Discussion in 'Wall St. News' started by forex-forex, Feb 9, 2008.
Yahoo Rejects Microsoft Bid: WSJ
Yahoo wants $40.00 per share.
I knew this would happen, as did most people (no revelation on my part).
But, MSFT would be incredible obtuse to even advance the discussion of this acquisition, which will end up toxifying MFSTs balance sheet and suck up massive cash which could be far better spent elsewhere.
MS should tell YHOO to forget it.. Not a good idea anyway.. 2 suffering outfits getting together..
MSFT will get a huge pop in their stock if they say forget it, and YHOO will go to the single digits. It's not only a good strategy, but a GREAT strategy for MSFT to tell YHOO to go fuck themselves.
Bunch of greedy bastards if you ask me!
this is great for MSFT
they should just wait 1.5 years and bid $20.......which will be a 100% premium when YHOO starts trading at $10
i don't understand why MSFT would want to waste ALL of its cash on a struggling company
Apparently in the minds at Yahoo the Google threat is bigger than the absolute lack of any other bidders..
Amazing how we all see it so clearly.. like the AOL/Time Warner or Daimler/Chrysler.. you read it and you think WFT?? I guess like all those finance Geniuses on Wall street they are just humans prone to bouts of stupidity like Joe 6-pack on the street..
My first thought was : how can I profit from this bouts of stupidity....?
I see huge problems with the combination of the companies (though it may very well go through).
The issues are a) culture b) technology, both of which are critical for a software company.
In cultural terms, the companies have little love for each other. This isn't just a top management thing, this gets down to many of the software developers and lower level managers. Many of the best will be so frustrated they will jump ship to Google and other companies. For successful software companies, culture and human resources are two of the primary sources of competitive advantage and I think this deal would absolute destroy many of these aspects.
In addition, the technology is very different. Yahoo for one thing is almost entirely based off of UNIX. The sheer complexity of a re-write to Microsoft's server technology (.NET etc) is just overwhelming. If they attempt that path, Yahoo might very well spend 5 years on the transition to Microsoft technology and watch product development productivity be cut 50% (if not much more) during that time. Meanwhile Google will be going full speed-- again, with Yahoo's best talent.
What happens if Microsoft doesn't try a technical integration? For one thing, it is terrible for marketing; Microsoft took enough flak when people learned it initially couldn't run Hotmail.com off of Microsoft servers as they weren't as good as UNIX for that purpose. They eventually switched it to Microsoft technology. Imagine Microsoft's marketing when it is forced to run the brunt of its internet business (Yahoo) off of UNIX/Linux, one of its most loathed rivals in terms of technology. Furthermore, there are virtually no economies of scale on the technology side if it doesn't standardize its technology. It takes a substantial amount of training for a UNIX expert to become a Microsoft expert and vice versa, and the amount of people who are experts in both is quite limited.
The only real area there is a benefit of economy of scale is the ability to allow advertisers to market across a larger internet audience in one step. This is quite useful, but I think given the huge negatives and high multiple that Microsoft would pay for this combination, it wouldn't be worth it. I think Microsoft would be far better off rethinking some of their internal projects and management to streamline things and allow for greater innovation, and pour the $40 billion into product development and marketing.
Great comment, thanks for the post.
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