Yahoo Vs. Microsoft
February 13, 2008
By Greg Sushinsky
“In this corner…we have the challenger…from Sunnyvale,
California, weighing in at thirty-nine and a-half billion dollars…”
Well, you may not hear Michael Buffer announcing this, though the
Microsoft (NYSE: MSFT) proposed purchase of Yahoo (NASDAQ:
YHOO) is, while not yet officially hostile, on the verge of joining the
“Let’s get ready to rumble!” crowd. It may not bring to mind the
latest UFC mixed martial arts smackdown, or an Ali-Frazier
heavyweight fight, but it’s shaping up as anything but friendly, with
trash-talking and lots of stare downs already.
The early favorite in this close quarters corporate combat has to
be heavyweight Microsoft, with a decided advantage in heft, financial
reach and clout. Yahoo, in some handicappers’ quarters a still
young but already fading combatant, may only be able to bloody
Microsoft’s nose in the process, to stave off the inevitable for a
while, but not actually keep the inevitable from happening. What’s
the inevitable? All the smart money says Yahoo as a stand-alone
entity will either hit the canvas or have to tap out. From any angle,
Yahoo, which once “coulda been a contender”—and was-- in the
internet search wars, which has seen its prospects dim in the last
couple of years, is likely on its way out as a major internet player.
When Microsoft announced its $44.6 billion offer to buy internet
search engine Yahoo, Yahoo had already been badly beaten up by
an even bigger bully, Google, which came out of nowhere to smash
and stomp Yahoo into a painful, almost pitiful distant second place in
the search engine wars. And when you’re second place, given the
economy of scale necessary to compete in such a gigantic ring as
the internet, you might very well be nowhere. Yahoo, in boxing
parlance, was reduced to the status of “opponent.”
But it doesn’t take a fight fan of any kind to realize that this has
been shaping up for a while. Yahoo, which some observers call
desperate, has clearly needed to do something to change its
fortunes, its business trend, as it is falling farther and farther behind
Google. When Yahoo’s board voted to reject Microsoft’s $31 dollar
per share bid, some see this as a formality, others a ploy, still others
as a delaying tactic. On the Microsoft side, some observers
question why they would even want Yahoo, and if the offer for the
company with dwindling fortunes is even sincere. Do they want to
prevent Google from swallowing Yahoo up? Why does Google or
Microsoft, for that matter, even need Yahoo?
In an odd yet predictably desperate move, Yahoo has bravely or
foolishly postured with rhetoric that it will continue on independently,
yet there are rumors it is in talks with Time Warner’s (NYSE: TWX)
AOL, an indigestible chunk of business goo that was swallowed but
is still stuck like a perma-furball in Time Warner’s corporate throat.
And if AOL and Time Warner aren’t poster boys for a bad merger or
acquisition, who is? That is the cautionary tale also if Microsoft
“wins” Yahoo. Be careful what you wish for.
February 13, 2008
By Greg Sushinsky
“In this corner…we have the challenger…from Sunnyvale,
California, weighing in at thirty-nine and a-half billion dollars…”
Well, you may not hear Michael Buffer announcing this, though the
Microsoft (NYSE: MSFT) proposed purchase of Yahoo (NASDAQ:
YHOO) is, while not yet officially hostile, on the verge of joining the
“Let’s get ready to rumble!” crowd. It may not bring to mind the
latest UFC mixed martial arts smackdown, or an Ali-Frazier
heavyweight fight, but it’s shaping up as anything but friendly, with
trash-talking and lots of stare downs already.
The early favorite in this close quarters corporate combat has to
be heavyweight Microsoft, with a decided advantage in heft, financial
reach and clout. Yahoo, in some handicappers’ quarters a still
young but already fading combatant, may only be able to bloody
Microsoft’s nose in the process, to stave off the inevitable for a
while, but not actually keep the inevitable from happening. What’s
the inevitable? All the smart money says Yahoo as a stand-alone
entity will either hit the canvas or have to tap out. From any angle,
Yahoo, which once “coulda been a contender”—and was-- in the
internet search wars, which has seen its prospects dim in the last
couple of years, is likely on its way out as a major internet player.
When Microsoft announced its $44.6 billion offer to buy internet
search engine Yahoo, Yahoo had already been badly beaten up by
an even bigger bully, Google, which came out of nowhere to smash
and stomp Yahoo into a painful, almost pitiful distant second place in
the search engine wars. And when you’re second place, given the
economy of scale necessary to compete in such a gigantic ring as
the internet, you might very well be nowhere. Yahoo, in boxing
parlance, was reduced to the status of “opponent.”
But it doesn’t take a fight fan of any kind to realize that this has
been shaping up for a while. Yahoo, which some observers call
desperate, has clearly needed to do something to change its
fortunes, its business trend, as it is falling farther and farther behind
Google. When Yahoo’s board voted to reject Microsoft’s $31 dollar
per share bid, some see this as a formality, others a ploy, still others
as a delaying tactic. On the Microsoft side, some observers
question why they would even want Yahoo, and if the offer for the
company with dwindling fortunes is even sincere. Do they want to
prevent Google from swallowing Yahoo up? Why does Google or
Microsoft, for that matter, even need Yahoo?
In an odd yet predictably desperate move, Yahoo has bravely or
foolishly postured with rhetoric that it will continue on independently,
yet there are rumors it is in talks with Time Warner’s (NYSE: TWX)
AOL, an indigestible chunk of business goo that was swallowed but
is still stuck like a perma-furball in Time Warner’s corporate throat.
And if AOL and Time Warner aren’t poster boys for a bad merger or
acquisition, who is? That is the cautionary tale also if Microsoft
“wins” Yahoo. Be careful what you wish for.
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