The rumors keep on rolling around the surprise semi-hostile Microsoft bid for Yahoo this morning. Sillicon Alley Insider says they’ve heard that a couple of hedge funds were already preparing their own bids for Yahoo, and were (or perhaps still are) days away from making their move.
According to our source, other big private equity funds were busy today, too. Taking calls from News Corp., that is.
News Corp. and Yahoo have been mulling over a merger (of Yahoo and MySpace) since the middle of last year. But the deal back then had News Corp. selling off MySpace in exchange for 25% of Yahoo’s stock. Now the roles have been reversed. Today, News Corp. was supposedly making calls to put together a syndicate and make a counter offer to what Microsoft put on the table. No takers so far, we hear.
All of this is likely to come to nothing, though. I agree with Paul Kedrosky and Mathew Ingram - Microsoft has probably already won this deal, simply because they aren’t relying solely on spreadsheets in their valuation. Hedge funds don’t have that luxury.
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Mike - We posted almost at the same time with some interesting parallels. Think if anyone could ‘match’ the bid, it might be a News Corp group but seriously doubt they would. Microsoft’s bid (in my humble opinion ??!!) is already a little high?
Fun to watch
Charlie
There is no Google Mafia. There is only a PayPal Mafia.
I like IAC, they do a good job, but not great. So I really think for the best of Yahoo, that the new owner should be Microsoft.
While the two will be merging to battle Google, a startup that builds a standalone business in the area will disrupt everyone in the future.
Will be very interesting
If i was news corp i would be preparing a bid for ebay, before google does,
ebay could then become an extension of the myspace community, imagine all those buyers and paypal accounts a huge cash cow for news corp
How do you rate? Check out http://www.yupnup.com
I think News Corp. was taken by storm with Microsoft’s offer, and it will be a miraculous feat to rally the troops, arrange for the needed money, and prepare all the plans and spreadsheets in time to make a counter offer and have a chance at snatching the biggest fish on the tech scene.
These news and rumors are just the beginning, and we are bound to hear lots more over the coming week.
One thing I’m sure of, is that none of the big tech players will have a weekend.
I’ll try and cover the whole thing on my blog as well.
Interesting post!
Can Yahoo-Microsoft OR Yahoo-NewsCorp together end the Google dominance? We can just wait and watch. Google has made its name synonymous with search and internet advertising. I’d really love to see Facebook making offer to buy Yahoo. Mark, are you reading?
-Kaustubh-
@7
Facebook bidding for Yahoo? Crazy much?
Maybe they should worry about getting out of negative 150 million dollar cash flow before they add a stumbling search engine to their business.
Ultimately money cannot beat innovation. Google has been innovating, and extremely quickly, in the way they approach softwares. Arguably they are copying Microsoft’s softwares, but ironically, they seem to be doing better job at making them than Microsoft is. What MS has is money and market share. What Google has is user friendliness and expertise. Both are equally cunning. It would be interesting to see what’ll happen after MS really takes over Yahoo. What assets can Yahoo offer MS that MS cannot build? Loyal users? Somehow I believe that by acquiring Yahoo, MS wil have plans to dissolve the brand and integrate it into their own brands, which would turn users away. It would surely turn me away. And I’d be sad to see one of the most famous brands on the internet, and certainly one which I’ve quite liked (thought hardly used) get swallowed up by the beast. Oh, and what’ll happen to Flickr?
http://theworldofm.wordpress.com
@7
Facebook bidding for Yahoo? Come on. How about Twitter, Pownce, etc.?
Steve Ballmer wants Yahoo!. He really wants it and is fixated on the acquisition. More importantly the reason MSFT will acquire YHOO is that Ballmer will over pay, if it comes to that. IMO
Of course, Microsoft aren’t solely relying on spreadsheets.
Excel can’t correctly format $44 billion or handle > 65535 rows.
Microsoft may be ruthless, but at least theyre not properly evil like Newscorp.
News Corp and Yahoo would be a match made in heaven.
The best for Yahoo! would be to stay alone but create a advertising joint venture with Microsoft (and others).
Their problem is monetization, not audience. Together, they would have a much higher volume. Microsoft has aQuantive, Yahoo! has its knowledge. What they need is a counter-argument to Google’s “We manage so much of the industry’s properties that you can buy any ad campaign you want - from text-based to video or audio!”.
They need to throw all their money into a new advertising solution. They need to compete with Google AdSense. They need to compete with just about everybody.
The other products can and should stay separate.
Oh no, we can’t have News Corp. putting in an offer. Microsoft all the way!
It’s not gonna happen. The beauty of Microsoft’s deal is the premium the they’re paying. If the board does not accept, you bet your ass it’s because of certain key people and Steve Ballmer hinted in his letter that he would go after them. March 15 is a special day for Yahoo! board of directors
It’s in their best interest to give it up to MS, or it will be taken from them by force, from MS
M&A’s take a lot of delibrations and negotiations before consummation and thereafter the real pain begins.
http://tekno-world.blogspot.com
Has anyone seen EPIC 2014 and Goolgezon … the predictions are coming true !
If News Corp gets Y! (which it won’t), I will completely abandon it (flickr, delicious, everything).
….and everybody thought MSFT was gonna get killed by Google. HA!
Facebook + Yahoo + MSN = equalizer.
Google just got put in its place. They’ll continue to do well, but Google’s stock will be in the 3 hundreds in a matter of 60 days.
Murdoch is a smart man, but in this scenario it would appear he has more money than brains. He just needs to leave his ego at the door. WSJ wasn’t a minor feat and a much better victory in this web war than Yahoo would be. Yahoo needs to take the MS offer.
i think is interested
Murdoch has consistently drummed his deep belief in the Internet…I am not surprised at all.
Yahoo should also be thrilled for at least now they can play off one against the other.
Sigh…
All that money and everyone is still going to have google.com as their homepage.
Google is encroaching on many different businesses and industries. At the end of the day they are going to be between buyers and sellers like we have never seen before. Google will become the ad agency, the publisher, the media firm, the technology company, the foundation for causes etc.
I recently left Yahoo as a home page provider when they “upgraded” their new home page. It sucks. It doesn’t load properly. The gadgets no longer offer the old content I enjoyed, so now i am over at Google. (Microsoft are you listening?)
When technology companies “update” their products every day/week I stop using them like I did Real Media. If the updating isn’t transparent there is no need to waste more of my time configuring their stuff.
Yahoo would be a much better fit for News Corp than for Microsoft in my opinion, Yahoo is more like a media company than a technology company.
The market needs more buyers otherwise this could kill the startup community..
Entrepreneurs beware Microsoft buying Yahoo could shut down the tech startup scene. It could send the startup climate back to 2001 levels - nuclear winter shut down. I lived through 2001-2004. It was ugly.
Efficiency for Microsoft means leverage with suppliers. Translation: Startups are suppliers and Microsoft just became Walmart. This could have a chilling effect on the VC and tech investment community. This new industry structure puts even more of an emphasis on ‘hits’ or category specific deals. If the Venture Capitalists are confused today can you imaging what they will do going forward. This could get ugly.
Advice for Technology Startups and VCs: Understand where your company is in the pecking order in this war. If you’re not an arms dealer then you might want to rethink your strategy.
http://furrier.org/2008/02/02/.....ms-dealer/
Think of the possibilities for social search; stumbleupon and delicious owned by the same company. Wow!
Great journalism here Arrington. Gotta hand it to you! This is turning out to be a ‘go to’ site for search related news.
What’s gonna be interesting to see is this - if News Corp. buys Yahoo, what will happen to their agreement with Google for ads on Myspace. And since, according to Yahoo, all of Myspace traffic is junk (most of the Myspace Resource sites with Yahoo ads had their accounts cancelled last year), will they add Yahoo ads on Myspace?
Yahoo should join with private equity and buy Facebook. A combined entity might be able to fight off Microsoft.
I agree with John, if this acquisition takes place, it will badly affect the startup economy, especially taking into account the type of startups that have been bought by Yahoo, such as delicious, flickr, MyBlogLog, etc. all of which are the best of the breed.
I hope anyone but Microsoft win the bid, let’s hope for the best.
@23 and 24 - I’d say you’re both right on.
But there should be a bunch of smart folks who come out of the acquired Yahoo (along with plenty of chaff) and start new web businesses or strengthen others.
And iGoogle is still no match for MyYahoo, so as MS freezes Yahoo’s development (before stifling, then killing it altogether), lots of users will come unglued, ready to adopt new products.
Exits will get complicated for new Internet startups, but we should see a lot of innovation in the next couple of years.
I would be pissed off if my kids still use Microsoft products!
I just hate the name, brand, look & feel!
As a Yahoo! employee, I do not look forward to being forced to use Windows Vista and Excel 2007.
There is no google mafia. There is only a PayPal Mafia.
#31
It must suck to be your kids. The XBox isn’t that “bad”.
#32
Nobody forces anybody to use this or that. Microsoft employees use Mac products too, just so you know. This is what we pay for underperforming. It’s all about business. Investors with millions of $ at stakes are certainly happy. As for regular Yahoo employees, this may be your chance to go up against Google. Btw, Yahoo doesn’t have to accept the offer, and might never see the $30/share level ever again.
You’re worried about having to use Vista and Excel?
@32
Given your attitude, you’ll probably be laid off before even having to worry about that…
Since the Saudis, Abu Dhabi have invested billions in our major banks and brokerage house’s maybe they would like to make a bid
They can shoot for Google next
There’s more synergy and common consumer-oriented philosophy there than with microsoft.
Why did the author of this post change from Duncan Riley (late last night when it was first posted) to Michael Arrington now? I know you run the show but talk about wanting all the credit…
Abu Dhabi have lot of money. But…. Saudi’s currency won’t work in the U.S either.
?
Michael, when are you going to updated us on the 23andme kit??
thanks
Yahoo! and Newcorp could be quite interesting but for me I think whatever happens I think it will take a while to challenge Google.
Microsoft and Yahoo can be a killer combination. But the question is, how would they solve the big Google problem mounting in front of them?
@32 now we know why Yahoo’s the way it is.
if you merge two slow company (in relation to google they are in fact slow), that wont be a fast company, but a much slower company
most ms employees would be THRILLED to see a news corp bid.
Michael, you nailed it with this:
“Microsoft has probably already won this deal, simply because they aren’t relying solely on spreadsheets in their valuation. Hedge funds don’t have that luxury.”
1) Sure, Microsoft wants Yahoo for its global reach and their existing web-ad operations. But more subtle is in that Steve Balmer finally admitted that the desktop centered world is ending, so MS has to have a future Operating System, $44bil is meager compare to the long term benefits. Buying Yahoo also gives MS a front that it can work its proprietory technologies back in, albeit little by little.
2) The white knights are … yes, GOOGLE & APPLE, GOOG can’t do it alone, anti-trust issue, APPLE has to be the front, and Steve Jobs gladly sticks a dagger in softie’s heart. Boy, even the names together sounds like a Madison ad shop, beautiful … bye bye PC, “hello WORLD!!!”, and this is what it is all about. On the battle side, GOOG has $13 bil cash, APPLE $18 bil, MS $19 bil, the scales are comparable.
3) MS is still very very powerful, technology-wise. So losing this deal doesn’t send MS to the death bed … it can buy AOL, it can buy IAC, well, it’s in the mood for buying lately. If there is 1 technology company that can run the world all on its own products, that’s Mr. Softie. Their products are easy to use … until Vista, Vista was an illusion, the Windows are shut. But the MS culture is becoming stale, corporate like. I praise Steve Balmer for overstepping the bean counters and the wallstreeters on this bid. If a business is only run based on ROI, it will never have a long term vision. Business is about calculated risk-taking, about learning and bettering from the failures, MS is doing this - MSN doens’t work out, MS search adcenter doesn’t work out, so MS went out took 5% in Facebook (a dumb ass move but the price is small), aQuantive (good move, but pricey), now YAHOO. Most likely the culture will clash, and Yahoo will go downhill, people will move off Yahoo and go somewhere else, but still ONE hooray for Mr. Softie for shaking things up … and 1000 shares Yahoo < $30 on Mondey market opening.
4) If GOOG + APPLE bid does come thru, it’ll be $50 eventually, this IS like the .com days, the bid price will make no financial sense. So to trump $44bil, it has to be ~$65-70bil, Yahoo’s stake in Japan, Alibaba alone brings potential that is worth half the price. So in a sense, Mr. Softie underbid, it should have done $60bil and get done with it, it should study GOOG + APPLE’s books!!!
Last words, as the Internet changes the world, visionary manuvours are not something those MBAs understand, these are not taught yet in class, but they will be in 20 years.
@18. So, you are planning to short Google? Please report back when you’ve made your bet. Google in the $300s in 60 days? Why don’t I think I’m not jumping on that one?