Comments on: Yahoo rejects Microsoft's bid

Board unanimously concludes that Microsoft's half-stock, half-cash offer "substantially undervalues" Yahoo.
Yang's follow-up letter to Yahoo staffers

[deepanjan_nag]

Points 2 Ponder

This was expected, but I reckon Yahoo! is only delaying the inevitable.



Here's what bothers me the most. Yahoo! servers run on FreeBSD, a rock-solid flavour of Unix. Well, Hotmail did too, until Microsoft gobbled it and changed it to Windows. It's another matter that the transition didn't happen overnight. If Microsoft devours Yahoo!, there's little reason to believe that FreeBSD will continue to have a free run. New services will be launched on Windows and old ones, when upgraded, will inch away from FreeBSD.



The Java guys in Yahoo! would feel like an endangered species, mass exodus would ensue and Microsoft would be hard-pressed to replace them. Other employees, disgruntled by the identity crisis, would follow suit.



Of course, this is just one of the possible scenarios and I hope it never happens. I have nothing against Microsoft per se, but I fear Yahoo! wouldn't be Yahoo! anymore if Microsoft owns it. The Redmond giant should begin to embrace the heterogeneity of the Internet before others cut it to size.

[Penguinisto]

Agreed.

[i]"This was expected, but I reckon Yahoo! is only delaying the
inevitable. "[/i]

I'm not so sure - this same company survived the dot-bust in
pretty decent shape.

[i]"Yahoo! servers run on FreeBSD, a rock-solid flavour of Unix.
Well, Hotmail did too, until Microsoft gobbled it and changed it
to Windows. It's another matter that the transition didn't happen
overnight."[/i]

Hotmail was not much more than SMTP + HTTP. Yahoo is a bit
more complex than that. I still suspect that Microsoft got around
it by munging the agent strings...

[i]" The Java guys in Yahoo! would feel like an endangered
species, mass exodus would ensue and Microsoft would be
hard-pressed to replace them. Other employees, disgruntled by
the identity crisis, would follow suit."[/i]

This is why IMHO Microsoft won't get their money's worth out of
buying it. By the time the dust settles, Google will have likely
sucked in a huge chunk of Yahoo's former marketshare (and a
huge chunk of MSN's), leaving Microsoft way the hell down in
search engine marketshare, very likely lower than it is right now.

Meanwhile, MSFT's share price will take a huge and near-
permanent hit until the debt gets paid back, not to mention their
financials overall... it may end up crippling them at a time when
they really cannot afford to be crippled.

/P

[tundraboy]

Ballmer is just plain incompetent.

The man has no coherent vision at all as to where he wants to take Microsoft. He has some vague idea but nothing like the clear laser-sharp focus of Jobs or Jeff Bezos or the triumverate at Google. And so Microsoft is muddling along pursuing all sorts of avenues without any apparent overarching strategy. And now the distant second in web search will be acquired by the dismal third with the dismal third taking the helm and expecting somehow this is a winning combination.

Well, there is an underlying theme though, which is to protect and preserve the Windows and Office monopolies. This is really a misguided objective because it ensures that MS will continue to be stuck in yesterday's business model. And isn't that MS's fundamental problem?

[JCPayne]

You are spot on. Case in point www.Sympatico.ca

Sympatico ... The internet service of Bell Canada. Microsoft wanted to take over that site...

Now? Sympatico = http://sympatico.msn.ca/
Result- Bye bye Sympatico and more then likely it would be bye bye Yahoo!

[Peter Bonte]

Human assets

Yahoo is content more than technology, Google can pick the best employees and part of the board to start a competing service. Its
easier to quickstart when the expertise can be moved in block from
Yahoo to the new service.

[Lee in San Diego]

It is almost all content

That is not necessarily a bad thing

[gggg sssss]

memo to staff - start learning VB

If the board and existing employees had ANY clues as to acheving the "values" they think Yahoo has, they would have put them in place last year, the year before or the year before. I assume they are all sharehlders - take the money - you will never get any more for it. Remember Altavista. Remember AOL. Remember webVan. And start learning VB.

[Renegade Knight]

Counterpoint

If MicroSoft had any clue how to achieve the value that Yahoo has they would not need to buy it from Yahoo. They would just implement it themselves.

The fact is that Yahoo is a viable ongoing company who does seem to enjoy the business they are in.

When you reduce Business to Beancounting it's only a matter of time before you are going to lose your market to someone who likes what they do.

If MicroSoft wanted to maximize value for shareholders (now that they are a beancounter company) they would break themselves up and spin off the parts to shareholders.

[bob1960]

Microsoft should just walk away.

Everybody has said how uncharacteristic this merger is for Microsoft. However, kicking the knees out of a company is not so far from the mark. If Microsoft walks away now, Yahoo! is doomed to have it's shares drop like a rock, law suits from shareholders, and an easy mark for another company to buy them out. In any case, Microsoft's position in Search improves with Yahoo! out of the way.

Now if only Apple would then step in and snap up Yahoo! at a cheap price and fuel it's open source Web-based systems with capital. It would give Apple a leg up in the trend toward Web-centric systems, while still letting them design sexy hardware/software clients that is does so well...

[riffkind]

Agreed.

With no other suitors courting Yahoo!, there is little reason for Microsoft to negotiate.

[sadchild]

how to be micro$oft lesson one

how to be micro$oft lesson one...

step one: offer billions for yahoo
step two: get rejected by all 10 board memebers
step three: fill yahoo board of directors with pro-m$-buyout people
step four: buy yahoo anyway

[David Arbogast]

Reminds me of Soros...

step one: Attempt to buy US Presidency
step two: Get rejected by the People
step three: buy off senators and reps
step four: Buy the US Presidency anyway

Look, Yahoo wouldn't be in this situation if they were not a publically traded company. Remember that Yahoo does not own Yahoo. The stockholders do. And when Microsoft offers them lots of money, they'll want to take it. They will also vote in the board members who will make the changes they want. This has nothing to do with MS being MS... this has everything to do with the fact that Yahoo went public and handed ownership to its investors. Investors want money. Microsoft has money. Just that simple. Yahoo can only reject sweet offers for so long, and then the shareholders will change up the board so they can keep making money.

[bridge solution]

How to be Yhoo, lesson 1

1. Continue to be "me too" on adding stickiness while continuing to devalue the signal to bling ratio.
2. Go from being larger than General Motors (back in 99..market caps compared).
3. Keep people from noticing, for a while, that most of the operating cash came from cds in the bank, provided by people buying t-shares based on perceived future value.
4. When people begin to think you are matured enough conmpany that a p/e over 50 isn't really a value, keep talking about "next year"

[Penguinisto]

How to cheerlead for MSFT, part MCMXLV

[i]"Continue to be "me too" on adding stickiness while continuing to devalue the signal to bling ratio."[/i]

...and this differs from www.msn.com... how?

[i]"Go from being larger than General Motors (back in 99..market caps compared)"[/i]

You forgot all about the dot-bust. You know, the one that nearly killed the likes of Amazon, made life hard for the likes of Google...

[i]"keep people from noticing, for a while, that most of the operating cash came from cds in the bank, provided by people buying t-shares based on perceived future value."[/i]

...and you can prove this, I trust?

[i]"When people begin to think you are matured enough conmpany that a p/e over 50 isn't really a value, keep talking about "next year""[/i]

YHOO has split five times thus far in its history. MSFT has only split four during the same time period.

This is also the same company that owns Flickr, Zimbra, and a whole wad of fast-growing profitable companies.

It has a forward P/E of 46, not "over 50", so I suspect that simply relying on the last report of 60.something is drastically, well... dumb.

See for yourself (using Google so no one screams "bias!"):
http://finance.google.com/finance?meta=hl%3Den&q=YHOO
.

Finally, a quick peek shows that, even before MSFT's meddling, YHOO hasn't been rated as anything less than "hold" for quite awhile:
http://www.marketwatch.com/tools/quotes/ratings.asp?symb=YHOO&sid=16665&siteid=mktw

So I hardly believe that YHOO is swirling the drain, as you claim.

/P

[Imperfect Nerd]

Big Brother--Little Brother?

Who would be swallowing who, is the question, and will the market be the one to get indigestion if it happens? I use Yahoo with a PC that runs Windows. It has a chip by Intel. It was manufactured by Compaq. I like being able to choose the combination of these factors that suits me. One day soon, if regulations remain loose, we all will be captives of one entity, BigBadComputer.com. We will probably be able to talk to it and it will talk back in a commanding voice while watching us thru a built-in webcam.
No, wait...that was "1984"...nevermind!

[Llib Setag]

Becoming MS - Step 2

IF you cannot innovate...imitate.
IF that fails, then open wallet & buy the competition ("threat") outright.
IF that fails, then copy the competition & bankrupt them in court after they try to suit you.
IF that fails, then hostel take over corporate raiders brown boots charge in & take it from them.

Extend / Embrace / Extinguish
MS : Where do you want to go today?

[oxtail01]

no wonder Yahoo in trouble

Let's see - their stock price was around $19 and sinking with no real hopes of getting it back up substantially. It jumps to $29 with Microsoft's offer but Yahoo board states it doesn't fully value their worth? With this kind of math, they're doomed.

[SenorFrog]

Today's Market....

Doesn't necessarily reflect what they have planned for the future. Many good stocks are down right now. What if they (Yahoo!) believe they can get their stock up in a few years because of projects they've got on the backburner?

[JCPayne]

Glad to see Yahoo not DUMB enough to fall for

such a dumb merger. Let Microsoft go rot in their own corner. THANK YOU YAHOO!!! Mission Accomplished!!!!

[JCPayne]

Yahoo stock right now higher than Microsoft's. OUCH.

....

[gggg sssss]

wtf

does that mean?? Back to accounting 101 for you

[riffkind]

you'd better bet ...

... that YHOO shareholders will help make it happen too.

[The_Decider]

Only if they are stupid

MS is a nonstarter in this market.

MS is stagnant, at best, everywhere else.

This is not a good move for anyone associated with Yahoo, including investors.

Yahoo is struggling, but if they grab onto the anchor known as MS, they only have one direction they can go. Besides, it is not like MS stock has been on the rise in the past few years.