Post-Microhoo: Winners and losers
Barring a come to Jesus moment by both sides, "Microhoo" is dead and buried. So who won and who lost? Months from now, we'll have a clear idea. In the meantime, here are my back-of-the-envelope picks.
Biggest winners: Steve Ballmer and Microsoft
A lot has been made of Microsoft's seeming inability to engineer its way out of a paper bag. Trouble with the conventional wisdom is that it's usually out of date. Prior to Ray Ozzie coming onboard and Microsoft's move to embrace cloud computing in a big way, Yahoo may have been worth nearly any price.
Jerry Yang is a girly-man--and that goes double for Eric Schmidt.
Not now. Besides, why buy trouble? By walking away from a protracted proxy contest, Ballmer saved billions buying a company which would have existed in name only. Too many malcontented Yahoo employees would have walked out the door. What's more, the cost of integrating the companies would have been a cluster bomb. Now Microsoft can dip into that big war chest and selectively buy any number of Web 2.0-ish companies to complement its bigger strategic ambitions.
Biggest losers: Jerry Yang and Yahoo
When Wall Street opens on Monday morning, I wouldn't want to be holding shares of Yahoo. After the company effectively put the kibosh on what would have been a 70 percent premium, investors are going to have a fit. In his letter, Ballmer said Microsoft was going to raise its offer to $33 a share, or another $5 billion, but the deal fell apart because Yahoo wanted even more.
I've got a plan. Really. I do.
I'm anxious to hear Yahoo's side of the story, but the spotlight's on Yang to convince outsiders that he held out for all the right reasons and not because of personal animus toward either Ballmer or Microsoft. Perhaps he thinks he can inveigle Rupert Murdoch and News Corp. or that the Google connection will work out to Yahoo's bigger benefit. Tough to say what's going through his head these days. Yang has remained incommunicado during the course of the entire novella. Perhaps he believes this clears the decks for the "rewiring" of Yahoo previewed by the company's CTO last month at the Web 2.0 conference. Maybe it does in the long term, but Yang doesn't have two years to muck around. He's got to produce a turnaround now.
Eric Schmidt and Google: Moderate losers
It's as simple as a zero-sum game. Whatever hurts Microsoft benefits Google. And vice-versa. The conventional thinking is that the Microhoo combo would have presented Google with a potent threat. I don't buy that line.
Sergey, Larry, and I quite enjoy Steve's Monkeyboy routine
On paper, a Microsoft-Yahoo merger looked formidable. In practice, however, it was rife with potential for a major culture clash. Management would have been bogged down for months trying to figure out how to get all the high-strung boys and girls on both teams to play nice. Google would have continued to feed its juggernaut, snickering all the while at "Micro-molasses." Now Ballmer's going to be in a frenzy to get Microsoft back in the game. Google would have fared better if Microsoft had to focus on making a Yahoo merger work.
Rupert et al: Moderate winners
Round and round they go. Maybe Murdoch or the folks at Time Warner (AOL) still hanker after Yahoo. If so, they may yet get another chance to twirl. During the last couple of months every scenario was on the table. Here's another: if Yahoo's stock fails to recover, Yang doesn't have any wiggle room. Without immediate improvement in the stock price, management may be amenable to a combination between Yahoo and one of its erstwhile suitors.
Charles Cooper has covered technology and business for more than 25 years. Before joining CNET News, he worked at the Associated Press, Computer & Software News, Computer Shopper, PC Week, and ZDNet. E-mail Charlie. 
yes, apple did pull itself together very well & is quite successful right now. but they too, needed a financial injection in the order of billions of dollars to get going. and steve jobs
it is simply a fact though, that the money came from microsoft. perhaps microsoft believed in apple's ability to make a come-back, i dunno, but they still did come back.
another thing is per se apple is a tiny proportion of yahoo size. so yahoo's in a different place right now
I don't see how Microsoft is winning anything by not going after Yahoo!. They are loosing out on the millions of page views Yahoo has. How does the logic explain why did MS go after Yahoo in the first place?
The 2nd most popular search engine is to remain free and the proprietary IE favoritism of the distant third, MSN, will remain in it's intended position.
Cloud computing? Sun has been saying this for years now... Maybe they should buy Sun.
Find a competitor (to MSN) within their means to take over, yet arrogant enough to think themselves invincible, then offer a generous takeover bid which they knew would be refused, causing shareholder panic.
- by darkr May 6, 2008 6:27 PM PDT
- double check your history shortly before MS's offer the value of yahoo's stock was 19 and wasn't going up.
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(11 Comments)they laid off alot of people on feb 3rd
plus they added the poison pill so that any hostile aquisition would've been expensive
the stock jumped to 30 after the offer was made but was floating till ms withdrew after yahoo made extreme predictions with no plans that they would double expectations by 2010
yahoo expects 37ish per stock when the stock was never near that begining of the year
now it sits at 24bucks per stock probably going to drop...
its only holding at that because of hopes that ms will return to the table now that yang offered to be more receptive