Microsoft bids $44.6 billion for Yahoo! but wait a minute…
February 2, 2008
Shortly after noon yesterday, Microsoft announced a cash and stock offer for Yahoo! of $31 per share or $44.6 billion. That pretty much wiped out the remainder of the day and much of the evening for me. Techmeme provided a regularly updated summary. By the end of the day the ‘noise’ from so many people posting was deafening.
The primary reasons behind the approach are well understood. Microsoft wants a big piece of the online advertising pie. So far it’s been unsuccessful in stopping the Google borg. It fears that Google will one day ‘get’ the business apps business and make a serious play for Microsoft’s core business. Microsoft needs content to support its advertising play and Yahoo has that in spades, along with 500 million users. As Steve Ballmer, Microsoft CEO said, the industry needs competition and it needs large players.
There was a lot of speculation about how well the deal (if it goes ahead), will work in practice with doubt being cast on Microsoft’s ability to absorb a large acquisition without losing momentum to Google. Then there’s the question about what happens with services like Flickr and del.icio.us and, more to the point, what users will think. In the meantime, Mike Krigsman poured cold water on the deal, arguing that enterprise customers will become confused. I disagree but hey - yesterday was a day when everyone had an opinion.
And sure as night follows day, there is speculation that News Corp will tip their hat in the ring. Puhlease. This is a crock of stock pimping rumour and speculation by people invested in the situation. Check out Blodget’s disclosure page. Fortunately, Matthew Ingram expresses the voice of sanity when he says: I think MSFT has already won. After all, who’s going to stump up a rival bid of this magnitude? Microsoft has had the planning on this in the works for a long time. It’s done its sums and when it chooses to strike, it has shown itself to be determined to win. That’s why anyone considering a bet against them is either mightily brave or insane.
Neither of the two major publications - AccountancyAge nor AccoutingWEB deem the story sufficiently important to discuss. That’s interesting because technology - and more specifically Microsoft technology - lies at the heart of what the profession operates upon. Assuming this deal goes ahead, there will be an impact and right now no-one has much of a clue as to how important that impact will be. Perhaps we’ll learn more at Convergence 2008 next month (assuming the deal is either done or ongoing.)
In the meantime, Vinnie’s take is worth reviewing. He argues that a Microsoft-Yahoo combination is a good thing because Yahoo! brings significant innovation to the table. I’m minded to agree though I wonder how much impact that will have on Microsoft pricing.
The next few days will see which way the wind blows.
As Hugh MacLeod says: we live in interesting times.
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The second I saw that MSFT was offering a 50% premium over current market, I knew they were serious and the game was over.
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