whihathac's Den

code is poetry

Microsoft's Bid on Yahoo - a Genius !

Hi,

This article is adapted from an article on TALK BACK from CNN.

Marat Glazer, a software developer in Los Angeles, writes:

Look at it this way for a minute.

Microsoft Corp. (MSFT) bids for Yahoo Inc. (YHOO); Google Inc. (GOOG) shows fear. Google is now under pressure, and should remain under pressure as long as the Microsoft deal is on the table. Google doesn't like pressure (e.g., they don't give earnings guidance). Why would Microsoft rush to "sweeten" its bid? Microsoft has Google right where it wants it, and all Microsoft had to do was send out a few memos and press releases.

Now Yahoo is scrambling for higher bidders, trying to outsource search to Google, thinking about a merger with AOL, all while deploying new initiatives to hold up what it knows is its soon-to-be declining stock value.

No matter how many articles Yahoo writes about reinventing mobile social networking, it won't hold its stock at $30 a share. I don't think such lackluster news is even worth $20 a share. At this point, Yahoo shareholders only have one thing on the brain: "Show me the money!" It's my opinion that Microsoft won't show them that money.

In its statement, Microsoft said its offer was "full and fair" (indicating it would NOT raise its bid over $31). I'll take Microsoft at its word.

Microsoft also made hints at a potential proxy fight. Based on Tuesday's Yahoo stock activity, I don't think Yahoo shareholders are ready for a fight. If Yahoo was getting ready for war, then the price of Yahoo stock should go higher as core Yahoo shareholders move to ratchet up outstanding shares in the market. That's NOT what happened Tuesday. Yahoo went sideways-south.

Microsoft is now playing the waiting game. I believe that after Yahoo Chief Executive Jerry Yang and his company board's arrogant and greedy response to Microsoft's generous offer, Yahoo shareholders will be waiting a long, long, long time for anything over $31 from Microsoft. In fact, Microsoft may lower its bid, or withdraw it entirely.

If I were Microsoft, I would wait about a month or two, as Yahoo, Google and Time Warner Inc. (TWX) stocks flail about. Then I would either lower or withdraw my bid, citing "a lack of perceived value." The aftermath of this move would be CATASTROPHIC for Yang and the Yahoo board. It would also cause internal turmoil for Yahoo shareholders and staff, as Yahoo employees who WANT the Microsoft deal are disgruntled. Basically, Microsoft lowering or withdrawing its bid spells big trouble in little Yahoo. And that's good for Microsoft.

In the end, however many ways you toss this salad, Microsoft comes out the clear winner here. Whether it gets Yahoo or not. Yahoo and Google are the clear losers, and I'm inclined to believe that's exactly what Microsoft had planned all along.

It's genius!

Hmm.. another side of story !

Regards,

Bhavik Vora

Microsoft + Yahoo! = ?

Hi,

Well I have been writing this post after such a long time. Heres a great experts comments from some of the journalists like BusinessWeek's Arik Hesseldahl who are willing to tell them what to do for free, ofcourse ! Here's a readable version which I take it from VALLEYWAG.

An Open Letter to Steve Ballmer by Arik Hesseldahl

Dear Steve,

Let's talk over this Yahoo thing. It's a profoundly bad idea. Big mergers practically never work. IBM and Rolm in 1984, AT&T and NCR in 1991. Lucent and Ascend. Compaq and Digital Equipment, followed by Compaq and Hewlett-Packard. Time Warner and AOL. The standard pitfalls: brain drain from departing employees, political turf wars amid clashing cultures, morale-depleting anxiety, customers going to less-distracted rivals like Google.

The Microhoo online operation could make $1 billion a year in profit down the road. But is it really worth blowing $41.5 billion in cash and stock? That investors have wiped $3 billion off the value of that offer in a week should tell you something.

If someone took Microsoft Office away from me, I could get by using a Web-based office suite. You should have had Office on the Web five years ago. You've been wasting time, effort, and attention trying to be a consumer electronics company, a digital media company, and now an online advertising company. Microsoft is a software company. Everything else is superfluous.

Desktop software is one of many things Microsoft is awfully good at, and you make a pile selling it. Then there's server software and Microsoft Office. Between those three units, you've got a $43 billion business that's generating 62% operating profit margins.

Here's what you should do: Package Yahoo with your online services division, the entertainment and devices division (yes, the Xbox, too), and spin the whole thing off. Keep an equity stake, even a majority. If you force these businesses to fester within Microsoft, they will always play second fiddle to Windows.

Well all I want to say is we dont really know what MSFTs' has planned to do with Yahoo!, but the foresaid comments need to be thought. The deal may result in technological imbalance in whole, who knows - its a way to stop the internet giant, Google - which Y! hasn't been able to contain itself !

Regards,

Bhavik Vora