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:
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 company that has already solved the problem.
Buying Yahoo! will not only gain some search share but also more importantly expand the online ads. business which is a big growing business (to replace traditional ads overtime), and digital media distribution.
Given the track record and the talent pool in MSN, it is a fine strategy to pay $45B to buy into the second place as long as the MSFT company management thinks long and hard about integration (culture, service platform, etc.), and make decisive, swift and clear decisions to consolidate the services. MSFT cannot have different photo/video portals, different ads platforms, different email services, etc. etc.
Paying $45B is the easy part, the hard part is in the execution.
question: how much did we have in the bank?
I guess it has to be spent on something...
From what I see on the inside, the company is extremely innefficient, we could grow the business, ship innovative products that would excite the users, etc. at a much higher rate.
It seems that management is in a different universe than engineering. At the top, money is thrown around. I think the Yahoo! deal might actually be a great idea but I don't live in that universe to know.
What I do know is that engineering here is Shocking! I recently interviewed with several different teams around the company and got an interesting reaction - my credentials and problem solving I was told was better than all the other canidates, but they were afraid I would try to change things! I showed a productivity gain, a velocity gain for my entire current team of over 10x's - I finally found a group that encouraged change, people that will challenge the way things are...
Office, Windows, Search, all are afraid of change, all have big teams that ship little customer value, with low quality, its not that the devs are bad, they can reverse all the words in a string with ease on a whiteboard... its that there is a culture at Microsoft that is afraid of change...
Remember the moving speach Steve gave about being Bold and Brave? I respect their decision to spend 44 billion, but I strongly question why they don't make the changes that would allow us to ship MANY times the features, in real time, with extremely high quality...
Steve and Ray and Kevin and all those guys could easily double the output of the company if they were bold and brave and lifted the curse of the fear of change, the conservative boring waterfall we have now.
What I'm trying to say is if they spend huge amounts of money, they should spend a little bit of time trying to change the velocity and quality on the floor right now... who's ever seen Ballmer in the office in the Bullpen seeing the real problems teams face? Kevin Johnson? Ray Ozzie? They wouldn't have to buy any company to beat Google if they change what they already have.
two words: "Synergy Trap"
Customers and shareholders are going to leave. Just a question of which ones go first.
Cool, we know that Mini is Principal level+. Ballmer made those comments about how buying Yahoo "didn't make sense" in his silly annual "meet the engineers" meetings.
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?
Obviously it comes into play but given MSFT's dominance in the core business they should be making a handy profit blind-folded. I suppose you think it was simply "bad luck" that shareholder value has increased a whopping 0% in 7 years (Jan 26, 2001: MSFT = $32/share) thanks to those handy profits?
What did they do? Break a mirror???
Interesting article about this deal (focusing on Ballmer) and possible reorg in OSG -
http://online.wsj.com/article/SB120192421439737669.html?mod=googlenews_wsj
I feel sorry for the folks in OSG. What a randomization!
expand the online ads. business which is a big growing business (to replace traditional ads overtime)
How's the Kool Aid? We've been hearing this for years and it has yet to happen. Do you really think TV and newspapers and magazines are going to disappear, or even less likely, stop selling ad space? (BTW, Google tried to sell ad space in newspapers years ago and it was a monumental failure. They are not infallible, nor are they tapping an unlimited supply of revenue.)
i have one question. how can a company with little credibilty, poor execution and a decade of red ink in online services space think it can buy its way into solving its problems before someone at the top should be fired?
So, so negative here, and so much backward thinking.
I'm an SVC employee and I work in Live services. Do people here really think that Microsoft is going to buy Yahoo then turn around and alienate all of the users that make Yahoo so valuable to us?
Yahoo is a good, not great company, that has never figured out how to make money effectively from their users. Microsoft believes that once we have the users, we will make money off them. Hotmail is a very successful service, it makes a lot of money, as in 8 zero's a year. When you see OSG losing money, just think how much it would be without mail (message and sometimes search).
Ask yourself, what is the better brand? Yahoo or Windows Live? It's Yahoo of course. If we makes any move to deteriorate the Yahoo brand, we've made a huge mistake.
We will use this opportunity to make peace with unix and open source. There may be a migration plan but it won't be to migrate to the current MS services platform, it will be via some future (hopefully long into the future) migration to a platform that likely doesn't exist yet. Again, lessons have been learned here. It may be slightly embarassing to have a big part of our business running on a different platform. It would be more embarassing to throw away $44B.
As far as pink slips go. There is a healthy purge likely to come. Layoffs aren't random. Smart companies use layoffs to cut fat, not muscle. If you are caught up in a small targeted layoff, you are fat. Hopefully Yahoo will do this and Microsoft will do it as well. I would welcome a purge of (the) 10% in Windows Live (and potentially related areas). There is fat there. Remember all levels have 10%'ers from junior to partner.
Lastly, this is 100% positive for Microsoft in the silicon valley. I expect that when the dust settles, Yahoo will emerge as a stronger brand than it is today, that it won't lose its identity or culture. It will give MS SVC employees another in an ever-growing list of choices (TellMe, Health, etc.) to work on. I hope that this results in true senior leadership in the Silicon Valley... as in someone that reports to Ballmer running MS Yahoo.
Economically, it is a bit of a premium. If MS can turn Yahoo into a $2B a year profit-center (big if), the deal will look relatively cheap. Aren't people always bitching about what to do with our money? When all is said and done, we will have set ourselves back only about 18 months as it relates to the number of shares outstanding, and we will have purchased a real shot at huge short-term profits.
tired, starting to ramble, but very excited.
"Assuming Microsoft isn't laying off all of MSN\Live and giving up to Google, what else can it do to compete right now?
How about... NOT TRYING TO BE IN THE INTERNET AD BUSINESS IN THE FIRST PLACE ???? HELLOOOOO ???
*That* is the whole point. MS has plenty of work to do in improving on its core businesses, in improving windows, in improving apps and going to the web as it makes sense for these businesses.
from http://www.alleyinsider.com/2008/02/microsoft-yahoo-inside-story-on-brands-integration-etc-msft-yhoo.html
How can you keep Yahoo employees motivated/retained? How can you compete with companies that can offer stock options that are just tied to Internet-division performance?
We're going to offer big up-front retention packages, and we're going to do it right away. We especially want to keep Yahoo's engineers.
Well thats good and is the right move.
However if the msft stock price doesnt recover from the hit soon, how about compensating MS employers/stockholders for their 6% loss.
And the hit has just knocked everyones reamining stock options back underwater (except execs and partners no doubt)
I was orginally in favour of it, and was going to push a few days ago for us to aquire Yahoo (for the brand etc and to improve our presence in that space).
And felt it would boost our credibility and value.
However the significant msft stock price drop, and the comment of the possibility of us messing up the merger (aka AOL / Time Warner, HP / Compaq) is making me reconsider.
Despite the stock price drop, most market sentiment seems to agree it is a good move if we really want to be serious in the web/ad/portal space.
Lets hope for the best, and please dont mess it up or destroy the Yahoo brand.
MSEurope1
Mini,
Patronizer here. I disagree with your views (surprisingly, I have to admit it's possibly the first time ever :-)). The way I would look at this is similarly to the Netscape situation. Did it make sense to "waste" billions to build IE when we clearly never made a buck out of it? ^%#@%$# yeah.
Re-Price. Everybody knows that the recommended cure for Yahoo's woes was to outsource their search back to Google. It's an economic (and technologic) no-brainer. Want to avoid that? Got to pay. How much? How about how much the company was worth when Yang came back onboard?
Re-MSN. One of the things I've learned early in life is that markets are indeed efficient. If you're one of the decent folks in MSN, you'll either survive or somebody will find you and hire you: God knows we need good people. If you're not ... I have a lot of personal respect for Mr. Pincus, I am positive he'll do even better where he is now.
Re-Online ads market. When's the last time any of you actually BOUGHT some PC SW? So how would that business model work again ...? 90% of the consumer experience is online, not on the desktop anymore. We can call it a day, focus on enterprise and turn into another IBM, or we can use the dow to take a piece of that action. Were Google to have ANY processes I'd recommend running for the hills. Being the slowing (stock price anyone?) madhouse I've seen (three months to make me an offer, like they're the only ones hiring) I'm excited to go get their lunch.
Just some thoughts...
The only potential anti-trust hurdle that springs to mind is Yahoo's purchase of Zimbra. But that's not the sort of thing that MS appears to really care about here, so I could see them quickly spinning it off to make the deal go through.
I fully expect a push to convert the BSD-based Yahoo to Windows Server; when that starts you can pull up a chair and watch the goat rodeo.
I wonder about Ballmer; does he just want to push into online advertising in a big way to expand profits, or is there something of a diversification strategy: Mini said "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." But that assumes that MS will always be able to coast along on Windows and Office profits. The future of MS without those is perhaps too terrible to contemplate...
This is the price of Microsoft's obsession with Google. Instead of paying $45B to buy the damn company MS could spend a (tiny) fraction of that and hire the talented ones from Yahoo. Judging from Yahoo's financial results many people there would be glad to leave, some would be fired otherwise according to recent rumors.
Ask the sales force what they think. Advertisers are clamoring to buy from MS, but if you don't have the traffic, they can't spend all the money they want to spend. Seriously.
Wow, I take a few days off from checking Mini, and look what happens!?!?!
The conference call transcript is interesting. Kevin Johnson cuts to the chase in response to Heather Bellini (of UBS') question about the effect this will have on margins in the OSB segment: "We have been losing money. Our plan here would not be to lose money in the future. That would be correct."
The power point deck is on Chris O'Brien's San Jose Mercury News blog. As he says, "Okay, every time you see some version of “synergy” in here, do an espresso shot."
Henry Blodgett's take: "This is a brilliant move by Microsoft--a big premium dangled in front of battered Yahoo shareholders, but a price that would have seemed absurdly low as recently as six months ago."
As for me ... my first reaction is surprisingly positive, although obviously the risks are high. More thought required, of course, and I reserve the right to change my mind on further reflection. That said, this fundamentally and irrevocably shifts the center of gravity at Microsoft away from the past and towards the future. Blodgett's right about the bargain price (especially since half of it's in stock, which has gone up a chunk since Feburary 07). And it's not like the money was doing the company any good sitting in the bank.
>How about... NOT TRYING TO BE IN THE INTERNET AD BUSINESS IN THE FIRST PLACE ????
Who left the doors unlocked at the retirement community? Newsflash, geezers: Newspaper, movie, and even television viewership are declining YOY. There's a new generation of people who get all of their media from the Internet,and that's only going to keep growing. Twenty years ago, the cellphone was a novelty, twenty years from now you'll have cheap wireless internet access anywhere. You really think MS should leave all that money on the table and sit on its laurels?
Where's our growth and expansion going to come from? Office and Windows? Don't make me laugh; the market's saturated and each already has more features than even enterprise IT will use in a lifetime, let alone normal users. Aside from which, Vista shows that they too can sink to MSN's level when the need arises. That enterprisey stuff that other guy whimpered about? Big, but still a niche market.
Of course Microsoft has to fight in the Internet business; anything else would be even stupider.
What if Ballmer really has a GOOD plan: to finance the spin-off of MS's Online Services and return the money to stockholders?
The weekend WSJ has two interesting ideas: (1) BillG wanted to enter consumer online, but SteveB "was less enthused... seeing it as a diversion from Microsoft's core business of ... software for businesses." "Yet, Mr. Ballmer inherited both strategies." and (2) "MS is already on the verge of being too big to manage ... unless MS gives this business more freedom--perhaps even its independence--it could just create a bigger, flabbier competitor to Google."
So maybe SteveB's plan is: buy Yahoo, jam all of MSN and Live into it (thus shedding thousands of second-rate softies), and spin it off as a totally independent company by distributing its new stock to shareholders.
The new independent company could rationalize itself, shed 50% of its employees, run BSD servers if it liked, and focus on doing the right thing. The remaining MS could refocus on the business where it excels.
MSFT stock would soar on the refocus. The new "Yahoo! Live!" company stock would probably also soar initially on the enthusiasm for focusing on their business, and cutting out deadwood. Both companies would do better after the separation.
Note that this results in returning the $45B to stockholders in the form of shares in the new "Yahoo! Live!" which they can sell for cash. (This is like selling MSN/Live to Yahoo and distributing cash, except that Yahoo can't finance such a purchase; MS can pull it off, achieving the same result.)
Where's our growth and expansion going to come from? Office and Windows? Don't make me laugh; the market's saturated and each already has more features than even enterprise IT will use in a lifetime, let alone normal users.
Ah yes, let's bust out this old gem. Our software is perfect, so let's move on to something else. This is the thinking that disbanded the IE6 team. Please, go back to 2002.
Microsoft Employees: 83,945
Yahoo Employees: 14,300
(from Seattle P-I front page today)
Total: 98,245
Is this the year we'll break 100k?
Out of 110 comments posted so far, this was by far the most insightful one:
It seems that management is in a different universe than engineering.
...
Office, Windows, Search, all are afraid of change, all have big teams that ship little customer value, with low quality, its not that the devs are bad, they can reverse all the words in a string with ease on a whiteboard... its that there is a culture at Microsoft that is afraid of change...
Yes.
Suppose for a minute that you're a dev/test/PM (or lead, or manager), and SteveB walked into your office and told you how to implement or design that feature, implement or design those tests, write that spec or manage that schedule. Such details are beneath him. He's a sales dude -- he has no background whatsoever in test/dev/PM. He doesn't know the details of code or product engineering. You'd be outraged, and he would look like an idiot who doesn't know what he's talking about.
But now look in a mirror at yourselves, and realize that almost everyone here is doing the same thing to Microsoft's management. Most of you don't know beans about finance, acquisitions, corporate development, Microsoft company management at the top, or how Yahoo! is on the inside. At best you might read some financial papers and hear about some deals after they've become public (10-K filings, etc.) -- you weren't one of the people making them.
From what I see on the inside, the company is extremely inefficient, we could grow the business, ship innovative products that would excite the users, etc. at a much higher rate.
Indeed. And who makes Microsoft's products? Is it not the people who post here?
When the Xbox 360 hardware has terrible quality, is that primarily Robbie Bach's fault? Or does the blame primarily belong with the Xbox hardware product team (including the designers and manufacturing)? When the Zune is widely criticized for terrible PC software and boxy hardware, is that not primarily the fault of the teams that designed and made it? When Vista has a major security flaw, is that not the fault of the teams that implemented those dialog boxes? When the Office and Vista packaging is so difficult to open that a KB article had to be written to explain it, is that not the fault of the team that designed and implemented the packaging? Etc., etc.
When you've got the next great game-changing idea and you can't convince anyone in a position to fund your idea to invest in it, is that your fault or theirs?
Great ideas are cheap. Everyone here has some. Execution is what separates the winners from the losers.
Microsoft is doing ok at the top. Not great, but it's much healthier up there than at the bottom. Like a talent vacuum cleaner, Google has sucked almost all the great engineers, product managers, and other ICs our of Microsoft (and Yahoo).
So despite all the misguided commentary here and in the press, this acquisition isn't about the individual contributors at MSFT/YHOO or the craptastic products they (you) have made. Spend ten minutes on anything.yahoo.com and you'll see it sucks just as much as anything.live.com. That's not what MSFT is trying to buy.
Instead of speculating on this business deal that involves so many people and things you know nothing about, maybe you should all focus on the things you're supposedly excellent at: executing on the engineering side. Then maybe, just maybe, Microsoft's products wouldn't completely suck ass.
Lots of interesting comments -- I especially like the one about spinning off the combined unit to unleash shareholder value. Could make financial sense, but not in the DNA of the MSFT management.
On paper, this should be an easy merger:
- Yahoo in general has the stronger properties and brand and is profitable
- Redirect all MSN/Live users to Yahoo properties.
- Eliminate redundant staff -- especially Marketing, etc
- Great share and rev per employee increases as business is totally scaleable
- Gets a reasonable ROI (not sure about $46B but still)
However, the issues are
- MSFT management will want to run the show
- YHOO employees will not want to come to MSFT in large numbers -- best will go elsewhere
- No one at MSFT will admit the YHOO has better properties so there will be a brand fight
- [already heard that Live Search has been 'assured' that its technology will win out as it is superior to Yahoo's. Even though YHOO has double the share, 'msft' relvance is higher, according to the study panel, which i presume are MSFT employees working on Live Search]
- Backend technologies are different, but you know they will want YHOO to operate on MSFT products -- this took Hotmail a reported 8 years to accomplish
- No switching costs for user may cause some of Yahoo's users to go elsewhere, especially where they have nothing invested like on the home page (mail users may be more sticky)
Overall, the cultural issues of a stronger company (MSFT) buying a weaker competitor who is stronger in an overlapping market (Yhoo), where the stronger player may just want the users and not even the brand, will cause insurmoutable issues.
Both YHOO and MSFT were, in a way, without other options, but it is a no-win for them.
GOOG may stumble, but they have economies of scale and network effects that even this merger cannot overcome.
Getting on the Search bandwagon 7-9 years after it began is the issue. Similar to how MSFT was with Browsing (Netscape), Internet (v Packaged SW), Commerce (Amazon), Auctions (eBay), and Music (Apple).
Someone said:
Who left the doors unlocked at the retirement community? Newsflash, geezers: Newspaper, movie, and even television viewership are declining YOY.
There's a new generation of people who get all of their media from the Internet,and that's only going to keep growing.
Newsflash, dude. That new generation of people who get all their media on the Internet? They hate ads! One of the benefits of getting your video content on-line instead of in front of a television? It's *ad free*. Why should I watch a TV show on NBC with ads when I can just download it off the iTunes store the next day and watch it ad free?
Ask yourself this question. When was the last time you actually *clicked* on a banner ad on website? Now, ask the same question of the next ten people you see.
But now look in a mirror at yourselves, and realize that almost everyone here is doing the same thing to Microsoft's management. Most of you don't know beans about finance, acquisitions, corporate development,
Wrong. Whereas software development is an actual skill, all this finance and merger stuff is cargo cult pseudoscience. Look at Wall Street. 80% of professionally managed mutual funds do worse than market indexes. And the 20% that do better are not the same 20% year-on-year. Basically a trained monkey could do a better job but somehow you business types have convinced yourselves that you have a skill.
When the Zune is widely criticized for terrible PC software and boxy hardware, is that not primarily the fault of the teams that designed and made it?
Look at how deep the org chart is in a product team. The front line at Microsoft really isn't responsible for much at all. Middle management (PMs, devs, and testers in name only) makes all the decisions that really impact a product almost unilaterally--what the budget will be, what the schedule will be, what LANGUAGE the software will be written in regardless of technical merit, how much testing will be done and what sort, etc.
If a project is planned and managed correctly, it shouldn't take a bunch of superstar best-of-the-best engineers to get it done. Do you agree with this assessment? If so, you've figured out where Microsoft's product development problems lay.
As far as pink slips go. There is a healthy purge likely to come. Layoffs aren't random. Smart companies use layoffs to cut fat, not muscle.
Hey dude wouldn't be ironic if you were one of the ones S*** canned? I would like you to make your argument then.
Snippet from businessweek.com article.
And then there's the challenge of figuring out what to do with overlapping Web sites and services—from the companies' automotive buying pages to their portals to their Web-based e-mail programs to their instant messaging services. "It's a mess," says Forrester's Li. "Users are notoriously fickle. One change and they're gone."
http://www.businessweek.com/technology/content/feb2008/tc2008021_885192.htm
One wrong move and bye bye $45 Billion. I am still amazed by this amount.
Just remember, Yahoo users are just user that... USERS. These people are not paying, buying, renting, signing contracts. They are mobile. Just the other week, my significant other lost access to her personal email b/c she canceled her ISP service. But before she left she sent out several mass emails to all her contacts notifying them of her new email addy. She sent 2 out as a reminder to all her contacts and it took her all of 5 minutes.
Most of the services that MSN, Google, and Yahoo provide don't cost anything. If you annoy someone off just once, they will close and say bye bye. And lets face it, MS does not exactly have a strong track record of "Customer Service" or "Customer Focus". Because if MS did, it would not be paying $45 Billion for another company.
Most companies use acquisitions to complement their existing lineup of products, not to compete with them. But not the case here.
Oh the insanity.
SteveB is reminding me of Phillipe Kahn. Kahn wanted to beat MS, at any cost. He lost, and Borland died.
We're going to offer big up-front retention packages, and we're going to do it right away. We especially want to keep Yahoo's engineers.
Well thats good and is the right move.
However if the msft stock price doesnt recover from the hit soon, how about compensating MS employers/stockholders for their 6% loss.
OK, I'm a greedy bastard. My first thought upon reading the SteveB email that spoke of significant retention packages for YHOO engineers (not "key engineers", just "engineers", mind you) was: "My compensation is f**ked for the next couple years while we pay these YHOO people their retention bonuses. Crap."
Yes, it may be petty, but consider that knowing that thousands of your newly-acquired peers are likely being better compensated than you are for similar work (dev, test, PM) might edge many consistent MSFT performers in BG's other than OSG (ie, those who have not demonstrated that their results are inferior to YHOO's) toward the exits.
And it pains me to even start to think about the returns that will be seen from YHOO stock that newly hired YHOOligans might have received recently. You know, in contrast to the returns that we'll be seeing for the next while...
All I can say is: If we go through with this, it BETTER work, and there BETTER be some upside for (whomever's left after the surely-looming layoffs of) the current 80,000+ MSFT FTE's who are watching this drama unfold. (Just pointing out to the PHB types that MSFT earns a lot of revenue off the backs of its current non-OSG FTE's, and it'd be a shame to alienate the best of them to acquire the best and not-so-best FTE's of a formidable but failing business.)
A note regarding Redmond-based OSG staff. Anyone know how many there are? What's a RIF going to get? 3,000 of them? Less? More? This could seriously affect unemployment in this region, tech salaries and (as someone else already pointed out) housing, particularly on the Eastside.
SteveB is reminding me of Phillipe Kahn. Kahn wanted to beat MS, at any cost. He lost, and Borland died.
Ballmer won't kill MS. He'll just waste a vast fortune in shareholder value, but it will take more than a few tens of billions to kill MS. For nearly all desktop/laptop users there is no choice for reasonably priced hardware except Windows. For servers, the best price/performance on the TPC-C test at the Transaction Processing Performance Council has been dominated by Windows for as long as I can remember (although I see a couple of Linux systems on the list today). The bottom line is that Microsoft is a massive monopoly in computing and can throw away money at will while still maintaining good income as the last quarter results show. Even Ballmer can't kill that with stupid investments. And I don't think that Ballmer is overly concerned about the stock price, or giving the investors a fair share of the profit pie - he just wants to swing for the home run, no matter how remote the odds.
What's a RIF going to get? 3,000 of them? Less? More?
I predict much less. I bet nearly none beyond the normal, "whack the bottom x%." As long as income keeps coming in and Microsoft is solidly profitable, Ballmer is going to keep whatever (100-x)% that he can and try to dominate the Internet with it.
For many years, critics have been saying that Microsoft's online products were broken and couldn't be fixed. And every year Microsoft and its defenders would respond that the latest reorg had solved all the problems, and market success was guaranteed.
This bid for Yahoo is Microsoft's admission that the critics were right all along. Keep that in mind when you are listening to similar agruments between Microsoft critics and defenders over other issues.
Ballmer is going to ... try to dominate the Internet with it.
Isn't that an inherently flawed strategy? The internet as a medium does not respond well to "domination".
Every internet company today that appears to have a dominant position (GOOG, AMZN, EBAY, even YHOO) did not say "I am going to try to dominate the internet." They provided a service that customers really wanted, often for free, and figured out a way to monetize that customer base. Even today, none of them dominate the internet - they only dominate their own niche service.
Our strategy should not be some neanderthal approach to dominate the net - that is dumb and just makes us look like a bunch illiterate jocks who don't get it. We need to figure out _exactly_ what it is that MSFT can offer on the internet - and make sure that it is superior to everything else. Being a "me-too" web portal is not going to cut it. Unfortunately, I don't see any evidence at the top that shows a nuanced and coherent understanding of this.
My hope is that our online strategy improves with the addition of YHOO's pioneering talent (assuming they stick around).
Why doesn't Ballmer just put the online services group under the E&D division?
Sure they'll lose money for a while but at least they'll come up with a workable strategy to compete against google.
This bid for Yahoo is Microsoft's admission that the critics were right all along. Keep that in mind when you are listening to similar agruments between Microsoft critics and defenders over other issues.
Why?
After the deal is closed, Yahoo will be Microsoft. MSFT will win.
There seems to be a lot of pessimism about this deal. Knowing how bad MS management is I can hardly blame people for this opinion, but there does seem to be one ray of hope in all this... MSFT and YHOO should pit their engineering against each other in a race to build something truly innovative.
Pop Quiz
1) How many acquisitions has Microsoft made since 2003? (My tip - take your guess and double it
2) Name 3 technologies (created from the IP) of our acquisitions which are used in shipped products (bonus point question - how many of those products are making a profit today?)
//a deeply disturbed employee & shareholder
>expand the online ads. business
>which is a big growing business
>(to replace traditional ads >overtime)
>>How's the Kool Aid? We've been >>hearing this for years and it >>has yet to happen.
This is what people said about book selling and online shopping in 1995.
>>Google tried to sell ad space in >>newspapers years ago and it was
>>a monumental failure.
Yahoo and MSN portals are actually generating more money. In fact, I think this is the whole point of buying Yahoo to strengthen our strong hold and use it as a way to out flank the Google search and keyword ads.
Yahoo is "cheap", buying it now is a timely decision. The rest is to make sure we don't screw up Yahoo and MSN at the same time when doing the integration! But duplicated effects and platforms have to be eliminated. It's ok to keep FreeBSD running for another decade or two. The elinimation decision should be based on where the true talent lies.
::Out of 110 comments posted so far, this was by far the most insightful one:
::It seems that management is in a different universe than engineering.
thanks, I posted that comment. Your reply really got me thinking... and reminded me of Ballmer's speach at the company meeting - I can question things, like the proposed aQuisition, and how things are in different groups. I start in a new group in a couple days, and I look at things this way -
Don't worry about other people - trust management, its not my place to even think about it, and I'm certainly not qualified to drive the bus! And I can't change other groups, even though some things shock me. What good does that do?
What I am qualified to do is make a big difference in my little universe, in my group. That's the only thing that matters. Like Ballmer says, we all need to be mini microsoft's, be brave and bold, in our own little universes, in our little part of the company....
Yes - we are responsible for quality. Not the business. My last group passionately hated the customer (internal customer proxy). My dev manager would yell and screem and swear at the customer. The application was the lowest quality and slowest I've ever seen in my entire career, and the team was big. I could have been a better agent of change and made a bigger difference.
I may not understand the management at the top, and I don't have to - All I have to do is ship the best damn product and let nothing stand in my way, or in my teams way, and break down every damn wall for the customer...
What Ballmer and the rest at the top do is none of my business, its good to know, but at the end of the day, my mission does not change, and that is my Only mission.
I may have misheard him, but I heard Ballmer say I should be a mini microsoft, and that's what I'm going to do. Anything other than [product name here] isn't my concern.
>This is the thinking that disbanded the IE6 team. Please, go back to 2002.
Hey, don't try to convince me Office and Vista are wonderful, convince our customers who are not buying it. Lots of luck.
You'd better darned well hope that some kind of Internet strategy takes off at MS so that we can have something to offset the next expensive dud out of those guys.
>That new generation of people who get all their media on the Internet? They hate ads.
Yeah, sure. That's why none of them go to Youtube or Myspace or Facebook or Flicker or any of those other sites. They just won't tolerate ads...not.
2) Name 3 technologies (created from the IP) of our acquisitions which are used in shipped products (bonus point question - how many of those products are making a profit today?)
I'm pretty convinced that most of the folks posting on here have nothing to do with Microsoft. I can't imagine anyone who has half a clue about the [recent or long past] history of the company who would claim that acquisitions haven't worked out of the company. Here's a list of 10 acquisitions or technology purchases that have worked for the company off the top of my head
1.) Hotmail
2.) Halo series (Bungie)
3.) Visio
4.) FoxPro
5.) SourceSafe
6.) Winternals
7.) FolderShare
8.) Groove
9.) SQL Server (Sybase SQL)
10.) Internet Explorer (NCSA Mosaic)
>But now look in a mirror at yourselves, and realize that almost everyone here is doing the same thing to Microsoft's management.
Ordinarily, I'd agree with you. But this deal is just too blatantly boneheaded to possibly be the right thing to do.
Here's a list of 10 acquisitions or technology purchases ..
And how many of those are post-2003? And of those, which are making a profit?
Previous posters had it right on both counts:
1. Don't buy YHOO, sell MSN/Live for whatever we can get for it, to whoever is crazy enough to buy it. My add is: take that cash and use it to fund incentives for teams/groups/divisions to create technical innovation that can be shown to lead to profit/marketshare growth.
2. Fire (NOT retire) SteveB and his direct reports (with the possible exception of Ozzie). If Ozzie's crazy/stupid enough to take the top job (I don't think he would), then give it to him - otherwise, go outside. Find somebody outside Redmond/Sili Valley who's been doing a good job of building up a tech-AWARE company with happy customers and let him bring his top people in. I strongly suspect that the best candidate for this is outside the US.
And then... for the shareholders and employees alike, come up wtih a set of corer principles, and stick to them. Define what we do and, more importantly, what we don't do (well or at all). Ditch things that make absolutely no sense for us (starting with Zune and Xbox - how about doing what it takes for those customers to want to play games on *Windows* for a change? (If we stay in the games market at all, that is - and if we don't, what do we need DirectX et al for?
And finally... a big part of that "Microsft Way" should be focused on making products customers WANT to buy, not are locked in to. Have very visible benefits/otherwise of doing something spectacularly right or otherwise - all the way up and down the chain. Why do (even a few) people buy Macs and/or use Firefox/Opera/whatever? (Hmmm... browser "inextricably linked" into Windows...see previous point.)
Microsoft is a company worth saving, but at this point it's pretty obvious to all and sundry that its greatest threat is itself - or, more specifically, the actions and mindset of its "leaders". We - and customers and shareholders - deserve a HELL of a lot better.
From WSJ today:
"The bid is an acknowledgment of the company's inability under Mr. Ballmer to manage many of today's challenges brought on by the Web."
There's one only single positive reading in this deal and is the fact that Ballmer might lose his untouchable status. The bad news is by the time he is taken down, it will most likely be too late.
Now that MSFT is doing big acquistions I wish we could go buy a studio or two or three.
1. Studios make software
2. They make money
3. HD-DVD could use the help
4. Kill Youtube with legal content
5. All the advertising possibilities
"Now that MSFT is doing big acquistions..."
Yeah, and while we're at it, let's buy an airline and a hotel chain and using our software run them the right way. The list goes on and on. As long as we're chasing the money, let's go after anything that has any relation to computers or the internet or even does business on them. Become a true mega-conglomerate...Ballmer sucks...sheesh
Microsofties: Quit the whining and hand wringing! This is your chance. You know this is the chance you've been waiting for. What else would you have done to beat Google and Yahoo if your board had not taken this step? Do you really think you could have caught up to Google on search? Or Yahoo in eyeballs? Or to GMail on web mail? Or to Mapquest on Live Maps? Come on, give me a frikkin break, you were struggling across the board and it was because of the sins of your forefathers in MSN who bungled their jobs for so long. So, buck up, and as the other 'anonymous' earlier said it's time to step up and do your part and chip in to make this work.
Hate to say it, but this is pretty much your only hope, and thank goodness you had that cash in the bank for this rainy day. It's raining pretty hard and you better stop the whining and get your butts in gear and get on with integrating Yahoo, and making a good run for your competitors. It's time.
Go for it!
Ask yourself this question. When was the last time you actually *clicked* on a banner ad on website? Now, ask the same question of the next ten people you see.
Yes. Even more telling is that many of us don't even see any ads.
We do this because (a) we don't want our web pages take a long time to load due to the insertion of (sometimes) 10 separate ads. (b) we hate our pages being cluttered so much that we can't even see what it was that we're hoping to read.
Thanks to ad-block software and purpose-built 'host' files.
I personally believe that steveb has just murdered MSFT with this latest little escapade. Why has he been allowed to remain at MSFT all these years? It's not as if he hasn't already done stupid things in the past?
My first thought ... was: "My compensation is f**ked for the next couple years while we pay these YHOO people their retention bonuses. Crap."
Newsflash: Your compensation is already f**ked. Your salary is depressed compared to all the other major software companies (in Seattle, let alone the Valley; unless possibly you're a hotshot new hire and MSFT tried to outbid GOOG).
And despite the competitive pressure and flat stock price, MSFT has actually been ratcheting down compensation for the past five years. You're all either below the midpoint and would be better off quitting and immediately reapplying for the same level; or else way past the midpoint with a promotion nowhere in sight and can either get used to annual 2% raises or try to get your overdue promotion by going to another company. Either way, quitting will be significantly more financially rewarding for you than staying.
Ironically, YHOO recently opened an office in Bellevue to poach MSFT employees just like GOOG did. Maybe if you hurry, you can go land a promotion/raise there, and then double-up later when they're acquired. It'll certainly be a better deal than sticking around here.
Yeah, and while we're at it, let's buy an airline and a hotel chain and using our software run them the right way. The list goes on and on.
No, it doesn't. If the game is about audience and content to sell advertising, no one knows the business better than Hollywood.
I think Google is breaking out Dom Perignon right now. They've been waiting for this moment with bated breath for years now. Two of its strongest competitors are about to self-destruct with a botched, AOL/Time Warner style merger. My prediction is, YHOO will be run into the ground within 3 years and Google search/ad marketshare will further increase.
I can't believe all the naysayers around here. Yahoo has eyeballs, and we have business sense. The combination could be a huge win. You think joe six-pack is going to open his browser (yahoo homepage) and say, "I heard MSFT owns this now, better move to Google!" Puhlease. Yahoo is staying as you see it for some time, and Ballmer et al value the brand too much to destroy it.
Please leave Microsoft, your pessimism and dedication to / expectation of failure are a poison to our products and colleagues. I'd rather work with the commenter from SVC and the anon excited about the possibilities.
To the rest of you greedy crybaby emloyee/shareholders, $2 drop in share price is nothing in light of how we have weathered the depressed market. This is the perfect opportunity, and realizing your view that we should be a corp of two cash cows and nothing else would destroy more market value than the Yahoo purchase.
And no, you don't know how to manage a mega-corp better than Ballmer, regardless of his perceived faults. And no, there is not a talented CEO in the valley who could do the job either.
There is only one purge I want to see from the buyout, and that is Jerry Yang. That or have MSFT hire the former head and bring Jerry in to work underneath him. That would be poetic.
I think my worry is this: Microsoft failed with MSN. It flailed around with MSN for quite some time - c. 1995-2008, and still hasn't made much of an impact, in spite of having the desktop OS/Office monopoly.
What makes SteveB, etc, so sure that they'll get it right this time?
What were the things that Microsoft got wrong with MSN? (eg, initially targeting AOL, etc, when the market had already switched to a more distributed model, the Internet.) Have they been addressed? Yet? Or are they still the big scary elephant-in-the-room that nobody's willing to address?
Anybody got any clues?
Or is SteveB hoping that Yahoo! management is going to pull the combined Yahoo!-MSN conglomerate out of the blues?
If this hasn't been addressed, I can't see YaMicrohoosoft (MicroYasofthoo ?) surviving merger.
...Yahoo has eyeballs, and we have business sense...
Well, one sign of business sense, real and solid business sense, would be that every single division operates at a profit. Many good companies do that. Why can't Microsoft? Sure there are a few very profitable divisions, but there are some basket case divisions and entertainment is one of them. Lots of product visibility, but to date there's no profit on the money invested, just billions of costs.
Another sign of real business sense, and one that's tangible to investors, is stock growth. MSFT isn't a good investment to anyone looking for a return. Against either the indices or the leading companies, MSFT doesn't look so hot.
Yes, it's not easy to run a massive business but you need some evidence to show that Ballmer's doing a good job. Just being in the job for a while isn't enough, and given Microsoft's lack of focus since Gates stepped down, I'd say Ballmer's leadership is a risk, not a benefit.
And no, you don't know how to manage a mega-corp better than Ballmer, regardless of his perceived faults. And no, there is not a talented CEO in the valley who could do the job either.
I reckon there are better people in business, both in Silicon Valley and elsewhere. Take a look at other companies sometime. You may well be surprised.
Maybe *I* can't do it, but I know of people who can.
When IE was behind Netscape, things really started changing once MSFT had 30% browser share. This gave MSFT enough share that people would listen and treat them as a long term player. The rest is history.
The YHOO acquisition gives MSFT the magic 30% of search share. They will once again have the most traffic'ed sites on the internet and enough ad inventory for clients to take them seriously, on a world wide basis. The wind will be in MSFT's search sails with this acquisition.
Didn't Microsoft buy Vexcel, a remote sensing research house that is/was heavily into open source software, to help it compete against Google Earth? Didn't Microsoft tell Vexcel that it had to eliminate its use of open source software? Didn't this lead to a mass exodus of the braintrust - despite offers of $50K bonuses for remaining loyal? Why won't the same thing happen if Microsoft issues a similar edict with Yahoo? Isn't this a case of cutting off your nose to spite your face?
The wind will be in MSFT's search sails with this acquisition
Sure. And Brian MacDonald won't screw that up like he did NetDocs? With his quality deision making, we are sure to win. And if the team were only bigger, all our problems would be solved!
Oh wait, he would only have his empire built.
Snippet from a good article on nytimes.com Esp the last 6 or so paragraphs.
http://www.nytimes.com/2008/02/03/technology/03valley.html?ref=technology
If Microsoft acquires Yahoo, some executives said, the question is whether it will shake its obsession with catching Google and instead look to the next generation of the Internet, even if it threatens Microsoft’s dominant position in PC software.
Nah, Ballmer is just looking to KILL THESE GUYS. (I am starting to wonder if Brin and Page called Ballmer's moma a bad name?) Then once that is done, stifle innovation and go about its merry way... Business as usual. Windows on the PC is saved once again. And please do not give me lip about how, Windows is dominant b/c it is so cool or innovative. It dominates (right now) b/c people are locked in and have to buy it, they are not buying b/c they want it.
Unfortunately, MS is busy SYNERGIZING with its new baby, Yahoo (making them Mini-Redmond), the rest of techdom will have moved on to the next big thing. And 10 years from now, MS will be paying $100 Billion to catch up yet again. What is MS obsession with killing everything that walks across the lawns at Redmond?
+=+
Look at the bright side - this acquisition might be the last erratic, knee-jerk reaction, Google-kill obsession chair-throwing drama, SteveB will be allowed to do.
I would guess in 2, maybe in 3 years max, there will be some chair-throwing at SteveB for his #$%^&* disordered behavior that is sucking the life out of once a great company.
BillG built the company from 0 to $600 billion market cap, and Mr. Ballmer is doing a great job deflating it.
I work in online services and think a nice severance package could very well be preferable to dealing with the inevitable integration chaos. Does anyone know how MS typical structures severances packages?
on the severance package - I know couple people who got ~2 weeks of their salary per year of employment. Thus for a 10 year veteran, it would be 20 weeks of pay.
This is a good decision for MS. Yahoo and MSN integration will be a challenge. Given Yahoo is ahead of MSN on almost everything on the web, we should make sure we have "leader" lead the newly combined effort, which means we integrate MSN and Live teams into Yahoo divisions, not the other way around. This will be the key to MS's success. I hope KJ and SB understand this and won't randomize Yahoo with the incompetent MS buddies to lead the combined efforts.
Online Services has so screwed up with product brand confusion that even internal folks don't understand what is what and what is profitable and not. MSN on its own is profitable with a decent contribution margin. MSN as part of Online Services gets pulled down by the massive P&L loser that is Live Search. If MSN were independent and outsourced search, it would be in excellent financial shape. But we can't do that. We have to bolster Search by sending 80% of their traffic to them for free and then we get tons of crap for being unprofitable.
>>>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
I think Yahoo should interview every MSN and Windows Live people, not the other way around!!!!
Fantasy Football Microsoft Style????????????.
I have a friend who worked at MSN for quite some time who has been at Yahoo! for the last year. Believe it or not, word from the inside is that they are even more screwed up than we are.
>>>I think Yahoo should interview every MSN and Windows Live people, not the other way around!!!!
Given that MSN and Windows Live are market followers, it makese sense to integrate MSN and Windows Live "into" Yahoo and truly let Yahoo lead our online division.
RE: Profitable acquisitions/IP. Sorry I wasn't clear Dare, my question was meant to be asking about our profitable acquisitions since 2003. So Hotmail, Bungie, Visio, etc do not apply.
>>>Given that MSN and Windows Live are market followers, it makese sense to integrate MSN and Windows Live "into" Yahoo and truly let Yahoo lead our online division.
Bill Gates and SteveB, if you have a chance to read this blog, please do consider this suggestion and empower Yahoo and let them decide how they want to integrate your Online Division!
Newsflash: Your compensation is already f**ked. Your salary is depressed compared to all the other major software companies (in Seattle, let alone the Valley; unless possibly you're a hotshot new hire and MSFT tried to outbid GOOG).
Urban myth perpetuated by people who think they're worth more than they are -- as in, "I'm a level 58 but anywhere else I'd be a Director"...
My total yearly comp at Microsoft is at the high-range of offers I've had when I interview outside (including an offer from Yahoo). Most companies can't afford to match what I make as an L64 (stock, bonus and salary).
okRegarging single minded CEOs, I rememeber Ekhard Pfeiffer screaming "Let's kill Dell" as loud as he could a few years ago.
Look at Compaq now.
You think joe six-pack is going to open his browser...
Anyone who despises their customers to the point of labelling them all as, "joe six-pack," is a real asset to any company. I only hope the author of this statement is a drunk - now that would be poetic justice ;-)
Anyone who despises their customers to the point of labelling them all as, "joe six-pack," is a real asset to any company. I only hope the author of this statement is a drunk - now that would be poetic justice ;-)
I think when you're talking about everyone in the world who uses the internet that it's fine to get a little snarky in order to make a (quite valid) point. There are a crapton of joe six-packs in the world who just want a good search engine to find them porn or sports and don't care how they get there.
Occasional snark does not mean that the person delivering it despises their customers, although I'd suggest that pious reverence leaves a bit of a bad taste. :P
Don't worry about other people - trust management, its not my place to even think about it, and I'm certainly not qualified to drive the bus! And I can't change other groups, even though some things shock me. What good does that do?
. . .
I may not understand the management at the top, and I don't have to - All I have to do is ship the best damn product and let nothing stand in my way, or in my teams way, and break down every damn wall for the customer...
What Ballmer and the rest at the top do is none of my business, its good to know, but at the end of the day, my mission does not change, and that is my Only mission.
I don't know who posted this but I have my doubts that you're actually an employee. The Microsoft I used to work for treated me like dirt for wanting to be a worker-bee who focused on my own tiny little sphere of influence. As a Level 63 I was told, "You need to meet with vice presidents and have a corporate-wide impact. You need to be thinking of big things and getting visibility."
So, it sounds like everyone level 63 and above (if not below that) should -- nay, is expected to -- help Steve and Co. make BIG decisions.
If you think you can succeed at Microsoft by focusing on your job and doing it well then you are sadly mistaken about what is expected of you in your job, Kim.
Yahoo is not going to fix our problems. The problem is that Microsoft has lost the knack of making products that people want to use: MSN, Vista, Zune 1, Xbox and Xbox 360, and a host of other products whose name you wouldn't know because they crawled off somewhere and died quietly.
What I would do with $44 billion and the ear of BillG:
1) Stop being so damned date driven. Rush your engineers and you will get a botched product, e.g. Xbox 360.
2) Spend the money to design and polish things until they're right, e.g. not Zune 1. UI and presentation is not a godamned afterthought. Neiter is ignoring small but irritating bugs in the rush to ship.
3) Lose the goddamned fiefdoms and insularity. I've seen great ideas die on the vine because some idiot GM or VP insisted the area belong to them instead of the people actually doing the work. I've seen other great ideas from outside of Microsoft ignored for years.
4) Take the time to do things right. Abandaoning engineering discipline like unit tests to get things shipped should get people fired immediately.
5) Take the time to make things right that you didn't do right the first time. That OOXML business revealed what a unholy mess that Office's codebase is. Don't make excuses and don't try to force it through to a standard. Clean it up and make it a standard that MS can be proud to sponsor.
6) Treat non-US markets as first class citizens. Yeah, I'm looking at you, "Can't display Asian characters" Silverlight. You too, Live Search and MSN.
7) Invest more in our own people. Teach managers how to manage. Demand people learn a new skill in their field every year.
8) Stop being so goddamned afraid of the consent decree. If there's an idea that might be good for consumers, pay a third party to build it and let them sell it to all comers for the same price they sell it to us. Fair and square.
It is time for the engineers to take back over this company.
What I would do with $44 billion and the ear of BillG:
... list 1-8 follows
My word, how... revolutionary. I don't think anyone has ever suggested those 8 things before! Seriously, I haven't been hearing variations of the exact same 8 points for the 12 years I've been at the company.
Your points are obvious to anyone with any kind of higher-brain function. Equally obvious is that nobody has figured out how to make any of them happen the way they should on a large scale. So, unless you have a tactical suggestion for how to make any one of those 8 things happen, please please please don't waste the digital space with typing them out YET AGAIN. Your insights haven't been insightful for 15 years.
I try to bake the above 8 points into my daily work life and influence what I can influence by making meaningful changes in the way I work and the way I work with other teams. Spouting off what you would do if you had BillG's ear -- as if it would all be an epiphany to him -- is completely useless.
There are a crapton of joe six-packs in the world who just want a good search engine to find them porn or sports and don't care how they get there.
Really? An entire crapton? And you know this for a fact? You must have an awful lot of joe six-pack friends and family to make this extrapolation. Are you joe-sixpack yourself? Personally, I don't know any joe six-packs - never met one. I know a lot of people that have varying interests, personal attributes, etc., but not one I would label as joe six-pack (or group together as a crapton). Maybe these craptons to which you refer are all in the midwest or south?
Don't worry - all those craptons of customers will love you anyway, even if you're such a far superior sample of humanity than they are...
>This is the thinking that disbanded the IE6 team. Please, go back to 2002.
Hey, don't try to convince me Office and Vista are wonderful, convince our customers who are not buying it. Lots of luck.
Actually, the latest versions of Office and Windows are so craptacular because of this mentality. Microsoft seems to think that its products can't get any better, so obviously the only way to sell "upgrades" is to make the windows shinier or the toolbars goofier.
If you want to see how things are done right, check out Apple. New operating system every couple of years for $99, and almost all of their customers are eager to upgrade. We could have this customer loyalty and revenue too--but who wants to upgrade their OS to something that's way slower, requires way better hardware, requires all new drivers, and may not work with the software you need to run...
Really? An entire crapton? And you know this for a fact? You must have an awful lot of joe six-pack friends and family to make this extrapolation. Are you joe-sixpack yourself? Personally, I don't know any joe six-packs - never met one. I know a lot of people that have varying interests, personal attributes, etc., but not one I would label as joe six-pack (or group together as a crapton). Maybe these craptons to which you refer are all in the midwest or south?
Don't worry - all those craptons of customers will love you anyway, even if you're such a far superior sample of humanity than they are...
See, THIS is what i mean by pious reverence. lighten up, gasbag! Good lord you customers are golden angels people make me vom.
I know plenty of joe six-packs -- as do you, unless you live under a rock or in a gated community of the illuminati. Not only that, but joe six-pack need not be as pejorative as you want to make it out to be, nor does it imply that I consider myself superior.
Sorry, but all of my customers aren't tech luminaries, and believe it or not many of them don't give a rat's ass if they use MSN or Yahoo. In fact, my own Mother barely understands the difference between Microsoft and Google -- she just wants to do what she wants to do, and as long as she gets where she needs to go then she'll leave the tech wars to the pointy heads.
My Mother is a joe six-pack, and if you think I'm dissing her then you're retarded.
If a project is planned and managed correctly, it shouldn't take a bunch of superstar best-of-the-best engineers to get it done. Do you agree with this assessment? If so, you've figured out where Microsoft's product development problems lay.
Level 64 IC dev here. I disagree with this. We need both excellect mgmt and excellect ICs. We're not modifying LOB software in Java on teams like Windows and Office. There are a bunch of specialized technologies that we expect our engineers to understand - including new technologies under development. I'm not sure if you're new to MSFT, but our management in Windows relies very heavily on senior devs to decide things like technical direction. The one exception being Longhorn Alpha, which as we know was a 3 year failure.
The internet as a medium does not respond well to "domination".
I've seen several posts with this theme. Where's the proof? All of the economies of scale are there to allow Google to dominate search and keyword advertising. Apple is dominating online music sales, and locking in with DRM and device exclusivity.
Please leave Microsoft, your pessimism and dedication to / expectation of failure are a poison to our products and colleagues. I'd rather work with the commenter from SVC and the anon excited about the possibilities.
Amen! It's our job to solve hard problems, and that starts with hard people problems like keeping people motivated. All of the whining and negativity is a huge drain - with no positive suggestions to counterbalance.
Well, one sign of business sense, real and solid business sense, would be that every single division operates at a profit. Many good companies do that. Why can't Microsoft?
Word lost money for years before becoming the #2 word processor. Same with Windows until 3.0. Same with Windows NT Server at first. Same with SQL server for years.
You're recommending a very conservative strategy. We can't be totally risk-averse. Building new big businesses takes time.
And it's not really fair to judge whether or not our most recent aquistions have made money. The 10 successful ones mentioned took time to develop, and the new ones will too. And many of our recent aquisitions DO make a profit: aQuantive, Softricity, Virtual PC.
I try to bake the above 8 points into my daily work life...
Ooh, a GM or higher has decided to grace us with their presence? I doubt it.
If you are, you're pretty spineless to argue for the status quo. Step aside and let somebody who's willing to do the hard work of cleaning up take over.
I'm not sure if you're new to MSFT, but our management in Windows relies very heavily on senior devs to decide things like technical direction.
To an extent, maybe, but I know that the big decisions about what to ship and when are made at the top of some (most?) groups, not the bottom.
So actually we CAN and SHOULD blame Robbie Bach for XBox and Zune quality/design issues, to answer the original poster's original point. Because who made the big decision to rush the XBox to market, ignoring Pb-free soldering issues and bad yields? Who made the big decision to recycle chunky Toshiba Gigabeat hardware for the original Zune? Do you think it was an executive or L61 Joe Developer, eating his lame cafeteria lunch in his office while working hard to fix his little Product Studio bugs?
(As for whether or not software engineering requires everybody to be superstars, you should read, or re-read, The Mythical Man Month. Any substantial amount of code should have an architect and many not-necessarily-awesome developers to flesh out the architecture. That way you end up with products that have a clarity of design and vision that you simply don't get from Microsoft, where everybody considers himself a superstar and makes a big "impact" all over everything.)
Simply put... I think that Microsoft made the right move!
Quote:
"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."
Questions:
1. What is the sound that a huge increase in balance sheet "Goodwill" makes? Yahoo's market cap is about $26B IIR. What's the offer price again?
2. What does the back end of a train look like as it recedes into the distance? In other words, what choice did MS have, given the "state of the nation" quote inserted into the beginning of my comment?
So glad to see so much optimism amongst MSers.
::I don't know who posted this but I have my doubts that you're actually an employee. The Microsoft I used to work for treated me like dirt for wanting to be a worker-bee who focused on my own tiny little sphere of influence.
I am an employee, in a product group, and that product, is my domain. Its my responsibility to make it as fast, reliable, and with as many great features as possible. Its my responsiblity to be a salesperson, if I have engineering ideas that will make it faster, more reliable, and more features, than I have to sell the dev team, pm, cust proxies, etc. or STFU.
Or if I'm someone that sucks the life out of the company, (there's a couple here and there :P ) then I would wine about how things should be, bitch about management and why its their fault, hate the customers, and spend all my time on Mini Microsoft talking about how Ballmer is the root of all evil and the Yahoo deal is aweful.
My point was STFU, make your product better, and if there's something in your way, and you feel your stuck, you can get outside help on your issues. I did and I work at 99% my potential, and make hundreds of times more change than I did.
I made an application run thousands of times faster (30000 ms to 15 ms), I replaced over 2 million lines of code with 300, I got a huge team working on features again and made the paralized walk again. I restored customer confidence. I made the software quality extremely high. I made the team work together and put them on the right path.
I'm off to another team to do it again. My point is that if you are worried about Ballmer and Yahoo then you are worried about the wrong thing. If you do something about yourself, you can do anything.
I used to be like alot of people here, selfish, bitchy, complain about things I don't understand like I do understand them. Then I started practicing Buddhism, meditating, and learned compassion for others (customer, team, PM, dev, etc), I did all I could, I became a mini microsoft like Ballmer talked about at the company meeting, and Miracles happened.
My attitude changed, and the product became something incredible, not by smarts, but by attitude.
You want true happiness? then don't worry about Ballmer. Think about your immediate customers, your team, yourself, don't hate anyone, have compassion, wish them to be happy, and not suffer... learn that your selfishness leads to your suffering.
And as you flame my message, remember, that I and anyone else that understands the truth I stated here, flow past you like water, and good things happen.
Why do you want to change the company when you cannot even change yourselfs?
"I try to bake the above 8 points into my daily work life..."
Ooh, a GM or higher has decided to grace us with their presence? I doubt it.
If you are, you're pretty spineless to argue for the status quo. Step aside and let somebody who's willing to do the hard work of cleaning up take over.
Hey Einstein -- you're making my argument for me. What I'm saying is that thousands of people have posted rants about "the things management needs to do to fix Microsoft", which is about as effective as a political bumper sticker is in converting a Blue to a Red.
Change begins at home -- take the rants you dream about giving to BillG and actually LIVE them. Don't let clueless management dictate how you work. I've worked in 3 divisions and have had 12 managers -- some great and some rancid -- and yet I've never felt as victimized as some of you seem to always feel... I've also build some damn cool stuff and consider myself an advocate for our customers.
And for the record, I'm not a GM... L64 individual contributor here, and someone who has never let Microsoft's problems seriously impact the way I build products.
To all the junior people who bemoan the state of the company: you have more control over your work life than you think, and if you can't see that then you're missing something crucial.
This bid for Yahoo is Microsoft's admission that the critics were right all along. Keep that in mind when you are listening to similar agruments between Microsoft critics and defenders over other issues.
Why?
After the deal is closed, Yahoo will be Microsoft. MSFT will win.
Because if Microsoft and its defenders had been right, it would have become #1 on its own, and would not have needed to buy Yahoo.
Because if Microsoft and its defenders had been right, it would have become #1 on its own, and would not have needed to buy Yahoo.
Rather simplistic. There's usually more than one way to win. As other posters have pointed out Microsoft has won on the back of acquistions before YHOO.
Is buying Yahoo the last straw MS is drawing in fight to become a "meaningful" competitor in the online advertising market (or Steve wanting to kill f%^*#@ Google)?
If for some reason, as recent news suggests, Yahoo partners with Google instead of being purchased by MS, will MS drop it's effort in the online advertising market? I mean MS is loosing money, how long will they be willing to do that?
I can see Yahoo starting to try milking MS now since they do have options, and one particular one very bad for MS - partnership with Google by outsourcing their search to them.
Regarding all the employee whining and bitching: This is what happens when our leadership decided some time ago that it had no interest in increasing shareholder value. 7 years and we're still waiting. Maybe they forgot but we're all shareholders too. It's kind of tough for people to accept lower raises and a completely flat stock when most of the hi-tech people around us have done much better. Yet somehow our leaders continued to get filthy rich or much richer than they already were during this period. It appears extremely out of proportion to me.
Maybe they should take a note out of John Chambers book. There's one CEO who could walk circles around Ballmer.
Sorry guys, but this is one merger that I do not want to see go through - I'd like to see Yahoo! be independent - at least of Microsoft. Might be okay if it were Google, but not Microsoft.
Sorry guys, but this is one merger that I do not want to see go through - I'd like to see Yahoo! be independent - at least of Microsoft. Might be okay if it were Google, but not Microsoft.
I actually spit my morning coffee out when I read this -- bravo!
How on EARTH is it a good thing when the undisputed dominant provider of a service -- in this case, Google -- gobbles-up one of the only other major players? Google would likely face much more regulatory difficulty if it tried to acquire Yahoo because the resulting lock on the market would be truly scary.
It's totally legit to say that Microsoft buying Yahoo creeps you out. It's asinine to say that Google buying Yahoo would be preferable.
I read through a lot of the comments and I need to make a rude statement or two.
Just to lay some groundwork, I think this merger is years too late. It would have been a good idea before we sunk big money into Live and before Google really exploded, but now it seems misguided.
That said, a LOT of the replies here are deeply clueless. I can only pray you arent MSFT employees.
Comments along the lines of "why the fixation on Google?" and "why does MSFT *need* to be in the ad space?" are almost shockingly ignorant. Seriously. If you actually believe either of those things, you need to really evaluate if you are still relevant as a thinker in this industry.
Google has amassed an enormous pile of cash incredibly quickly by dominating the internet. The internet, in an esoteric sense, may be "a network" and Im sure utopian socialists view it as some nebulous nirvana of freedom, but Google has *proven* that it was a commercial green field that could be conquered.
While people like you were sleeping cluelessly, they essentially took control of the internet. People use Google *reflexively* now. Google is a verb. EVERY person that uses Google to search for porn, or research or X-mas gifts puts money in their bank.
And they are JUST as arrogant as MSFT has always been. They have an infinite cash cow now with their massive dominance in search and ad space. They're an ad agency printing money.
And what do they want to do with that money? Its a stated fact by their founders that they want to "change the landscape" (ie - destroy MSFT)
Do the ignorant really believe Google just wants to be a search engine and ad server? HOW can you be so brainless?
I work with ENTERPRISE customers SERIOUSLY piloting Google apps in industries that would CHILL you if you WOKE UP AND PAID ATTENTION. If you are MSFTers, please quit now if you're, frankly, this stupid.
The predictions of "doom" for packaged software have been coming for "so long" because the early predicters were VISIONARY. Not because its imaginery.
Google is framing a world in which MSFT is irrelevant and, at best, a provider of a commodity OS that only exists due to inertia with an ever shrinking share and the morons that supposedly are MSFT deep thinkers feel the answer is "continue to invest in what we do right!!! build our CORE so we can be like Apple and give people what they want!!!"
Its INFURIATING to see such stupidity, honestly. Continuing to do what we do will ensure that MSFT is gone and Google wins.
Here are some hints to give one last shot to converting you folks who think this way into SOME kind of useful thinkers. Windows Mobile and the XBox (ALWAYS maligned on this friggin blog) are two of the most important, and tentatively most successful, ventures MSFT has taken in the past 5 years or so.
As a little game, take that statement as TRUE and instead of trying to dispute it, TRY to figure out WHY. Because it is true, you just dont get it and instead of puzzling through what you're missing, arogantly assume that all of the analysts and executives and engineers telling you these moves ARE good are morons.
Google is the same situation. Assume they ARE a big danger to MSFT. Now try to use your brain and think HOW they might be. Because they are, you just dont get it.
SO Y! merger? No. THis should have been a headline from 2001. But Google compete? HELL yes unless you dont plan to have MSFT in your future.
Heres a hint on WM and XB - a whole new generation of kids dont reflexively DESPISE MSFT now b/c they view MSFT as XB. An EU telco is planning to use XB as THE set top box for its IPTV. If you're still clueless, you're helpless
on WM, APPLE (the company all of you worship) made a phone, Google (in a rare ME TOO) has been floating "we'll make one too!", WM has turned HTC into a POWERHOUSE and is now seriously on carrier radar. Enterprise architects say every day that "blackberry works great, but we're interested in WM as an APPLICATION PLATFORM". GET IT YET????
Here are some hints to give one last shot to converting you folks who think this way into SOME kind of useful thinkers. Windows Mobile and the XBox (ALWAYS maligned on this friggin blog) are two of the most important, and tentatively most successful, ventures MSFT has taken in the past 5 years or so.
As a little game, take that statement as TRUE and instead of trying to dispute it, TRY to figure out WHY. Because it is true, you just dont get it and instead of puzzling through what you're missing, arogantly assume that all of the analysts and executives and engineers telling you these moves ARE good are morons.
Man, you must be an absolute joy to be around no matter how good a job you think you do of bottling that contempt...
Seriously, you really do need to dial down the arrogance. Even if you're correct and the two results you mention (IPTV and goodwill) did turn out to outweigh the investment in Xbox thus far, the fact is that both of those are very long-term payoffs and Robbie Bach promised back in 2001 that the Xbox experiment would reach profitability within five years. So they've utterly failed at that, even if they do manage to bellyflop into an eventual payback in the areas you mention (and sorry, but neither of those is the done deal you think either. Those same kids whose opinion of MS has been mellowed by the Xbox also think those "Hi, I'm a Mac" ads are hilarious. And IPTV has been chosen by "an" EU telco? Gee, I guess we might as well declare victory in the IPTV space. Hell, we couldn't even retain Comcast as a customer for our TV services, let alone expand our presence in that market into anything approaching success. And the US cable industry is a lot more friendly towards us than the EU will ever be).
You're counting a lot of unhatched chickens there, Colonel.
This looks like a very bad idea to me for MSFT. As an AAPL shareholder though, I'm all for anything that distracts your company from its core business.
"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?"
Disney/Pixar?
Oh, wait. That was only 7.4 billion.
Apple/NeXT?
No, that was only $400M.
HP/DEC?
Nope.
HP/Compaq?
Striking out here...
Well, what can I say? When you're right, you're right.
Windows Mobile and the XBox (ALWAYS maligned on this friggin blog) are two of the most important, and tentatively most successful, ventures MSFT has taken in the past 5 years or so.
The first one is in the process of being destroyed by the iPhone, and the second one only needs twenty more Halo-sized hits to go profitable.
Of course, compared to MSFT's other great ventures in the last five years, you might be right.
First, any moron can make money selling oil (except Dubya - but lets not go there).
Actually, the value of Citgo is rapidly declining under Chavez, so a moron can't necessarily make money selling oil.
Secondly, GWB wasn't selling oil, he was running an oil exploration venture, which is always a very risky proposition. Investors take that risk because the payout can be huge if they get a good hit.
Let me just mention something about Google apps. I have a need for a 3D modeler for a vertical-market opportunity I'm working on, and after putting a few feelers out with the Autodesks and Catias of the world, I had a wonderful experience talking with the Googlers who work on SketchUp.
Since Google wants to cooperate with developers like us, and knows that the more open they are, the better for all parties, they are completely willing to hand me an SDK and full documentation of their file formats so that I can use SketchUp to generate my models and then use those within my apps.
If I have occasion to include mapping features in a future product, who do you think I'm going to call? I'll give you a hint: it's not going to be the company that wants to me to require all my users to be on Windows.
Mini,
Patronizer here. In the past (probably before your popularity surge ;-)) it's been possible to have meaningful "conversations" on this blog. Reading the
Its a stated fact by their founders that they want to "change the landscape" (ie - destroy MSFT)
You say that like it's a bad thing.
a part of me is wondering just how many softies are left posting here. Not that the occasional idiot(the term is not mine, Gestner used it to describe the employee who sent him an EMAIL reply to criticize his focus on competitors and encourage him to accept IBM's natural decline) is not fun but ... here it seems to have become the norm ....
Any chance we can switch the conversation to something less attractive for external posters? E.g. what would be a good way to retain good employees according to softies?
Just a thought.
Competition is not the goal. Competition is incidental to creative work. Do you imagine that Google and Apple employees think about you clowns all day?
Of course they do, you asshat. Creativity in business is not divorced from fiscal and competitive pressures.
You're still in school, aren't you? Cuz school is the only place you can afford to be so totally out-of-touch with the real world.
Someone said:
Yeah, sure. That's why none of them go to Youtube or Myspace or Facebook or Flicker or any of those other sites. They just won't tolerate ads...not.
I can't speak on Facebook or Myspace, as I don't use either. However, I use YouTube frequently... on my Mac, on my iPhone and on my AppleTV.
I've not seen ads in the videos (unless the whole point is that the video is an ad... vintage, for example). I just pulled up the YouTube front page, and I see only three ads. Ordinarily, their presence wouldn't even register. They are almost invisible to me.
I suspect that most modern 'net users are the same way. Ad impressions on websites are glossed over so quickly they don't even register, and they most definitely are never clicked.
As I said, ask the next ten people you meet whether or not they've ever clicked on a web ad, and whether or not the presence of those ads even registers. (If the ad is animated or particularly annoying, it might be seen... however, those tend to just make users angry.
So, where's the money in 'net advertising again?
"You're still in school, aren't you?"
Guess again, sunshine. I worked at Apple for three and a half years. I can tell you that we didn't sit around obsessing over whether MSFT was going to wise up in our lifetimes.
I keep telling you, focus on the customers, not the competition. Do you think that a customer-focused company would have dreamed up something like "windows genuine advantage"?
De-cloaking here because of that crack that another anonymous poster made, claiming that I must still be in school.
I've been in the industry for a very long time, I watched IBM lose their lead, and I'm watching Microsoft lose it right now. Success in business does not come from "beating" the competition, it comes from serving your customers.
You can scheme against Google all you want, and if you manage to do them some damage, you'll just get blind-sided by the next company with a new idea that serves your customers better.
That fixation on Apple, Google, Sony, IBM, or whoever else he decides is the enemy of the month is why Ballmer is hopelessly floundering around and wasting shareholders' money on failed ventures. Get him out of there, or you can count on MSFT staying on a slow decline.
Seriously, would you have been able to sell any copies of Vista to date, if you didn't have the monopoly leverage over the Dells and HPs of the world?
-jcr
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