Microsoft bids $44.6 billion for Yahoo
news.yahoo.com
news.yahoo.com
1. Find something Yahoo currently does well (e.g. flickr)
2. Make a clone of it.
3. Wait for Microsoft to ruin the original.
Heck you could SAY that it "replaces" Microsoft Flickr, and that would be perfectly valid !
I think it is indeed a happy day for startups.
He said this: A Microsoft deal is unlikely because (when he was there) all the Yahoos hated Microsoft. If an acquisition happens, it'd be hostile and the core guys will jump ship.
I nodded in agreement. But then this happens.
Now that's a coincidence...
At the very least I'd be interested to see how Microsoft could integrate such a huge company properly. I had discussed the idea 6 months ago when the rumor began to surface, the big question (if it happens) is how the two cultures and systems would merge...I think it would take years before they would actually operate as one company.
But also, let's not kid ourselves, Microsoft could give two shits about Flickr. What they really want is Yahoo/Overture/Panama or whatever. That's the expected growth and cash cow that makes this deal possible.
You forget that Yahoo has over 120 properties, what about things like Yahoo Autos, Real Estate, Shopping, Finance, etc? There's significant overlap with what MS offers, yet Yahoo is clearly kicking their asses in many of these. I highly doubt MS would kill off the more-popular site/name for their own, especially if it could give competition a chance to jump in as the new #1.
Also, things like Flickr and Delicious could do very good things to MS's perceived image in future generations, so there's more here than just cash.
And Yahoo might have more popular destination sites but Microsoft has the lock on operating system. MSN/Live is seen as a cloud computing services for the _future_, Microsoft would rather saving those than the multiple Yahoo turds. How's Brickhouse doing? They pumping out hits yet? How about 360? Mash? Pipes? What about those landing pages for products? That whole group is gone.
Most of the hardcore people from Flickr, ie. those whining separate login people, will be jumping ship the second this deal is inked. Instead you'll just end up with a shell of a service but again, Microsoft could care less. They'll just slap it on to Windows Pictures like they slapped Hotmail onto Windows Mail. And the masses will gobble it up because to them it doesn't matter.
If anything, this will be great for Windows 7 if it ever comes out. On your computer is Microsoft, on the web it will be Microsoft apps with Yahoo names and the products will actually not suck as bad. What Yahoo also needs to do is to properly tie in all its features and properties to formulate a social network. They have every single parts required but just lack the skeleton to bind it all together. Hmm... What company does Microsoft have an interest in that's like a social network... Hmm...
EDIT: As an addendum to this, I just read Gruber's opinion on the merger and he agrees with my premise. Microsoft culture will pounce Yahoo culture. Yahoo's products (web1.0/2.0 lamp stacks) will be naturally converted to Microsoft technology (yay windows 2000!) because at the end of the day the Borg can't stop. So if you have a job at Yahoo it's best to polish up your resume and if you're a Yahoo user be ready to get a Windows Live account. The name might be Yahoo but the backend's going to be .NET and if it's not Flickr or Delicious then most likely you won't be able to use it.
microsoft's bid on yahoo is a perfect illustration of why microsoft is doomed to failure.
how many startups could they fund with $45 billion? 100? 200? 1000? why exactly do they want to be at the helm of a slowly dying web portal left over from the first dot com boom?
i remember someone talking of microsoft and relating their situation to a victim in a horror film. we can all see the monster lurking behind them, slowly creeping in for the kill. when the sea change of personal computing really does come, whenever that may be, microsoft will not be there, they will be knee deep in shit, trying to claw themselves out of the hole that they've spent the last five years tirelessly digging.
>> how many startups could they fund with $45 billion?
100? 200? 1000? why exactly do they want to be at the helm
of a slowly dying web portal left over from the first dot com boom?
if they invested that $45 billion in 45 one billion dollar projects, if at least one of them had an annual net of more than $700 million/year, they are doing better than buying Yahoo.
yahoo also has deals to provide email for many ISPs in the US.
I think Microsoft could benefit from the increased market share in many areas.
Better to let former MS employees bet their own cash on startups, which MS then gets to pick and choose and buy the ones they find most interesting.
And don't write off Yahoo's presence in the Third World, like China, Philipppines, India, etc. As those economies grow Yahoo's user base there will be more valuable.
"Microsoft is desperate to grab a bigger share of the online-advertising market because many of its software products are being challenged by free, advertising-supported services offered by Google. The company is also worried that Google's dominance in search and advertising allows it to dictate terms to advertisers, and gives it an unfair advantage over its smaller rivals."
I was young... 6 maybe, so I thought wow yeah heh I'll take all the money.
Sure, MS have cash from their dying desktop, but they still can't build web apps, or compete with google online. I'd say yahoo are almost as bad.
I remember being pretty damn pleased with myself when you agreed to that ;-)
And I think this buy is more about strengthening Microsoft's online presence, not their desktop apps.
Server tech would be a concern, but who knows - perhaps rather than switching everything to Windows servers, Microsoft might take the chance to become acquainted with Linux and BSD. It would make sense if MS would in the future simply release a theme for Gnome, rather than waste resources on another OS that nobody wants.
So everyone who still holds any given stock thinks that the market price is too low.
Only true in a limited sense. For instance, a majority holding the stock up until today might have just thought that the market price was way too high for how the company is performing, but that the presence of one or more misguided, irrational, drowing-in-money, potential aquirers out there meant that there was a large chance they might get a large upside off one of the fools--turns out they were right =).
The reason is because Google WAS the underdog. Yahoo and Microsoft were the established giants. After 5 years or so the situation has almost reversed, though, with Google making (and buying) the killer apps and the other two players stuck in a game of follow the leader.
In 2007, Microsoft's net income was: $14 Billion. Yahoo's net income was: $660 Million. Google's net income was: $3 Billion.
Trying to claim that YHOO/MSFT is (technically) better than Google and that Google is just a bumbling idiot trying to hold down YHOO/MSFT via cheating and uncompetitive practices is a bit of a stretch, even for the seriously deluded among us.
Uh, really?
Also, much of Google's "monopoly" comes from a source that is heavily protected by law: the pagerank patent. Patents are government granted monopolies with limited time; as such, there is little or no legal recourse as any mildly abusive behaviour is expected, tolerated, and what the system was designed to provide.
I think the combined search powers could be really good.
take a look at the annual data. they may be profitable, but a 62% fall in net income over 3 years, that's pretty bad.
Yahoo's problem seems to be the management and the fact they are still playing catch up with adsense.
To learn how to make a Windows web service work, they buy a FreeBSD based one and then spend 5 years replacing FreeBSD with Windows.
What an expensive way to do QA.
They would have needed to vastly overhaul and rebuild the infrastructure multiple times to scale the site and add new features, anyway. The question is just whether to do those overhauls as part of a transition to Windows or not -- and I think the answer is that moving to Windows obviously makes sense in the long run, even disregarding the non-zero PR benefits.
I'm confused...
EDIT: I guess I'm sorry for pointing out that I thought the parent comment was underappreciated...?
And "Flickr (a Microsoft brand)", etc.
The new company slogan will be "Microsoft. Period."
Microsoft is offering $31 per share of Yahoo. YHOO is now trading at nearly $31, up from $19 at the close yesterday.
Why would anyone pay $31 for a share of Yahoo right now? There are two possible outcomes: 1) the deal goes through, and you get your $31 back either in Microsoft stock or cash. No net gain. 2) The deal doesn't go through and YHOO drops back to around $19, losing you about 30%.
Am I missing something?
This rumor is over a year old; it was also first floated around Q1 last year and YHOO's stock price surged that time too. I seriously thought Yahoo was going to sell that time but they didn't. Perhaps this time is different?
It's merger arbitrage.
Buy YHOO, short MSFT. If the merger doesn't go through, then sure, your YHOO stock will drop, but your MSFT stock will gain.
If you get the right proportion of long/short YHOO/MSFT, you make money no matter what happens.
(Where the "right proportion" is really complicated to figure out, and is often wrong.)
Everyone thinks they know so much more than the market. In this thread so far I have seen you claim the stock always goes (slightly) lower than the offer, and another guy express puzzlement as to why YHOO even managed to exceed the offer at times today. I hope neither of you were trading BEA Oracle offered ~6 billion, BEA rejected it, and 3 months later Oracle offered ~8billion and BEA accepted. One other thing to keep in mind (this is more picking on the other guy than on you) is that when these deals are announced they are often largely made up of stock (Microsoft is so buried in cash that might not be the case here). If Yahoo! accepted the offer right now, it still might end up with a different future value. Luckily it is not to hard to factor that out by purchasing various positions or leveraged vehicles in or relating to Microsoft/whoever-the-aquirer-may-be.
Microsoft is sorta uniquely positioned to make this offer at this moment.
(yet another outcome is that Yahoo twiddles it's thumbs and Microsoft rescinds the offer, but in that case you can look forward to getting in on a nice shareholder class-action lawsuit against the board)