What Ballmer really meant to say in Moscow
While speaking in Moscow, Microsoft CEO and Yahoo suitor Steve Ballmer said, "Yahoo was never the strategy we were pursuing, it was a way to accelerate our online advertising business...We will spend money on some acquisitions. You can do a whole lot of things with 50 billion dollars."
In support of Ballmer's recent remarks, Microsoft officials maintain that Yahoo has always been part of "a" strategy, and not "the" strategy.
Yahoo is a means to an end. Of course, Microsoft was primarily interested in the search piece, but they apparently thought that acquiring the rest of Yahoo would also have some strategic value. Otherwise, why pay so much, unless Microsoft thought it couldn't achieve what it wanted without making an offer for the entire company.
In my post analyzing Ballmer's Moscow remarks, I said that he was doing a bit of historical revisionism. The initial $31 per share, $44.6 billion, a 62 percent premium on the January 31, 2008 price was for more than just getting access to Yahoo search technology, engineers, and contracts.
Now, after 113 days of going back and forth, Ballmer and his team have refined the overall strategy to focus on Yahoo's search business. It was apparently Yahoo CEO Jerry Yang who brought up the idea of Microsoft doing a deal around search at a meeting prior to Microsoft walking away from the negotiations on May 3. At the same time he dangled search in front of Microsoft, Yang was also talking to Google about a search-related partnership.
It appeared from Ballmer's letter to Yang on May 3 outlining the reasons he was taking a $33 per share offer off the table, that Yahoo's negotiation with Google for a search deal was a major pain point that drove Microsoft away.
Microsoft and Yahoo have reengaged negotiations on a search deal, and Microsoft is also reserving the right to reconsider a full acquisition "depending on future developments and discussions that may take place with Yahoo or discussions with shareholders of Yahoo or Microsoft or with other third parties," according to a Microsoft statement from May 18. I guess that is part of "a" strategy, but it's "the" strategy of accelerating the online advertising business.
In other words, it still might be strategic to acquire all of Yahoo (given acquisitions are supposed to be strategic), but the predominant strategy is to blunt Google's search offensive with Yahoo search as an accelerant.
In effect, Microsoft has three possible avenues to take in its strategy: acquire all of Yahoo; acquire or joint venture on Yahoo search; or find another alternative (there aren't many left) to accelerate its online fortunes. At this point, Microsoft may no longer find it strategic to acquire all of Yahoo.
Yahoo could do a search deal with Google, which might never get done due to regulatory scrutiny and would make large shareholders unhappy, or do a deal with Microsoft. The odds favor some kind of Yahoo-Microsoft transaction.
Tune in next week for the next chapter in this saga. On Tuesday at the D: All things Digital conference, hosted by The Wall Street Journal's Walt Mossberg and Kara Swisher, the main actors will be in the same room. Bill Gates, Ballmer, Yang, and Yahoo President Sue Decker will be in attendance. The crowd will be looking for any contact or body language that could signal whether the two parties have found strategic alignment.
Dan Farber is editor in chief of CBS Interactive News, which includes CBSNews.com and CNET News. He has more than 25 years of experience as an editor and journalist covering technology. E-mail Dan. 
He is a child pouting that he didn't really want the toy that he was throwing a fit over 5 minutes ago and his mom didn't get it for him.
Funny thing, though?
After they acquire Yahoo! (and I believe it'll happen) and the hostile takeover utterly destroys all real forms of competition in this field (and after they fail and the only one left standing is Google), what will have been accomplished?
Microsoft?
In case you can't buy a clue, you're a distant 3rd in search & ad revenue because people, when given a choice, won't use you.
Too bad Yahoo! had to pay the price.
Is that part of the WOW, or should I be afraid?
Joke #1: Bill Gates is a visionary.
I've been in the industry since 1980 and have known all along that isn't true.
Joke #2: Steve Balmer is a leader.
Microsoft has been a mess ever since he took over. Maybe Bill Gates gave it to him that way. But he hasn't been able to fix it. The feds made sure they couldn't block all distribution channels anymore.
So what has this got to do with Yahoo?
Well, Bill and Steve were the ones that put Microsoft on the road to Vista which is worse that MS Bob and MS ME.
The whole thing about Yahoo isn't about them buying Yahoo or not. It's all about keeping people from writing a lot more about how bad Vista is.
Sure people will come on here defending it. Good luck guys and gals. Look at the trends. People are looking for other options and while you can't see how many people are downloading and installing Linux too easily, you can see that the number of people buying Apple computers is going up quickly.
So I'm a Apple or Linux fanatic? Not really. It's just that Microsoft hasn't made anything I find all the interesting and I don't need the headaches of badly written operating systems with lots of security holes for viruses. Microsoft people will tell that you Macs will have lots of viruses too. It's like the USSR. If you can't compete, spread lies.
Remember that saying in the '60s? Don't trust anyone over 30? My saying is, "Don't trust anything anyone from Microsoft." It has served me well.
- by technewsjunkie May 25, 2008 8:23 PM PDT
- Microsoft is again late to the game, this time in online advertising, and sure yo can buy your way in "with 50 billion". Of course having the idea in the first place requires insight they don't have.
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