly speaking) to navigate all the migration hurdles to come, from Intel to PPC and back to Intel, etc. But the basic concept was the same as what Ballmer's done here, except that it was a good idea. Anyway, it's an interesting comparison.
I have to make my previous post (Apple/NeXT) more clear: When I wrote
Apple in 1997 was in a similar predicament to MS today, They couldn't create a competitive operating system, after trying for years with various failed internal projects.
obviously I didn't mean that Microsoft can't create a competitive operating system. Apple's doomed "Rhapsody" project in my example is analogous to MSN/Live.
The Apple/NeXT comparison is hardly apt. Apple didn't make its money on NeXT's OS. They made it by transforming into a consumer electronics company with the ipod. That was their big success, and none of that came from NeXT. If Apple didn't do that and just came up with another computer, they'd be out of business right now.
So this is like if suddenly tomorrow Zune or surface computing or something similarly totally unrelated turns into Microsoft's biggest cash cow ever and it happens to be roughly correlated in time with the Yahoo! acquisition.
A whole lot of people are going to get canned; if not sooner then later. I agree with the anonymous commenter who stated that this acquisition is a tacit admission that MSN is a complete failure. Much of the functionality at MSN and Yahoo are duplicates because the two entities were competing. Take search, for example. Is MSFT really going to keep the MSN search people and the Yahoo search people?
Also, this move is going to confuse the customer base. When Joe Sixpack sits down at his PC to look up the nearest McDonald's; he may think "Hmmm...MSN or Yahoo...both owned by Microsoft...which should I use? Ah, I'll just Google it."
Well, Google just released disappointing quarterly results -- http://www.reuters.com/article/marketsNews/idUSN3135468920080201 and today's info helped drive their stock down even further -- almost $50.00 off, which isn't anything to sneeze about.
One might suggest that based on the above there's also some anxiety on the other side of the fence.
Nah..GOOG is trading in its normal trading range of $515-$595. Traders tried real hard today to break the $515 grip and was successful once at $510, but it bounced back.
I don't think Ballmer "gets" the Internet at a very fundamental level. I have worked with many otherwise smart, senior executives at different companies. It is amazing how many of them don't get it - especially at the companies that did well before the internet.
They understand their core market and core business VERY well, but have a tough time with visualizing how to turn the thing on its head and run on the web. But because they have risen to senior influential positions, it is very hard for new ideas to overcome this inertia in thinking.
Several years ago, I worked with people inside MSFT who had come up with great ideas (similar to: linkedin, facebook, flickr, and a version of music sharing that _still_ doesn't exist anywhere) - these ideas and people seem to have gone exactly nowhere.
Even if MSFT took 100 of these ideas and seeded them with a million or two each - and managed to get execs to stay out of the f*ing way, we could have either serious ROI, or serious learning - possibly both. For a lot less than 44B.
I have to stop now - this is making me physically ill...
Wait for 3 more months, you YHOO will naturally be $14 - why not pay your F-king premium then???
Private Equity was within days of bidding on Yahoo. MSFT will probably have to bump their price up a few dollars or Yahoo's board can drag this along for a very long time.
There are more bidders coming along and Yang would love to partner with a Private Equity firm and remain independent. Check out the article below.
http://www.alleyinsider.com/2008/02/hold-everything-we-may-get-another-yhoo-bidder.html
I think the reason Ballmer gets away with moves like this is that he really reports to one, maybe two shareholders. BillG, and maybe Paul Allen. It doesn't matter a whit what the rest of the shareholders or Wall Street thinks as long as Steve can get Bill to buy in to whatever move is in the works.
"I have to stop now - this is making me physically ill..."
I know. I have walked around with a pissed off pit in my stomach all day over this. My first thought was to fire off a mail to Ballmer (after some single malt scotch). Then I thought, I really would like to get a sign and picket outside building 34. Who is with me?
The Apple/NeXT comparison is hardly apt. Apple didn't make its money on NeXT's OS.
If Apple had not switched to NeXT's OS, they would be dead. Everything they've done in the last ten years traces back to that acquisition. Apple's "Classic" system was so out of date and hopeless, it would never have supported any of the market share growth in consumer PCs (iMacs etc.) or the technology they run on top of it (Final Cut Pro, iTunes, etc.) that was coming up. The analogy's actually pretty good.
Anyway, it wasn't intended as a direct one-to-one comparison. It's simply a similar instance of a company trying to solve a problem with its own resources, and then giving up and buying another c