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February 11, 2008

The Microsoft-Yahoo merger as soap opera

Posted by David Hunter at 9:28 AM ET.

Based on the number of pixels devoted to the Microsoft bid for Yahoo since it was announced, it seems to be affecting most observers like a train wreck: horrifying to watch, but no one can look away. My own reaction is considerably more sanguine, believing the whole idea the result of typical large company myopia and executive hubris that plays more like a soap opera.

We have wealthy mogul Steve Ballmer so intent on enhancing his inheritance that he is willing to mortgage his fortune for a chimera by an expensive wooing of the weak and unwilling Yahoo who in today’s episode is expected to formally reject his unwelcome advances while sneaking out to meet with AOL at the local motel. Heady stuff, if you like the genre.

And like all good examples of the genre, there is a large cast of characters sucked into the maelstrom of pathos (and bathos). Consider the Microsoft shareholders:

I have a better idea. Let’s get someone to see the value in MSFT that Ballmer has kept so well hidden these past 8 years, and offer us a 60% premium. Given Friday’s close, that would put us at $45.69 – or just about 20% down from where we were when Ballmer first took over as CEO in ’00. Surely someone would like us to be their Valentine? We aren’t cheap, but we have redeeming virtues. And we won’t be ungrateful and accuse you of trying to “steal” us.

Ah, the overlooked “girl next door.”

Then there are the Microsoft employees about to be “merged” on uncertain terms:

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.

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.

Yes, it’s “the old girl friend scorned.” 

There are the Yahoo employees typecast as the surly children from a previous marriage and Google lurking in the background like a raffish gigolo and … ; but why go on listing the players? Grab some refreshments and catch the daily episode until the writers run out of plot twists. Unless you somehow got drafted into the cast.



Filed under Acquisitions, Coopetition, Microsoft, Yahoo

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2 Responses to “The Microsoft-Yahoo merger as soap opera”

  1. Ballmer gives Yahoo a three week ultimatum | Microsoft News Tracker Says:

    [...] Frankly, I’ve mostly been ignoring the Microsoft-Yahoo acquisition soap opera since the daily doings have been at best tedious, repetitive, and inconclusive. Today, however, Microsoft finally took the velvet glove off the steel fist with a letter to the Yahoo board from Steve Ballmer. The net is that unless the Yahoo board starts to seriously negotiate the details of the acquisition and an agreement is concluded within three weeks, Microsoft will cut the amount of the financial offer and wage a proxy fight to replace the board and carry out the acquisition. I still think the deal is a really bad idea, but the lack of any apparent alternative for Yahoo means there is no stopping it.   Filed under Acquisitions, Coopetition, Yahoo, Microsoft   [Permalink] [TrackBack] [...]

  2. New plot twists in Microsoft-Yahoo soap opera | Microsoft News Tracker Says:

    [...] Just when the plot in the Microsoft Yahoo acquisition soap opera was getting a bit stale, some new twists were added today leading off with Yahoo announcing that they would be stepping out with Google for a two week trial run of Google ads on Yahoo search. The Google ads are only supposed to appear on 3% of Yahoo search queries during the trial, but this solution has been advanced before as a way for Yahoo to leapfrog the problems with its troubled search ad infrastructure and make some real money off the Yahoo search gold mine. Needless to say, wannabe suitor Microsoft was displeased to hear that Yahoo was still playing the field and raised fears of a monopoly without actually using the “m” word. [...]

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