Microsoft pursues Yahoo! takeover
Duncan Riley
101 comments »
The NY Post has the exclusive story this morning: Microsoft has once again approached Yahoo!, asking the Sunnyvale based search portal and content destination to come to the table and negotiate a friendly takeover by Microsoft.
The same report values Yahoo! at $50 billion; the interest by Microsoft is said to be serious to the point that world renowned bankers Goldman Sachs are advising Microsoft on the deal.
If the deal comes to fruition, the takeover would be one of the largest corporate takeovers in American corporate history, and likely the largest ever in the Tech sector.
It’s also interesting to observe the continued attempts by the any one but Google crowds’ attempts to win marketshare, from Ask’s bizarre viral marketing efforts (The Algorithm advertises above urinals), country specific deals such as Testra’s tie up with Microsoft’s NineMSN destination in Australia, to even this story now. It certainly is a strange time when Microsoft accuses Google of anti-competitive behavior one day, then actively seeks to acquire a leading competitor for the sole purpose of trying to compete with the Mountain View based uber company the next.
Update 10:20am EST: The market is taking the NY Post report seriously with Yahoo! stock up 18% at the time of writing and increasing on volume of 90m after only 20 minutes of trading compared to the 3 month daily trading average of 23m. The continued rise in Yahoo’s share price can naturally be tracked at Yahoo! here.
Update 1:30pm PST: The WSJ is saying the deal isn’t happening.
In order for online advertising to grow we need a strong number 2 to Google. If this happens it will benefit all of us who make are living from online advertising.
http://www.ebizmba.com
Assuming Yahoo stays as a separate entity and they can convince a workforce filled with opensource leaders (i.e. Rasmus L., etc..) to stay — then it’s a good move.
The merger / acquisition could also give Yahoo/MSN Search/Live.com a 38-39% share of the search engine market, which would become more competitive with Google.
I’d wonder if such a merger would lead to user attrition at Yahoo, given Microsoft’s not so great reputation with a lot of the tech community. Yahoo has reinvented itself as an early adoption friendly network and has legitimized the social web and ‘2.0′ with not only the acquisitions of Flickr & del.icio.us, but the active growth of those brands and their ideals.
I like the sound of it. Also I like to think Yahoo is just a little jumpstart away from starting to achieve the financial potential of their good work getting viewers/users. Maybe a takeover is just what they need.
On the other hand what I’d really love is even a 50/30/20 market with Google Yahoo MS, 3 would be better than 2m but I doubt they’ll catch up that much soon.
Is this not the clearest sign yet that the Windows Live strategy is failing?
I am wondering what took them so long.
I would like to see anyone but Google acquire Yahoo! …
- so if its microsoft, maybe that makes sense.
- 50 billion?.. that means yahoo is only 50 times better than YT? … Sounds about right.
-RB
If yahoo is 50billion Google must be worth 300 Billion
What a brilliantly ironic story. AOL is called out for copying *one* of Yahoo’s pages and Yahoo may become part of Microsoft - the biggest hack company of all time. If I’m at Yahoo and I get word I’m working for that monkey Steve Ballmer, I’m jumping to another tree.
Microsoft Flickr ?? Oh please sweet lord, say it isn’t so.
Anyone remember when Microsoft bought Hotmail — boy, they sure turned that around into something great, eh?
Are you sure you want to tag this photo?
Yahoo stock is up 16% @ US$ 32.77.
Michael,
Can you set up another website that kinda focuses towards tips for traders cause seems like you get merger news / rumors before anyone else does.
Testra or Telstra?
About time, M$ needs to get ahold of something on the web.
@11 TC didn’t break this news — haha what makes you think he did? Yahoo was up huge overseas and in pre-market trading in the US
The end of your article is pretty confusing and riddled with errors. I’d post some grammatical fixes but there are too many. You guys may want to re-edit this thing considering the size of the story.
Oh. no. the day yahoo becomes part of MS is the end of yahoo.
give me one successfuly internet app developed by ms… I dare you..
hotmail? what a joke… why you have to click on mail tab again to see your emails after you log into hotmail is beyond me…
live search? lightyears behind google
msn? nobody gets news there anymore..
messenger? yeah.. decent success only because it’s bundled with windows.
therefore, I have every reason to question yahoo’s future under MS.
How can Microsoft taking over any competition be good? The are a monster monopoly that needs to be shrunk not grown. We need more innovation and imagination like Google. Not boring take over suits like Microshaft!
If they succeed in taking over, I will leave Flickr in a heartbeat and shut down my Yahoo mail.
Are you sure you want to cancel your Flickrsoft account?
Wrote a long post about “3 Reasons the Microsoft/Yahoo Deal Needs to Happen Today”
Post is here - wil.gobignetwork.com
But the short version is -
1. Terry Semel needs a parachute
2. adCenter needs to merge with Panama (for one stop shop, not software reasons)
3. CPC is Google’s Achilles heel
Caveat - this deal would bog both companies down in red tape for 2+ years
I actually heard this from a Google insider last weekend. I think that Yahoo has plenty of momentum, and does not need to hide under the wing of big daddy Microsoft.
GeorgeP
correct, TC didn’t have this first, the NY Post had it over everyone and I’ve credited the post as such. We get a lot of good stuff at TC, but you can never win them all.
For me Yahoo has always been the best representation of what the Internet is all about. MS, on the other hand, is, IMHO, the worse thing that ever happened to the IT world, it has been the worse obstacle for innovation.
This could be one of the worse things that can happen. YAHOO needs to remain an independent entity driving innovation and competing with the Googles of the world.
Wow. If microsoft gets their hands on yahoo. Google will have to watch out. I bet microsoft has some evil plans behind this “friendly” takeover….
50 billion … thats alooooot of money…. on the other hand. that will leave google more money to buy all the other companies that would actually rule the world.. cant wait for internet os from google side. that will really take microsoft on
This would indeed be HUGE for Microsoft, but is it truly worth it for them? (I guess it’s really all they can do to try to keep pace with Google. Not that Yahoo isn’t worth $50b (wow that’s a lot of money), but if so, will that break the back of Microsoft trying to merge the two corps together while keeping all the users? I guess only time (and ton’s of money) will tell.
Now we are talking. Forget about what Microsoft has done…if Google is to be challenged, this is a business combination that needs to happen.
At least on paper MS and Yahoo together would be extremely formidable but then again don’t get your hopes up. Google may just pull the Anti-trust card (lol).
The idea that Microsoft will ‘own’ the Oddpost and Flickr properties feels funny. Creepy uncle funny.
Microsoft Flickr….argh. Better not. I think Y! can compete with G on it’s own, they just need to work harder/smarter.
Adrian - Google is closer to anti-trust than MS. There is no comparison to the ad market and the desktop software market either.
Ugh. This would be a terrible move–for both companies; as well as for those using their various products, services, and platforms.
Micro and Yahoo each have their own unique specialties, strengths, and corp cultures.
Both have made some great moves over these past couple of years–both online and off.
There is little true synergy here; this is not a “1 + 1 = 3″ opportunity; but no better than “1 + 1 = 1.5″
For the sake of the many diverse marketplaces they operate (and compete) in, their many 1,000’s of hard-working employees, their many vendors, customers and users; and their stock holders as well; this is one merger/takeover that should not happen.
I disagree with Steve. I happen to think this would be an excellent move for both companies. WHile I agree that making something “bigger” often means that important stuff falls through the cracks, I also think that strengths of each company compliments the other extremely well.
Strong software company + strong internet portal = (possible) vertical domination of a user’s computing experience.
This will never happen!Do not even underestimate Jerry Yang and David Filo’s love to Yahoo! this brand!!!!(9%)*50B$ isn’t quite different from (9%)*44B$,money is meaningless to both of them,they are rich enough to ignore any temptation.But Yahoo! this brand means a lot~~~!Unless they get enough esteem(for example,merge MSN brand to Yahoo!,just keep Windows live and Yahoo!)
This is great news for Google and terrible for Yahoo. Microsoft is so blinded by the fact that they are not number one on the internet that they can’t manage their own properties properly. In the short term, this is great for Microhoo but their online advertising is stagnant and their search results are laughable. I doubt that their management will know what to do with Yahsoft a la Time Warner/AOL *shudder*.
This also shows how hypocritical Microsoft is. The best part is they are going to drop $50 billion. THat’s not going to leave much left for future acquisitions not to mention development. The integration of the two companies will be long and most likely messy. Wonder what the Vegas line is on this being in the Deadpool in 18 months.
For YHOO, an MSFT merger is a bad idea. The primary beneficiary would be GOOG. YHOO and MSFT would be mired in a failed attempt to combine clashing cultures while GOOG would remain nimble. I think there’ll be enough YHOO insiders who recognize this and will oppose the deal.
Perhaps GOOG will counter and make an offer for YHOO. They don’t need to but that would be a better fit - and would completely kill off any MSFT online advertising aspirations.
It’s simply time for something large to hit. MicroHoo/YahSoft? Why not.
mYahoo..
rotten fish.
Perfect definition of a “Bad fit”
The fastest way to decimate tens of millions of loyal Yahoo Mail and Flickr users? Demand they use IE 7 ( ONLY ) to get their mail and manage their photos - which would be the the first thing Microsoft does on day one.
Plus all the millions of people who would receive this notice:
“….Silverlight is not your default media player, to use this Yahoo service, you must uninstall Flash 9 and then install Silverlight 1.0. Clicking “No” is a violation of your Terms of Service agreement…”
Will some Yahoo people please chime in on this post, please?
http://www.lucianobove.blogspot.com/
Hi thanks for visiting my Blog…Ciao!
@Todd
You’re clueless my friend. I hope the tinfoil hat fits well.
Wow…now that would be something. I think this would be a great move for both companies. Somehow I doubt this will come to fruition though.
Two words: Sell YHOO.
The very next day we may see Google buy the rest of AOL
Integration Challenges Abound
MSFT has been successful in acquiring smaller cos. and integrating those into their core product portfolio.
Imagine, acquiring YHOO and merging msn.com, hotmail.com, flickr, yahoo mail, advertising engine issues (I would not have the details on those), etc.
We could be looking at a Peanut Butter and “Jelly” Manifesto.
Should Microsoft buy Yahoo?
Yes anyone but Google!!!!!!!!!
As I wrote on CN, I would rather see Yahoo acquire AOL while MSFT gets their web strategy in place. And if this deal goes thru it cements my belief that 2007 is an acquisition and consolidation year.
This is a big story, but Duncan, man, you gotta take a deep breath and proofread before posting. Unless I am just not reading this right (quite possible)… this sentence really makes no sense start to finish:
“by the anyone”
“continued attempts” … “crowd attempts”
“The Algorithm advertises”
“to even this story now.”
I’m confused.
Update: Well, I figured out the last part (to even this story now) — was just thrown off by the rest.
@Allen #43: I would think that if this acquisition when through, I would guess that this would be Microsoft’s web strategy.
(when=went … I can’t very well call someone out for not proofreading, then make a typo now can I? I promise, this is my last post.)
Just sold my YHOO stock at $33.45. I was looking for an excuse, and a 20% jump is as good as they come. This deal may happen, but it may be weeks before anything happens.
I really think Yahoo was just figuring out what they were good at, and would love to see them continue. They don’t need to be purchased, what does MS bring to the table in this merger?
#45 - yep, I agree. I still think Yahoo and AOL would be a better marriage.
And Charlene Li has an excellent post about the possible merger. a must read I believe.
one thing she notes is that a merger and consolidation of brands - say msn home page and yahoo home page would hurt available ad views.
Allen - Link to the Li post?
Here is the link to the Charlene Li article:
http://blogs.forrester.com/cha.....oft_y.html
Do it Microsoft Do it! This will bring the game back in action!
Finally!–ooO
It was reported at lunchtime today that 63 out of the FTSE 100 companies here in the UK (the 100 companies with the greatest market capitalisation) were the subject of rumoured interest from private equity. Many of these stories seem authoritative in isolation, leaked to the press by “impeccable sources”, but collectively they are obvious nonsense.
The plain, ugly truth is that seeding the press with such rumours has become a safe pump-and-dump scam. The stock named as a potential target usually jumps by between 5% and 20%, and the scammer’s own transactions get lost in the noise because the stock is so much more liquid than the usual targets for such scams.
Take any and all such stories with the largest pinch of salt you can stomach.
it won’t happen, but the timing is perect. it’s just what the doctor ordered to get the stock moving again.. …..just long enough til next earnings announcement which is show time for terry.
OH THE HUMANITY!!!!!!
Microsot and Yahoo maybe a good combination or perhapes the end of Yahoo. I think if microsoft buy yahoo the best choice its not change anything on yahoo (like google and youtube) and use this two companies (micro and yahoo) to win to google on internet advertisement game. Microsot is a bing power company on pcs soft and i think that will become also the biggets internet company, they are just staarting with live.com. So, next step to Microsot its to buy Google and myspace. Why not? I like the ideia of Microsot and Yahoo and Myspace and Google together because it becomes more easy for a new internet company to build a new quick impire and earn a lots of money :-). Go Micro buy all internet…
This deal would be bad for both MS and Yahoo– 2 great companies in their own space. The clear winner will be Google, another behemoth in making (or already is), and that is not good tech community.
Google + Microsot = Microsot ! Why ? Windows Sofware are in all world pcs (more than 90%) and if microsoft remembers to combine use search tecnologie with Vista operating system tecnologie, Bye Bye Google.
http://www.Quogle.com
In the short term it seems like a good development for the market but as the larger players consolidate there is an inevitable trend that will make it harder for the smaller players to sustain themselves.
Kelli — your comments re:”THat’s not going to leave much left for future acquisitions not to mention development. The integration of the two companies will be long and most likely messy. Wonder what the Vegas line is on this being in the Deadpool in 18 months.” — could not be further off the mark.
$50B represents a ~17% dillution of MSFT at today’s price, that’s easily absorbed, especially YHOO adds incremental revenue day-1.
As for deadpool, please… I don’t think you appreciate how powerful and resourceful MSFT is… this could completely flop and they would shake it off easily.
Do I hear AOL and Time Warner?
Agree with WhatDa, Steve and tk: This would be bad for everyone.
Yahoo! has enough to make it on its own, but they probably need a new CEO. Development of their core products has been slow (no surprise, given their user base) and of inconsistent quality. The company seems to lack a clear direction (’organizing the world’s info’ is ambitious, but at least clear), which makes them tentative at acquisitions and dilutes their brand.
Microsoft’s Internet initiatives have squandered a lot of shareholder value (how many people do you know who rely on Hotmail?), and there are few reasons to believe that they would not just roll Yahoo! from a coasting trajectory into a steep dive. Who would root for Yahoo! any more if it became a Microsoft property?
The New York Post? Bwhahahahahaha, it would have been slightly more credible if The National Enquirer broke the story.
Shocking, shocking!
And the combined entity will be called…. Microhoo.
Time to spread some conspiracy theory rumors : like Microsoft forced Yahoo to close down Yahoo photos as a prelude to the talks..
MDH - the thought that they are going to spend $50 billion on Yahoo then spend more to integrate the two? Seriously people, is Microsoft really going to spend $50 billion and keep Yahoo separate? Doesn’t sound like the Microsoft I know.
The very notion that they would spend $50 billion on Yahoo, then if it flops, they will just shrug it off? Do you know how absolutely insane that sounds? Man, maybe the other inmates at the asylum think that’s possible but in the business world, Microsoft would get killed by investors, analysts and especially Google. Their stock would plummet, Ballmer would be out of a job and they would have to bring in someone new, then you have the transitional growing pains (I assume like almost any other company would). Then Google gets to say, hey, thanks for taking our number 1 competitor, which really wasn’t competition anyway, wasting $50 billion of your stock and cash to further propel us in market share in search and advertising profits. Not to mention that if it does fail and fail miserably, I wouldn’t be surprised to see if Microsoft gets sued by it’s stockholders. Microsoft can’t afford a flop this big, it would set them back 10 years. My God man, wake up.
Won’t do the trick in my opinion. Google is way too good (in search) and its dominance is a lot bigger than Yahoo and Microsoft together. They’ll die together.
This news is very disconcerting for me. I make use of Yahoo’s services (among others), but if this merger actually takes place I will be severing my ties with them.
Micrudsoft’s handling of Hotmail is just one example. I used Hotmail as my primary email before they were taken over by MS. Hotmail then went to hell. The same will happen to Yahoo mail if this take over occurs. And all of Yahoo’s different departments will suffer the same fate.
The proof is in the way that Microsoft has handled itself in the past, and how it is still acting now. If you don’t know your history, you are doomed to repeat it…
Microsoft’s stock hasn’t moved in years. They missed the entire “Internet Revolution” and sadly they know it. This move will put them squarely as a top player in the consumer space and their stock will start moving. Who knows if it’ll move up. But it’ll stop it’s bracketed years of minimal fluctuation.
Not just Hotmail, remember too that Microsoft spent how many millions upgrading their search engine only to see their market share drop almost instantly. I am sure if this doesn’t work out, and the odds are long and against them, then Ballmer will go into another shouting fit against Google and how this was their fault.
Maybe they are trying to stir Google’s pot on this. Microsoft got interested in DoubleClick as everyone knew and Google stole their thunder. Maybe they want to lure Google to Yahoo and have them over spend. It’s stupid and juvenile but then again, we’re talking about Microsoft.
If I could say anything to Microsoft/Ballmer/Gates, it would be this: hey, you’re doing alright as it is. You’re not exactly rolling pennies for gas money here. You dominate so much (OS, Office, etc etc etc.) Don’t get into a merger that will almost certainly drag your company down and hand over even more market share in search and advertising to Google. There’s a reason why you’re number 3 and you can’t just buy your way out of it.
unbelievable.
Kelli -
Of course, an outright flop would be a disaster (relatively speaking), and you’re right — all the pundits, analysts, idiots, blogs, and shareholders would scream “SEE, I told you Kelli was right! — from the top of every mountain”
But, in reality — it would not flop outright or immediately. In truth, it would take a long time to learn if synergies and value were gained. A good parallel would be HP and Compaq… remember that witch hunt? Turns out, regardless of what those same pundits had to say, the truth varied to a fair degree and the full answer is still not known.
Yes, you’re also right, it would be an expensive deal — However, even if the wheels came completely off… Microsoft would easily survive it (hence my earlier point to you. I will admit, “shrug it off” is an understatement - however not nearly to the degree to which your “deadpool” comment was an overstatement).
Remember, this is a company which buys back $6.7B of its own stock in ONE QUARTER! They are a friggin’ CASH REGISTER. They have an incredible buffer and ability to be wrong, even at a very large scale, without sacrificing the viability of the company. Who cares if it cost Balmer his job? That has nothing to do with the sustainability of the company which is what you inferred in your original post.
BTW, they’re already getting killed by GOOG. Don’t you get it? There is no upside from doing nothing at this point, they need to leverage their balance sheet and put some pressure back on them.
I think this deal, if it happens, is going to be better for consumers. MSN and Yahoo put together can give a much better fight to Google- thereby bettering the search and other services. The best part is the whole yahoo bundle will help microsoft to really expand and grow their already existing boquet of services !
A game to watch- A close fight is always exciting than a one sided…so enjoy!
My biggest concern is purely selfish; Yahoo is one of the biggest acquirers of startups. Losing one of the biggest acquirers would likely depress acquisition prices.
hahahah riiiiiiight
I’m sure that’s exactly what they’re going to do. Because you get to be the biggest Software company on the planet by doing incredibly stupid things just to make it easier for the Internet to hate you.
Microsoft “loses” every major battle and somehow consistently wins out in the end.
I’m amazed at how short-sighted this community can be.
I would have loved to read a TC thread when Netscape was red hot. “Netscape is going to kill Microsoft and own the desktop.”
Yeah, that happened.
Well this is Microsoft’s chance to get deeply into the online Market, something that its been trying to do with only marginal levels of success for quite some time now.
Now, if you could combine the Goliath that will be generated from these two companies with something like News Corp, then the end of the world as we know it might be at hand.
silver+bronze can never strike gold.
YAHOO AUCTIONS CLOSING IN JUNE 2007
http://auctions.yahoo.com/show.....pe=message
Someone BLINKED !
I’m with the grammar critics. Owners of popular blogs whine about not getting respected as journalists and write this kind of crap? The Strunk and White book is about 50 pages long. Read the damn thing, or find an editor who can. I expect this kind of writing on a no-name blog, not one of at the top.
WSJ says the talks are no longer active. The stock is back to previous levels.
It doesn’t matter now anyway. WSJ is reporting that the talks are off.
http://www.reuters.com/article.....3320070504
Damn you Louis-Eric! lol
This might be Microsoft’s plan to outdo google….but one thing microsoft should realise that their time is over and no matter how much they spend in acquiring big companies like yahoo they are never ever going to beat google
This is a very interesting movement. But so far seems the announcement seems to be better for Yahoo (+10% in the last 24 hours) than for MSFT (-1.32%). The boys from Yahoo just made a ten percent more of value with this new!. Interesting…
Does anyone else think that this was all a conspiracy by some institutional investors to bump Yahoo! stock price so that they can sell? >;)