Microsoft's Yahoo! Acquisition is Bold. And Dumb.
Please, Yahoo!: fight to stay independent. Or at least tear yourself apart and pop a couple of poison pills to go out on your own terms before this goes much further. Yeah, I've got your double-suck cake for you: one layer Yahoo!, one layer Microsoft.
I was on the internal Microsoftie bandwagon that Steve Ballmer was steering not too long ago that an acquisition of Yahoo! didn't make sense for Microsoft. So when the unsolicited offer went through, I was like a whole bunch of other confused senior people looking around trying to figure out what changed and why this suddenly was the right thing to do and to bet the company on.
I recognize that huge change for the future is typically greeted with 95% critical negativity. People don't like to change and huge change is an immense leadership challenge, especially when the change is the right thing to do and very few can see that perspective. So I've done my best to be open and accept that Yahoo!'s acquisition by Microsoft is a good strategic move for Microsoft, for our customer's, for Yahoo!'s customers, the shareholders, and for Internet users in general.
I haven't gotten there.
In fact, this still seems like a real dumb idea, like a staggering drunk trying to prop himself on an unwilling and lame adversary who wouldn't mind seeing the drunk facedown on the pavement. The only arguments that are half appealing are those that suppose there's going to be a $110,000,000,000USD annual online ad-market, and Microsoft + Yahoo! gets a third of that market. Hand-waving, "The acquisition pays for itself!" Yeah, okay, give me that dream and a milkshake and at least I get to enjoy the milkshake.
Some interesting posts on this:
- Mr. Todd Bishop: What's next Microsoft's options after Yahoo rejection.
- Ms. Mary Jo Foley: What’s Microsoft’s Plan B?
- MSFTExtremeMakeover: Media Roundup, Having Fun Yet, and This is like a person who's completely lost his mind.
- Mr. Nathan Weinberg: Some Microsoft/Yahoo Overlap You May Not Have Considered. I like Nathan's comments here. It's interesting how many technologies of Yahoo! he declares as being "dead." Why are we paying for dead stuff again? We're not taxidermists.
- Creating Micro-Hoo: a pro-acquisition editorial from the Seattle Times, taking a bit of a personal view of Google's impact on the newspaper industry.
- Mr. Philip Greenspun: Microsoft is 2000 times less effective than Google; Yahoo Board seems to be insane: snippet: "The interesting question is why a company that claims to know how to program would pay anything for Yahoo, much less a P/E ratio of more than 60."
- Mr. Henry Blodget: Microsoft's Colossal Strategic Mistake We Need to Be in Advertising - Silicon Alley Insider. Right. Ads?
Of course there's one big thing I haven't touched on: headcount. Let's see, why did I start this blog? Oh, yes: Microsoft has become way too huge to be effective and nimble in the creation of focused, passion-driven software. Fourteen-thousand or so demoralized people thrown on the heap does not help in the least. That's the amount we need to go down, not up. What is this, Bizarro Microsoft?
Have you brought up HeadTrax recently to see how many positions report up to the top? Give it a go. And how many people report to the various presidents. Any surprises?
Microsoft absorbing Yahoo! doesn't make sense to me given the extreme overlap in offerings that neither Microsoft nor Yahoo! have been terribly effective at. How many success stories have there been lately at Yahoo!? I like their portal. I use their search on occasion (only when Live Search and Google give me disappointing results). And their acquisition of flickr was really good for them, along with not screwing flickr up (and flickr users, you gotta know Microsoft would be pretty hands-off of flickr, other than probably putting a Live ID sign-in bar or such on there).
The only argument I've heard that makes sense from a conspiratorial Machiavellian kind of angle is that this is an opportunistic move to bust and cripple the already lame business adversary we have in Yahoo! We don't really want Yahoo!, but rather see this as an opportunity to kneecap and sideline them, pointing out their vulnerability to acquisition and angering their frustrated shareholders into revolt, all while putting them under the microscope of the analysts, pointing out their various failed and marginal ventures. And some glimmers of potential. But mostly, Yahoo! continues to come up in an unflattering light as people scratch their head as to how they'd help Microsoft at all.
If the acquisition doesn't go through, Yahoo! certainly emerges with several broken bones and bruises. Rebuilding from that will be a struggle that will require drastic and draconian decision making.
And the MSN, search, and ads folk at Microsoft certainly shouldn't be too proud right now, because you guys are under as much scrutiny as Yahoo!. Why are we proposing blowing $22,000,000,000USD in cash and going into debt? Because Yahoo! has something done right - relative to us, according to our leadership - that you haven't been able to do. Is there a Microsoft online-services leadership shake-up coming? One can hope. The fact that we've initiated this acquisition, for whatever reason, means that the people in charge haven't been able to deliver and are not on a path to deliver. Accountability?
I do want to see the strategic importance in this huge, complicated take-over. I do want to believe. If this all about ads and the acquisition goes forward I need the influentials in Microsoft leadership to connect with me and convince me to believe that this is indeed the next important foundation for Microsoft. To tell you the truth, if you had pulled me aside when I was in school, holding court in the computer science lab, and whispered in my ear ala The Graduate: "online ads..." I would have laughed my geek butt off.
So Google gets to have the joke on me, but for us to bet the company and build Microsoft's future foundation on ads revenue? WTF? As someone who considers themselves a citizen, not a consumer, I want to create software experiences that make people's lives delightful and better, not that sells them crap they don't need while putting them deeper into debt. I'm going to be in purgatory long enough as is.
Yes, okay, we should have a team do an advertising platform and do it well, but the money chest can be better invested across the company, let alone avoiding going into debt and putting us on another spiral of doubt and angst in the stock market, all while dealing with anti-trust maneuvering in Europe.
The attempt to acquire Yahoo! is a bold move. But bold and dumb are not exclusive. Q.E.D.
146 comments:
The past eight years of SteveB as CEO was just noise leading up to this Yahoo deal. I wonder if we're quickly heading to the true tipping point of the company.
The deal(regardless of outcome) will usher in a new dumber age for Microsoft or a bolder richer one.
We'll know quickly which one it will be.
I worry about what a Microsoft/Yahoo company would do to the salaries of Yahoo's developers. My ex-girlfriend, who has about 10 years experience as a developer, took a job at Microsoft last year for about 80K and I have heard stories of others who have been given very low offers or have seen very little salary growth at Microsoft.
Right reason to acquire Yahoo:
to add to an already successful add and online services business. Microsoft so far does not fulfill the drill.
Wrong reason to acquire Yahoo:
to save an incompetent leadership from its own failure to succeed (like Google)in the add and online services business. This looks more like the real reason, which only proves it is the wrong reason.
I worry about what a Microsoft/Yahoo company would do to the salaries of Yahoo's developers. My ex-girlfriend, who has about 10 years experience as a developer, took a job at Microsoft last year for about 80K and I have heard stories of others who have been given very low offers or have seen very little salary growth at Microsoft.
I can't think of any strong 10-year veteran developer that we'd bring-on for 80k -- that's basically what we offer college grads.
Does she have a degree? What does her resume look like? What kind of background does she have?
A strong 10-year veteran developer, with a CS-related degree and a strong job history would likely be coming in somewhere in the 120+ range (63/64), with top candidates probably pulling considerably more based on niche talent.
The deal has to be about aggregating traffic and improving the value extracted from MSN's own traffic (today's and that in the future, if you believe ad-funded apps). It's probably also about getting some people who know WTF they're doing in the online services space.
Valuation aside for now, I think it is a MUST DO for MSFT and now it is for YHOO as well. I haven't sharpened my pencil and done the math, but it will probably be fairly easy to justify. We'll find out in a few years' time whether the value above and beyond what was paid is actually realized.
I sold all my MSFT stock and poured it into YHOO last week. Unless you have tax issues to deal with, it seemed pretty compelling since YHOO is trading at a discount to the MSFT offer. It is unlikely to be worse than holding MSFT stock.
re: MSFT taking on debt, people need to separate the two concerns.
The first concern is really about whether the acquisition makes business sense; the second concern is how MSFT should finance it.
On the latter (putting aside the former), MSFT should use up much of its cash on hand (some buffer and keep some for working capital) and issue debt to cover the rest. MSFT has to be a triple-A credit--it's generating so much free cash flow, it isn't much of a worry to lenders (and I doubt MSFT won't be issuing 30 year corporate bonds) and MSFT shareholders should get a better Total Shareholder Return (TSR). Incidentally, it should force MSFT to be more fiscally disciplined--which it has lacked and continues to lack, though it's improved since putting in the new CFO.
Hey, maybe Yahoo's Sue Decker will stay on board--that might be a nice injection of experienced management into the MSN/PSD org.
What are a lot of you complaining about?
You wanted Kevin Johnson in charge of the company and now he is.Be careful what you wish for.
Henry Blodget's piece, "Microsoft's Colossal Strategic Mistake: 'We Need to Be in Advertising'", February 9, 2008, is particularly compelling.
http://www.alleyinsider.com/2008/2/microsoft yahoo will be our google apps
"Corporate applications will never be supported by advertising, and if Google really wants to unseat Microsoft's Office monopoly, it will have to build up the same sort of corporate sales and service organization that Microsoft already has. Microsoft should stop trying to go into a business it doesn't have to be in--advertising-supported consumer media--and concentrate on protecting the core corporate business it already rules--by committing wholeheartedly to Office Live.
One big step toward doing this? Radically changing the Yahoo deal. Microsoft should merge its Internet advertising assets with Yahoo in a much smarter Yahoo transaction--and then invest $5 billion in building out a global cloud computing platform to support Office Live."
Read the whole thing. Nobody should support the Yahoo! offer without being able to answer Blodget's cogent argument.
Now that the press is reporting that Y! is going to refuse the offer because it's too low... what will happen now? Will we offer more? Or walk away? This is turning out to be a disaster. A lose-lose "Fargo" of a deal. SteveB needs to be ousted.
I can't think of any strong 10-year veteran developer that we'd bring-on for 80k -- that's basically what we offer college grads.
Well, when you come to US on H1B you are at their mercy. I can speak of myself and about 10 friends. 5 to 7 years experience -> lvl 59 with 70k a few years ago. You do not get to negociate, is a take it or leave it deal.
Mini, I agreed with you up until this point:
> "but for us to bet the company and build Microsoft's future foundation on ads revenue? WTF? ... I want to create software experiences that make people's lives delightful and better, not that sells them crap they don't need while putting them deeper into debt."
I think you need to rethink your perception of ads a bit. First, who says Windows makes people's lives better but ads don't? Sometimes people really are looking to buy things, and the ad links (if they're relevant) help them find what they're looking for faster.
Second, your "putting people deeper into debt" comment is an exaggeration, or at least doesn't add anything to your argument. Buying software puts people into debt too. And it's silly to imply that MS shouldn't sell advertising because it might increase consumer debt.
A strong 10-year veteran developer, with a CS-related degree and a strong job history would likely be coming in somewhere in the 120+ range (63/64), with top candidates probably pulling considerably more based on niche talent.
Wow, really? I guess I'm a walking idiot then. 15yrs exp, 8.5 here at MSFT. I came in a 60 and I am now a 62. I just broke 100K last review cycle. I can't stand the "career management" that gets shoved down my throat twice a year. Another freaking check list and waste of time better spent doing my job (and I do it damn well, thank you very much).
It amazes me that shipping product successfully is just not what works here at all anymore. When I am busting ass to get a feature done I just can't seem to care about how "visible" I am to upper management. When I am working with the team to wrap up shipping the last thing I am worrying about is my "cross divisional impact". And yet, at the end of the day that seems to be all that matters.
We all hope that this deal doesn't go ahead but the truth is some serious damage has already been done.
1. Stock. Y! 47% up after offer got public, MS? well you know.
2. Message sent to the industry. There is not a single credible media who hasn't interpreted this as an open acknowledgment that our online strategy is a flaw and we cannot compete.
3. Message to our employees. Specially working on the MSN/WL space. Since you guys suck and what you are delivering is shit, lets see if we can get it from someone else. For the rest of us, the message is the same as the industry.
Really, what Ballmer needs to do to lose his job?
It's time not only to sell but to leave before we all sink.
A strong 10-year veteran developer, with a CS-related degree and a strong job history would likely be coming in somewhere in the 120+ range (63/64)
In 7 years in Windows, I have seen this happen only once and the guy eventually had to transtion to a PM position. More MSN level inflation?
Wow, really? I guess I'm a walking idiot then. 15yrs exp, 8.5 here at MSFT.
I agree with the last poster. I joined as a L60 SDE in 2000 and am at L62 now making less than 100K. Worse a new hire joined my team at L60 and is making 94K. So much for the 8 yrs of experience in Microsoft.
"Well, when you come to US on H1B you are at their mercy. I can speak of myself and about 10 friends. 5 to 7 years experience -> lvl 59 with 70k a few years ago. You do not get to negociate, is a take it or leave it deal."
I know several people that in similar situation got offered L61 few years ago.
I don't get how much that is H1B related? If company goes through hassle of offering someone H1B, they do want that person.
What I wonder is: if MS wants to gain enough eyeballs to look like a viable Google competitor in the ad space, why not go after them the old fashioned way- with advertising?
Think print, radio, TV. Think what a mere $5 billion spent on a smart campaign could accomplish.
Does MS really need to spend $40B, plus another who knows how much (not just money but morale and confusion) to weld Yahoo on top of MSN/Live ... which already has most of the functionality Yahoo has?
Over here from the Yahoo! side of the fence we don't want this deal either. The problem at this point is that because of the way your glorious leader came barging in, we are F*'ed!
There are only really 3 scenarios left at this point:
1. MonkeyBoy refuses to raise the offer and walks away. Probably the best option for you guys, but we are F*'ed. The stock will tank and we will be dealing with shareholder lawsuits 'til the end of time.
2. MonkeyBoy goes all out hostile and replaces the board and forces the deal through at $31. This will drag the whole thing out longer, and there will be no assistance from the Yahoo side getting past the regulatory hurdle. The uncertainty and all-out hostility between the two companies will leave us both F*'ed.
3. MonkeyBoy raises the price slightly and we end up with a "friendly" takeover. The Yahoo board can take a bit of credit for getting more value for shareholders and the Yahoo employees can take some solace in the fact that our options are worth a bit more. Of course, then the choppers carrying the stormtroppers from Redmond will start arriving. Be careful, our neighbor, Lockheed-Martin, is well-armed. There won't be a parade waiting for you guys. Just long lines at the laser printers waiting for our resumes to print and wondering how long we need to stay with the boondoggle before our few above-water options vest. Again, both companies are F*'ed.
Thanks guys. That's why we love you guys so.
New blog post topic for you Mini
http://money.cnn.com/magazines/fortune/bestcompanies/2008/full_list/index.html
Microsoft drops from 50 to 86 in a year. Almost one year back Lisa had posted on the InsideMS blog on how Microsoft dropping from 42 to 50 in 2007 was not good and what she would do about it. An year has passed by and there are no comments now from Lisa on what she feels about Microsoft's current position in the list. So much for executive accountability. Guess next year Microsoft might not be in the list
The deal doesn't make much sense to most Microsoft employees. Combining the force of two losers won't beat Google. Yahoo's search market share is shrinking fast. In a few months, their share will below 20%. Their search technology is not much better than Microsoft. We shouldn't pay a premier for this.
If you talk about display ads, which is as big a market as paid search, Microsoft is not bad positioned with aQuantive acquisition. We really don't need Yahoo to win the display ads war.
$44.5 B is a huge sum, even the annual interest is in billions. I would rather to use this money to buy more nimble web 2.0 companies( and can buy thousands of them).
I just don't see how to merge two slow elephones together. It will only be slower. We should stay away from this deal.
The level 62 1.0 Compa should be about 99K, someone who's an actual manager should be able to confirm
you can estimate about 10% deviation between levels from there
Leave it to SteveB to kill our momentum again and drop the stock below $29 - thanks so much. At least Yahoo's board is rejecting the offer.
Our best move is to now walk away. The reaction from all the hedgers will be to drop Yahoo and it will tank further. The result - Yahoo is damaged further, Google has freaked out, and hopefully our stock bounces back.
Or for another very different take on the deal, check out Cringely: (http://www.pbs.org/cringely/pulpit/2008/pulpit_20080208_004240.html)
Sometimes I think Scott Adams is a Microsoft employee:
http://dilbert.com/comics/dilbert/archive/images/dilbert2008026112009.gif
In just one cartoon strip, he captures the essence of all Microsoft failures of the past decade.
I am appalled by the frenzy various folks on this blog (including mini) have worked themselves into.
This acquisition makes perfect sense! From a technical perspective MSN has been trying for 10 years to get a strong foothold in online space and look where they stand. The head of the live/msn/whatever search exclaims "our technology is better!" Ok, Einstein where is the beef?
From a market perspective MS/Y! gets the eyball and perhaps proven technology. So let's shake up some things around here.
Financially, 31 dollars is a bargain. Actually it was rumored that last year we were willing to pay 43 dollars, but who knows.
In the words of Chris Liddell this is the only way to grow and we shouldnt be embarrassed by it.
Alright I have my asbestos suit on, flame away!
I'm not sure where all of these strong Devs with 8+ years experience and who are still stuck at level 60 -- or who were suckered into accepting an offer at level 59 -- exactly are at the company...
As a 10-year veteran hiring manager first in Dev Div, then Windows, MSN and now Xbox, I can honestly say that I've never seen such low salaries as people are reporting here with the exception of some self-taught Devs who came up through the ranks without formal training and have topped-out at 59 or 60... and I've certainly have never hired any strong external Dev candidates with 8+ years of industry experience (with relevant degrees and strong work history) at such low levels and for such little money. I'd be laughed out of the offer, frankly.
Why on earth would anyone with nearly a decade of development experience who had a good resume come to work at MSFT for 80k a year? It makes no sense.
Hmm. Now I'm *really* curious about the quality of people posting on Mini's blog...
"Wow, really? I guess I'm a walking idiot then. 15yrs exp, 8.5 here at MSFT. I came in a 60 and I am now a 62. I just broke 100K last review cycle."
Dude, I really don't mean to be harsh... but if you've only been promoted twice in 8.5 years and you have 15 years of experience in the industry, there are *only* two choices:
1. You're not a very good Dev. If you were a great Dev, you would either be doing much better than you are at Microsoft, or you would have left the company years ago when it became obvious that you were being criminally undervalued.
2. You're a masochist and despite the fact that Microsoft has been basically telling you that you're not so great by the lack of promotions, you've chosen to stay.
Everyone good Dev I know at the company is doing far better than you are, and the good Devs I know who weren't doing better left after just a couple of years when it became obvious the fit wasn't very good.
I would say your choices are to either accept the fact that you're not as good as you think you are and therefore that's why you're making chicken scratch after 15 years, or it's time to wake-up and leave the company and go somewhere that will pay you what you're worth.
"When I am busting ass to get a feature done I just can't seem to care about how "visible" I am to upper management."
Amen. You summed up my feelings exactly.
This Yahoo deal is retarded. Ballmer should be fired for this idiocy. I've been here for 11 years and seen things go from good to shit. It amazes me that we still make money, but it has to end sooner or later.
I just hope to hang on a couple more years to collect some stock awards and then I'm on to bigger/better things.
CFO Chris Liddell is profiled in the New York Times as the architect of the Yahoo! deal:
http://www.nytimes.com/2008/02/11/technology/11dealx.html
"You have to be disciplined and ruthless", says Liddell. The article makes MSFT leadership sound clumsy, heavy-handed and clueless.
LisaB's job was never to make MS a better place to work, it was to quell dissent. Thru a bunch of smoke and mirrors (hey we'll give you back towels!) she's somewhat succeeded.
All while getting to sell those $28 options that expired for the rest of the rank and file earlier in 2007
I'm in OSB and I just don't see the point. The things we do moderately well, so do they (portal, mail, chat, news). We both do search and maps fairly well (now), but not better than G, much less well enough to switch anyone. The things we suck at (ad center, social), they suck at. I don't see synergy, just an expensive grab at overlap and some diminishing search share.
MS' core strength is its sales and service for enterprise. As Vista and Office 2007 show, the quality of the software really doesn't matter, and we will still make a mint. Success at things like Sharepoint and Server-n-Tools brings this home all the more: it doesn't have to be good, just good enough for our excellent enterprise pipeline to start printing money. We've shown we can make very small, painful successes eventually (Msn, Xbox), but more often aren't going anywhere without the established enterprise pipeline to prop up our effluvia (Mobile, Live, Zune).
I just don't see how billions for Yahoo changes any of that. I like them, but they won't alter MS an iota and will never make the money back. Ad-driven software is huge and getting bigger, we can all see. Buy up a million bloggers and put our ads there, start up new online properties for the same, figure out how to sell ads on media centers and games (whatever happened to Massive?), or whatever, but don't blow the company's wad on a surefire money loser.
Our best move is to now walk away. The reaction from all the hedgers will be to drop Yahoo and it will tank further. The result - Yahoo is damaged further, Google has freaked out, and hopefully our stock bounces back.
Hey, maybe that was SteveB's intention all along, and he's a freakin' genius instead of a freakin' idiot? Y'think?
Guess we'll see when he responds to the rejection. (I'm not holding my breath for the right response, personally.)
"Well, when you come to US on H1B you are at their mercy. I can speak of myself and about 10 friends. 5 to 7 years experience -> lvl 59 with 70k a few years ago. You do not get to negociate, is a take it or leave it deal."
Sorry dude, I call shenanigans. I came a few years ago at lvl 59 with a grand total of 1 year of experience. I've seen promotions rate of 1 every 1.5 years, and all this while I've been on an H1-B. If anything I'd say the culture here is agnostic to whether you're on H1-B or not.
I think the real reason for that lowball offer might have more to do with the quality (or at least perceived quality) of said people.
Here is the amusing part. From the letter from SteveB to Yahoo's board:
"Microsoft’s share price has generated shareholder returns of 8% during the last one year period and 28% during the last three year period, significantly outperforming the S&P 500."
Not any more!!!
Over here from the Yahoo! side of the fence we don't want this deal either. The problem at this point is that because of the way your glorious leader came barging in, we are F*'ed!
Sobeski, is that you?
"Corporate applications will never be supported by advertising, and if Google really wants to unseat Microsoft's Office monopoly, it will have to build up the same sort of corporate sales and service organization that Microsoft already has. Microsoft should stop trying to go into a business it doesn't have to be in--advertising-supported consumer media--and concentrate on protecting the core corporate business it already rules"
That assume's Google's purpose in the productivity space is to make money. Microsoft and Google have similar DNA, and they are both software giants with ridiculous sums of money. They are the only companies that could reasonably threaten one another.
Google could create Office-like applications and give them away for free, not to make money but to destroy a Microsoft cash cow. Google could fund Firefox and push for offline features, not to make money but to remove OS value and attack the other Microsoft cash cow. With a weakened Microsoft, Google has no serious threats with a combination of economic strength and technical ability.
They probably won't get the corporate sales force to make lots of money and take marketshare and profits from Microsoft. But they can get the technology to take marketshare and destroy Microsoft profits.
It's the exact reverse for Microsoft in Google's area of strength. If we get an ad/search platform as effective as Google's, that means there's competition and the price of ads goes down. The profit in the whole industry goes down. They say online advertising will be a 80B business in 2010. How much of that will be profits? If we commoditize Google's ad platform, not much. If we get competitive with Google, the profit will be much less. The only way to take Google's profits is to beat it to the point where Google doesn't even have a competitive marketshare, which I don't think anyone expects.
With CFO Liddell in charge of the deal, it's no surprise it doesn't make any sense. It's pretty clear the acquisition is a dream on the CFO's spreadsheet. If you make the right assumptions and put the right numbers in the right boxes, in pencils out beautifully. This is what happens when you put the finance guy in charge and why the future of MSFT hangs in the balance. This guy could be as bad or worse than Ballmer when it comes to making bet-the-company mistakes.
Well, when you come to US on H1B you are at their mercy. I can speak of myself and about 10 friends. 5 to 7 years experience -> lvl 59 with 70k a few years ago. You do not get to negociate, is a take it or leave it deal.
Not to be too "harsh" but:
- you didn't need to come to the US
- you didn't have to take the offer
- MSFT - or any company - assumes substantial expense to deal with all the regulatory BS around H1B
MSFT doesn't owe anybody a job, and very frankly, $70K or all the higher salaries discussed hereon in various comments as "low" and so on, are pretty nice for much of the world's population. I realize we have invested a lot in our education, but living in an overpriced area or expecting plasmas and Xbox360s isn't really MSFT's problem, it's yours. If you don't like your salary... work harder and kiss the right asses (sorry, but that's the impression I get about MSFT) or go elsewhere or start your own thing. There are enough talented people in low-cost areas now that many of us will really need to face these unpleasant choices; have you contingency-planned yet? Or are you so good that you don't need to... (and does your mgmt agree)?
More on topic... I make my living using and applying MSFT products. A distracted, suddenly indebted and cash-poor MSFT struggling to integrate tens of thousands of now-depressed employees (Y! + MSFT Live! etc.) makes me think about perhaps becoming expert (as opposed to competent) in competitive tools. I prefer the MSFT tools; so I hope the Y! merger fails and whatever is necessary happens at the MSFT top to get the flab out. A management that can't find better uses for $44B than buy a failing eyeball-play (hello, dot-com is over) must have to justify its existence to the board at some point! Right? Right?
I think you need to rethink your perception of ads a bit. First, who says Windows makes people's lives better but ads don't? Sometimes people really are looking to buy things, and the ad links (if they're relevant) help them find what they're looking for faster.
Second, your "putting people deeper into debt" comment is an exaggeration, or at least doesn't add anything to your argument. Buying software puts people into debt too. And it's silly to imply that MS shouldn't sell advertising because it might increase consumer debt.
Here's an idea: Make money by selling ads for Linux. That way you won't be putting the customers in debt. ;-)
MSFT:YHOO two weeks ago: $34/$19
MSFT:YHOO on 2/11/2008: $29/$29
If MSFT drops below 20, can GE buy Microsoft? GE might do something good with it.
Apparently, MS just announced another acquisition... Danger, the makers of the SideKick phone.
http://www.engadget.com/2008/02/11/microsoft-buys-danger-windows-mobile-sidekick-imminent/
Weird.
What's their intent? To make a phone themselves, and piss off all their partners a la PlaysForSure and Zune?
MSFT behavior just gets more and more bizarre by the day.
Danger Will Robinson!
MSFT to buy Danger, maker of the Sidekick.
http://www.news.com/8301-13860_3-9868954-56.html?tag=nefd.top
Which, when taken together with€ Yahoo\, is awfully interesting.
Bold, even
A strong 10-year veteran developer, with a CS-related degree and a strong job history would likely be coming in somewhere in the 120+ range (63/64)
That's not right.
I was a 14+ year veteran developer when I joined MS with extensive experience and after 8 years I have finally broken the 100k mark.
Salaries vary enormously at MS depending strictly on who you know and who's your friend.
How much time will be lost as MSFT rewrites all of Yahoo to be Windows apps? And how much ground will be lost to the competition while that goes on? It's not like hotmail ...
"I haven't sharpened my pencil and done the math, but it will probably be fairly easy to justify."
If it was fairly easy to justify, MSFT's marketcap wouldn't be down $40 billion and climbing.
I think the real reason for that lowball offer might have more to do with the quality (or at least perceived quality) of said people.
And here I was thinking this was because people in the US understand that negotiating a job offer is like buying a used car. Which means those from other countries would be at a natural disadvantage.
Taking the analogy further, the counterexamples are equivalent to lucking out by happening to shop at a no-haggle dealership.
Microsoft to buy Danger
http://www.news.com/8301-13860_3-9868954-56.html?tag=nefd.lede
Sounds like Windows Mobile is not good enough or what? Or is MS trying to muscle in to the consumer space which Windows Mobile is not? It would be interesting how the politics work out with two different Mobile OSes to support and integrate. Or will Danger be folded into Windows Mobile (or vice versa)? My understanding is Danger sells its own hardware. Will MS be going the same route ala Zune?
Hey, look at the bright side:
1.) Yahoo and the market are now deluded into thinking that Yahoo is worth a lot more than it is. They don't need a poison pill, we just gave them one, we priced them far out of reach of any of our competitors. Hmm, similar to what we did with Facebook, think about it...
2.) Yahoo's bloated stock is now a great short opportunity. Short it! Free money!! (unless someone comes along and offers more ... which is not likely)
3.) Microsoft stock is now nice and affordable. Buy it!!! it might never be this low again, and it'll pop back up after this blows over. Free money!!
I enjoy all the whining, but take a chill pill, call your broker and profit from this move.
All that actually happened was that we made an offer.
Surely our senior leadership knew it would be rejected.
Surely they anticipated what would happen to our stock price and Yahoo's stock price.
Surely they were motivated by a strategy that is not quite obvious to everyone now, but will make sense in hindsight.
You don't make a 42 billion dollar offer on a whim, there are some nice side effects from the offer that we did not have to spend any money on.
I might just be the best money we never spent.
There's the first head to roll:
http://valleywag.com/354851/microsoft-demotes-poached-askcom-ceo
Please walk away from this deal Steve! I want to believe in my company once again.
"Microsoft’s share price has generated shareholder returns of 8% during the last one year period and 28% during the last three year period, significantly outperforming the S&P 500."
Really? And what three-year period would he being referring to? Please find me a 3-year period anywhere in the last 3 years where MSFT has outperformed the S&P500. Even if you take our peak (Nov. 2, '07) and go back 3 years, we still didn't outperform the S&P500.
If Ballmer truly wrote that then that's proof he is an idiot.
I do want to see the strategic importance in this huge, complicated take-over. I do want to believe. If ... the acquisition goes forward I need the influentials in Microsoft leadership to connect with me and convince me to believe that this is indeed the next important foundation for Microsoft.
Totally agreed. And presumably the logic they'd use to convince employees would also help with the press, analysts, investors -- and Yahoo!
Of course I cut out a few words there ... Mini had originally written "If this is all about ads ..." and then went on to say "but for us to bet the company and build Microsoft's future foundation on ads revenue? WTF?" I think this is oversimplifying in a couple of ways.
First of all, Yahoo! is fundamentally a media company (that just happens to monetize primarily via advertising). If Microsoft's serious about competing with consumers -- online, with XBox and Zune, and increasingly with operating systems -- it needs to get a lot more of this perspective. Yahoo!'s the most technology-focused of any large media company; unless Microsoft wants to retreat to the enterprise, it's hard to pick a better partner.
Secondly, advertising is only one of the potential revenue models: subscriptions and micropayments are also extremely plausible. Yahoo!s offerings including their portal, Messenger, Flickr, Y! Answers all have a lot of possibilities with any of these models -- and with Zune taking the lead on MS Points, Microsoft has some really technologies in micropayments.
Third, at least for the time being the advertising market is huge and extremely profitable; and unless you want Microsoft to give up on one of the few multi-billion dollar spaces it's got a shot of expanding into, you need to look at how this fits in. One significant thing about the aQuantive acquisition was that their agency portfolio; this is a great try at a flanking maneuver with Google, and Yahoo!'s media presence is like gold from that perspective. In addition, the dynamics of the search keyword market in particular mean that there is a virtuous cycle as your market share increases: additional high-quality inventory attracts more advertisers who bid up the value of keywords. This is one of the very few options Microsoft has for buying eyeballs. [The same is likely to be true for messenger, mail, and photos as people get better at monetizing them.] Also, this shores Microsoft up in the display ad space, which is likely to come under pressure as Google integrates DoubleClick.
Which isn't to say I think the deal's a no-brainer; I've been busy with other things, and so am still where I was before: initial reaction positive (although high-risk) if things had gone through at the initial offering price. As it is, we shall see ...
Still, I think it's important to be analyzing it taking these strategic perspectives and the online business models into account.
jon
As a former GE person, I reckon GE would do very good things for Microsoft. You have to remember they have a focus on every division returning a profit though, so some divisions might be culled in a purchase.
Their other great focuses are double-digit annual growth (always kept hearing that one) and process re-engineering (good old Six Sigma).
The staff review processes might be better than you're used to as well.
There's probably a negative here, but I can't see it offhand.
Much smaller deal, but apparently Microsoft has acquired Danger, a small company in CA that makes the operating system for the Sidekick phone that enjoys a very loyal and enthusiastic fan base. If you haven't used a Sidekick, it's actually very easy and fun to use.
Unfortunately this leaves Microsoft with two incompatible phone operating systems. Windows Mobile has momentum and broad, if lackluster, support from phone vendors, internal groups, software vendors, and corporate customers. I can't see it getting killed off to be replaced by Danger.
This means the new Danger "group" will either be left alone and will continue to function as they always have--not likely, why would we have acquired them in that case--or they will be asked to port their popular user interface piecemeal to the arguably inferior Windows Mobile OS. This is the most likely possibility and I assume the result will be kludgey and unpopular.
So, "thanks" Microsoft, for killing a product that many people love.
CFO Liddell should go. This company is in serious trouble now. Draining the 21B cash will put this company in great risk should there be any stragetic mistake. Liddel knows nothing about the software industry. Ballmer, wake up!!! Fire Liddell!!!
Wow, are you people serious with the salaries? 80K! I know technical writers with 5 years+ experience in the Valley who make more.
Read the whole thing. Nobody should support the Yahoo! offer without being able to answer Blodget's cogent argument.
Patronizer here. Read the whole thing, rarely seen anything that miopic.
Google's competitive advantage is the scale they're achieving in their data centers. Those, just like the OS, cut across consumer and enterprise providing you a cost advantage. Your author's thesis is the equivalent of recommending IBM to fight Windows by focusing OS2 on features corporate customers want (#1: reliability). Problem is ... we kind of know how that ended don't we?
I'd be curious to see what would happen were we to walk away from the deal now and come back in six months ...
"A strong 10-year veteran developer, with a CS-related degree and a strong job history would likely be coming in somewhere in the 120+ range (63/64)
That's not right.
I was a 14+ year veteran developer when I joined MS with extensive experience and after 8 years I have finally broken the 100k mark.
Salaries vary enormously at MS depending strictly on who you know and who's your friend."
I have never in my entire Microsoft career experienced this, and I've helped hire and offer many top-tier Devs for the company.
Something is not right here -- we do not pay top Developer talent with 15 years of experience less than 100k anywhere that I have ever seen in the company. To even suggest that we would is... just crazy.
What *exactly* do you people work on? It's certainly not any of our core businesses. Are you all in IT or MSDN?
And another question -- who in their right mind with 15 years of Dev experience will take an offer for less than 100k unless you can't find anything else in the industry? And that said, what kind of top Dev with 15 years experience has trouble finding work?
Again, I'll say: something is not right with these responses. I'm very curious about who you folks are. This is *not* the norm at Microsoft.
Something is not right here -- we do not pay top Developer talent with 15 years of experience less than 100k anywhere that I have ever seen in the company. To even suggest that we would is... just crazy.
Yes, you do actually. I got an offer for under 80K a couple years ago when I had about 14 years experience. You are correct that you would get laughed at. It has apparently been a practice of Microsoft's to lowball people for years. See this from 1996:
http://www.scribd.com/doc/413614/Microsoft-Staffing
Just because you never heard of it doesn't mean it doesn't happen.
80K! I know technical writers with 5 years+ experience in the Valley who make more.
Valley cost of living != Seattle cost of living. Duh.
Just wondering... If msft decides to go hostile and take it to the yhoo shareholders then doesn't it make sense that msft shareholder's get the same consideration?
Again, if Ballmer and company truly care about their shareholders then let's take it to a vote. Of course, this won't happen. So, let me get this straight, somehow yhoo shareholders know what's best for their company but msft shareholders don't?
In any case, here's my vote: Hell f'en NO!!
To all of these people with 10- 15- years worth of experience who haven't yet broken 6-figures at MS: The previous poster had it right. What exactly are you working on? Are you "web developers" in MSN? "Programmers" in IT? People who write sample code for MSDN?
If a software engineer with "15 years of industry experience, 8 of the most recent were at Microsoft" came to me for a job and said he was currently making $80K, I would assume he was one of these "hasn't been promoted in 10 years" hacks. That is a -pitiful- wage for someone with so much experience, unless the person is just super-terrible at software development. Or one of these ITT-tech or "self-taught" spaghetti coders.
"Something is not right here -- we do not pay top Developer talent with 15 years of experience less than 100k anywhere that I have ever seen in the company. To even suggest that we would is... just crazy."
Yes, you do actually. I got an offer for under 80K a couple years ago when I had about 14 years experience. You are correct that you would get laughed at. It has apparently been a practice of Microsoft's to lowball people for years. See this from 1996:
http://www.scribd.com/doc/413614/Microsoft-Staffing
Just because you never heard of it doesn't mean it doesn't happen.
Red herring -- the compensation philosophy was completely different in 1996 -- it was all about option wealth. But even so, we would negotiate with top Developers and make sure we didn't lose them.
The piece you posted is ancient history, btw.
But you still refuse to say what you do other than you have 14 year experience -- this does not mean you are a great Developer who can command top compensation, rather it means that you have 14 years experience in... something.
Top Developer means you have patents, you are a giant throbbing brain and your 14 years of experience is stellar and blows my hair back. That's the kind of Dev I hire -- these people were top in their graduating classes at highly rated programs, they have patents and they will create more patents because they're brilliant. Does this sound like you?
We can step down from the above until we hit 80k with 14 years experience. If you were to show me your resume, I have a feeling it might explain the 80k -- and I'm not saying this to be snarky, I'm saying this to contextualize the discussion about how on earth someone who believes himself to be a stellar developer with 14 years of experience is offered 80k in the modern era of Development.
MicroYahoo, Cui prodest?
* Google should only try to make it expensive for Microsoft (start a bidding war and leave the curse of the winner befall Microsoft);
* Microsoft will finally have made the capital mistake--what will have been Microsoft's most significant loss/win? Mr. Ballmer himself.
* Yahoo! will lose the game (beginning with R&D talent);
* The financial community will stand to make great fees;
for more:
http://chircu.blogspot.com/2008/02/microyahoo-cui-prodest.html
This acquisition makes me feel like I'm about to watch Ballmer attempt to do a Criss Angel stunt:
There's a deep hole in the ground and next to it is a coffin. First Ballmer said he's going to put himself into the coffin, have his friends place it in the hole and bury it (equivalent to Msft making a $44B unsolicited bid for YHOO). Unfortunately the crowd didn't think that trick was good enough so now he's saying that he's seriously considering wearing a straitjacket and nailing the coffin shut (equivalent to the possibility of a hostile takeover). Everyone but Ballmer and his friends (eg Liddell, et al) are baffled at this point since they all realize:
He ain't no Criss Angel...
Top Developer means you have patents, you are a giant throbbing brain and your 14 years of experience is stellar and blows my hair back. That's the kind of Dev I hire -- these people were top in their graduating classes at highly rated programs, they have patents and they will create more patents because they're brilliant. Does this sound like you?
Ok, this made me laugh. Maybe you should be a writer instead of Dev Manager? :-)
But back to the subject at hand: I didn't see anyone say "Top developers (aka rock stars) get offers of 63/64 and $120k coming in." I saw "Strong developers get offers of 63/64 and $120k coming in."
I would think rock stars of the caliber you're talking about better get a whole lot more than $120k if we're trying to entice them to/keep them at the Big M. People like that could go anywhere and do anything.
But just because someone isn't a rock star doesn't mean they're a doofus or "not a real developer" either. Rock stars are, by definition, the top of the top of the top. There's a *whole* lot of room for merely ("merely") strong, cranking developers (or testers or fill-in-your-job-category), and if they're only getting $80k then no wonder we're trying to buy Y!. Did Ballmer ever consider revamping the salary scheme now that, shall we say, stock options are no longer on anyone's radar (except in a very, very negative way - underwater, anyone?)? Having happy workers with strong morale might actually make a difference in our company's performance AND ability to draw fabulous workers (and even some rock stars) to our shores.
Just look at the kind of momentum Obama has been able to develop, and what all those enthusiastic, go-the-extra-mile fans are willing to do, now that they're jazzed up and excited about the political process for once. Bad morale is bound to lead to lesser products. And bad morale results from (among other things) not getting even COLA raises for years on end while wet around the collar newbies come in at higher pay.
Just as an aside, ITA with whoever said that how fast and often and high your raises are at MSFT depends *completely* on who your boss is. You can be an honest-to-god rock star and get 10%-ed if your boss doesn't like you. Period.
Cuban said the following:
"If there is one thing Microsoft does well, it's to ignore Wall Street and invest in its corporate strategies."
Is this just a nice way of saying our leaders are good at ignoring shareholder value? Here's a problem I have: I'm a "strategy" guy. My job is to create and understand strategies somewhere deep inside Msft. Unfortunately I don't have an understanding of those "corporate strategies" he's referring to. Does anybody else? Does anyone really have a clear understanding of the strategy behind our attempted acquisition of Yahoo? Do you think more people might be rallying behind Ballmer/Liddell if we had that understanding?
Sure, it's human nature to initially react not so well to potential change of this nature - especially when your stock was finally going up only to find that it's back to the same price it was 7 years ago. React well? Hell, that's amazingly painful!! More importantly, it's a huge hit to employee morale. The difference between the mood in my office from early Nov ($37/share) and today is like night and day. If we proceed with this acquisition during this economy then the reality is our stock is stuck in the $30/share range for about another 2 - 3 years. Funny enough, that happens to be close to the time when the very last set of options expire.
It does make you wonder. How do we always manage to kill the rise in stock price right at the time when we start to see it happen? Coincidence?? At this point I'm just not buying it anymore...
On the whole 150 years experience / 80K compensation thread. 0.02: get over it.
In this country slavery was abolished a long time ago, if you're worth more go get more. BTW if you can't you may want to consider changing your attitude to "what can I do to start earning what this company is paying me"?
On the "H1B visa I'm getting screwed" concept. As a fellow immigrant I completely sympathize with you. When I came over (with IBM) my offer was 30% less than a comparable US dev was making. Still, I was "dumb" enough to look at it as 400% of what my peers were making in my home country and feel overpaid. That was me, if you feel otherwise let me remind you that the slavery comment applies to all of us.
Please stop complaining about levels and assuming that level or promotion velocity indicates a quality employee, lack of it indicates a poor employee, or even the opposite extreme (quick jumps = overleveled).
I have been in many different divisions in MS, and the leveling is wildly different per skill level. None of them are necessarily wrong or right. The corporate inconsistency, however, is the real problem.
Please use the MS poll next month to send a strong message that you do not have faith in the senior management of the company. I don't know if it will be very effective but at least we would have sent our message
from the new dare:
To Mini-Microsoft: On Building Software Experiences that Delight Users
Top Developer means you have patents, you are a giant throbbing brain and your 14 years of experience is stellar and blows my hair back. That's the kind of Dev I hire -- these people were top in their graduating classes at highly rated programs, they have patents and they will create more patents because they're brilliant. Does this sound like you?
You do realize that in a company with 80,000+ employees, many of which aren't developers that the majority of people hired can't possibly be blow-your-hair-back talented. I would even go so far as to say that maybe only the top 5% of developers might get these great offers we all here so much about on here. The truth of it is that hiring managers/committees try and offer the least they possibly can, especially if they gauge that a person isn't good at bargaining. All the better for the company bottom line.
Aside from these talent arguments, where have we gotten in society that a person would works for 15 years and only makes $100k is complaining that they don't make enough? From where I come from, middle class America, that's when you've made it. The median national income is $48,000. So, if you alone are making twice the median, how exactly is this bad?
Don't get me wrong, I enjoy getting overpaid like the rest of you, but you won't hear me complain very much about how criminally undervalued I am.
I think people in the software industry have a very short memory. Look back to 2000 to 2002, just in case you were in college, and just how many companies, and employees, bit the dust. It could easily happen if our downturn turns into a recession, especially if it ended up being a bad one. We all get to use our brains for a living, and get paid quite well if you ask me.
* Google should only try to make it expensive for Microsoft (start a bidding war and leave the curse of the winner befall Microsoft)
Is anyone going to take a bid from Google seriously? There is absolutely no way in hell that regulators would let that deal go through, so IMO any bid from Google can safely be ignored.
hmmm... yahoo employees don't want this acquisition and msft employess don't want this acquisition.
And somehow somebody sees this as a recipe for success?
* Google should only try to make it expensive for Microsoft (start a bidding war and leave the curse of the winner befall Microsoft);
I doubt Google would do that. They know better, else they would not be where they are.
It's clear that acquiring 13,000 Yahoo employees who don't want to be associated with Microsoft is not going to lead to integration happiness. You will have spent $44B (probably more) of your hard earned money to make rich a bunch of people who don't like you and don't want to cooperate with you. You can't force them to work for you even if you pay them lots of money. They'll just do their time and leave when their options vest. And the truly great people won't even stick around for that. At the same time you will alienate a bunch of MSFT employees who's stock will be worth much less. Assuming MSFT succeeds with it's hostile takeover, how does it then get its money's worth? This whole thing is a spectacularly ill-conceived idea.
MSFT employees stood by while Bill and Steve made a royal mess of the anti-trust situation (remember that long nightmare?). You stood by when they paid $6B for aQuantive (??!!??). And also when they invested in Facebook at a $15B valuation (wtf??). Those were the warning signs. It seems high time that people start making some serious noise and try to knock some sense into the bubble boys who run the company, before they totally wreck it. Everyone but Ballmer, Liddell and Johnson know this deal will be Microsoft's biggest disaster yet since there is no way it can actually work.
Sigh... According to the Wall Street Journal, Microsoft is likely to sweeten its bid even though their are no rival bidders. The reason? To secure the 'goodwill' of Yahoo staff and management. Didn't anyone ever tell Steve and Chris that you can't buy love? More $$ down the drain, plus the integration nightmare of taking in thousands of new people who don't want to work at Microsoft.
Just as an aside, ITA with whoever said that how fast and often and high your raises are at MSFT depends *completely* on who your boss is. You can be an honest-to-god rock star and get 10%-ed if your boss doesn't like you. Period.
Yes, this is true all over the world in every company -- if your boss doesn't like you, then you will likely not do well.
The interesting point to ponder for the purposes of this discussion, I think is this: what about Microsoft makes self-proclaimed "rock star" employees willing to suffer low pay under bad managers year after year without actually leaving the company for greener pastures?
Are we really to believe that talented people who should be able to command 50% more on the open market than they're currently making at Microsoft are willing to surrender their most productive years under a spectacularly incompetent regime of clueless management and bad products?
I'm reading about Developers with 15 years of experience who, for whatever reason, have been compelled to accept insultingly low-ball offers from Microsoft and who end-up spending years working on products they don't believe in and for people they hate.
My question is -- who's at fault here?
I would think rock stars of the caliber you're talking about better get a whole lot more than $120k if we're trying to entice them to/keep them at the Big M. People like that could go anywhere and do anything.
Somewhere around the time that SteveB took over/the dot-com crash Microsoft lost its way with regard to how it treats its employees. The company's management has such an arrogant attitude and treats its employees in a way that suggests that they think:
1.) Our management is top notch, cream of the crop, the very best there is.
2.) We only hire top notch, cream of the crop, giant-throbbing-brained, patent-writing engineers who gladly accept industry average salaries to join our elite team.
3.) If you aren't a big-brained, patent-writing engineer you are Banta fodder. Don't let the door hit you on the way out.
The company is not humble in any way and this is what has caused the industry and customers to turn against it. Who likes being around arrogant, my poo doesn't stink people? Nobody.
This attitude as demonstrated by the "dev manager" here is part and parcel of the caustic atmosphere inside the company that is causing it to struggle with going anywhere beyond the monopoly feeding trough that it has been at since the early 80's.
The company was not founded by, nor did it make its ascent, using people who were "top in their graduating classes at highly rated programs". But the company appears to be wallowing now that it is staffed with these geniuses.