The following email was sent to all Microsoft employees from CEO Steve Ballmer at 5:17 pm PDT (see Breaking: Microsoft Withdraws Yahoo Bid; Walks Away From Deal):
From: Steve Ballmer
Date: May 3, 2008 5:17:30 PM PDT
To: “Microsoft - All Employees (QBDG)”
Subject: Withdrawal of Offer to Acquire Yahoo!
This afternoon I sent the attached letter [see update 2 here for letter to Yahoo] to Jerry Yang announcing that Microsoft has withdrawn its proposal to acquire Yahoo. We proposed the deal in the belief that a Microsoft-Yahoo merger would create a combined company with the resources and assets to win in the fast-growing market for advertising and online services.
Although the acquisition of Yahoo would have accelerated our ability to deliver on our strategy in advertising and online services, I remain confident that we can achieve our goals without Yahoo. We have a strategy in place to do so and we will continue to expand on this strategy and accelerate our progress.
Our strategy has three components:
· Deliver on the basics. We will continue to improve search relevance and build out our ad platform.
· Change the game through innovation. We will expand investments in engineering and deliver transformative tools and Web experiences.
· Expand our global scale and focus. We will pursue partnerships and investments to realize the competitive advantages that come with scale.
At the heart of our strategy is a commitment to bring the benefits of competition, choice, and innovation to everyone who uses the Internet—from consumers to content creators to advertisers.
We are 100 percent focused on executing on this strategy and we have made good progress in a very short time. We’ve improved search relevance dramatically, introduced compelling new search verticals, successfully integrated aQuantive, and added nearly 100 new publishers to our ad platform. In the last couple of months we’ve rolled out new versions of key products including Internet Explorer and Silverlight, and introduced new technologies like Live Mesh. We now have over 430 million active users of our Windows Live services worldwide. And we continue to add new technologies with acquisitions such as YaData, which brings leading-edge behavioral targeting technology, and Caligari, which gives us advanced 3D modeling capabilities that will help us continue to improve Virtual Earth.
Ultimately, our goal is to build the industry-leading business in search, online advertising, media, and social networking.
We are absolutely committed to being the leader in each of these areas. Now is the time to do what we have always done best—be tenacious, focus on the long term, innovate, and keep working hard.
I want to thank all of you for your patience during this process and for your dedication and hard work across all of our businesses. We asked that you remain focused on our goals through these cycles, and you have done this extremely well. We are committed to making the investments that will enable us to compete and, ultimately, lead in the online services and advertising businesses. Together, I know we will succeed.
Steve
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It’s all over then. I don’t know if to feel relieved or annoyed. So much fuss and nothing happened in the end.
First, Ballmer blew it.
2nd
Again, Michael, thanks for giving us the first look at the latest news!
Some guessing YHOO opens up down $8, sounds about right. Should have a read on it Sunday nite when Asian marts open.
Ouch! Monday is going to be rough.
I hope Google gets in on the Yahoo action soon… I’d love to see Google and Yahoo combine.
This has got to suck for the Yahoo employees that stuck around and didn’t leave / get laid off. This will be a very troubling time for those employees, as well as for Yahoo as a whole. Good Luck!
Peter Epstein
http://www.thewebwar.com
Yahoo shareholder have to be angry right now.
it’s a good news for yahoo
“…I guarantee, 100%, that Microsoft will own Yahoo. It’s a done deal. Take that to the bank.” - Michael Arrington
short sale!
Surprise but no surprise…
@9: No, it’s not good for Yahoo. This will probably be the start of a major downturn for them, which will probably end in an acquisition or sell off of parts for much less than MS was offering. Outsourcing to Google, if they still peruse it will ultimately kill them. They’ll be the next ask.com.
“Together, I know we will succeed.” — very well said…
If I were working for Microsoft, this letter would make me quit. Ballmer’s obsession with Google has made him completely lose sight of what Microsoft’s all about.
YaData = Yahoo?
Hahaha, this is so funny!
Best part is: “· Change the game through innovation. We will expand investments in engineering and deliver transformative tools and Web experiences.”
Innovation? Microsoft?
So let me write an open letter to Microsoft here:
Dear Microsoft!
You should simply stick to working on (or bug fixing) your operation systems, and maybe MS Office, cause these are the only things that might keep you alive for another while.
Go back in you huts and sleep further on any innovations on the web.
Microsoft certainly had it’s big times and fullfilled its mission “one pc on every desktop”, but these days all your “innovations” are bad attemps to copy things that have been developed (and made big) by others.
So where are your innovations?
Silverlight? Who needs that? What kind of “buisness idea” is it to try to compete against Flash?
The Zune Phone? What a laugh!
Windows mobile? Dead after 1 year max after the launch of Googles Android!
And I am so happy you failed to take over Yahoo!
Cause your aim was to buy Yahoo to become better in contextual online ad-services.
What kind of stupid aim is that?
While Google carries on to make the knowledge of the world available to everybody in every possible way, you are after the online-ad biz only?
I will be so proud to answer my grandchildrens questions about “Who was Microsoft?” by digging out my “The history of computers and internet” in about 30 years.
Meanwhile I carry on to work with WinXP, cause I love free software!
:-D
Yours,
natadd
what value will microsoft open at since it has more liquid funds on monday?
Why does Techcrunch have this letter?
Seems like MS is pulling a lame PR trick to get people to think they don’t ‘really’ care about the Y! acquisition.
Stay strong Yahoo!
Yahoo!
Wait, this distracted Yahoo!’s 2008 execution for 3 months and caused some employees to leave. This period of time created more disruption at Yahoo! than it did at Microsoft and therefore Ballmer in the end certainly can’t be questioned for his actions. In fact, it may have been his intention all along as integrating this would have been challenging to say the least…
Good for MSFT. They showed it has strenght in its conviction of stand by its reasonable offer. YHOO will tank on Monday, and MSFT will be able to buy them in about a year for about $20.
YHOO overplayed its hand and lost, sorry YHOO shareholders but your founders and board of directors are complete idiots.
MSFT should refocus and try to pick up AOL. Implied value after GOOG investment was $20B a couple yrs ago, but as a declining asset it could be had for much less, maybe $5 or $10B.
Big mistake for Yahoo. They are getting slammed by Google. Microsoft’s offer was really good. Jerry probably made the biggest mistake of his life. He can’t turn this sagging company around.
Yahoo employees should be very disappointed. They have no future.
SG
Don’t see anything exciting in this letter but Yahoo! definitely destroy itself in order to avoid the hostile takeover. Whatever it does with paid search is now irrelevant because of the partnership with Google. This time, Google wins again. You lose, Yahoo!
This deal falling through is the best possible outcome for Microsoft. What were they thinking? Last time I checked Microsoft was a software company. This would have been a distraction at a time where they are going to face serious threats to their dominance in the software application space. They need to focus on item two of their strategy with the full attention it deserves:
“Change the game through innovation. We will expand investments in engineering and deliver transformative tools and Web experiences.”
I don’t think it is over for Yahoo! I still have faith that Yahoo can be turned around. There are many very talented people still left. We will see how Google plays this out. Could be Google steps up and makes an offer.
So no proxy battle, at least not yet. I bet Balmer comes back soon with something…. maybe it’s AOL?
Google will celebrate tonite surely. What a mistake by Jerry. Yahoo will die.
@ Victor Caballero (#23): Your faith is greater than mine.
Yahoo does have some great properties (Flickr, Delicious, MyBloglog, etc.) but only time will tell whether they pay off for Yahoo! in the long run.
As far as Monday goes, Yahoo! is going to have a new reason to hate that day.
Msft - > next target -> Facebook ?
One step forward, one step back.
Personally I think its wise that MS has withdrawn its bid for Yahoo. Big mergers tend to fail more often than they succeed, as best I can tell.
But I think it’s silly that MS continues to persue the search-driven advertising market. Fundamentally, MS just isn’t an advertising company (and make no mistake, that’s what Google is), and hasn’t got what it takes to make more than an also-ran effort in this arena.
MS should continue to expand on their innate strength: making computing accessible and relevant to the mass markets of users & developers. That’s Windows, Office, Sharepoint, Visual Studio, Exchange, other apps and backends which perform useful work for individuals and companies. Or new apps (in the same vein) like PhotoSynth. MS can put these into the desktop individual app model or the web-based model as the market demands, and let Google sell ads alongside. Persue synergy with Google rather than hostile competition with them!
Somehow this idea that ‘Google is big and innovative, MS is big and innovative, therefor they must duel to the death’, pushed by pundits, has infected Ballmer. It’s a mistake for him and for MS. Ultimately I think Ballmer will be replaced by someone who realizes the basic folly of the idea.
finally, losers are the y! Shareholders
Now that there are less “captains” at Yahoo!’s ship, it might be easier to steer. This will be exciting to watch!
Yahoo! will benefit in the short term if they outsource search to Google, but can’t believe it will solve their problems long-term. But let’s see if they can even work together with their combined market share on search.
Michael,
this is awesome.
by the way, how’d you get your hands on the email?
Funny, not a word on Vista in Ballmer’s e-mail (as in: “One of our great products”). MS must really be leaving the OS market then (which is, in all honesty, a great thing for the rest of us).
He sounds like a broken record. M$ is toast. Google rules the web.
yapeee…..
This is a very inspirational email from Ballmer. Well written. If indeed Yahoo is to go at it independent, I am very happy. But please, get your innovation machine going.
Yang put his own ego ahead of the best interests of his company, and now everyone at Yahoo will suffer. Good going Jerry!
I want Yahoo! to live for a long time to come, to innovate and to bring exciting products to users. It has great talent, sadly equally incompetent management. Yang is a good founder, but not a good CEO. Shareholder value should have been his first deliverable, which is clearly not the case.
I dont know what is going to happen to MSFT or Goog. Yahoo is definately going to be cause of its own destruction!
Good luck all Yahoo!
So, do we have a Yahoo-Google deal in the making now?
Yahoo is a great company and it would be nice to see them continue to grow. I am glad Microsoft did not purchase Yahoo as this would have created a two company industry Microsoft and Google. At least right now we have three major companies in this industry. Most other companies of similar nature have faded down the ranks. I remember when Lycos, and AV were big players in the game and now look at them… When is the last time you saw an ad with the Lycos dog?
It is definently right now a three company industry. I would love to see some new players come to the table and shoot up the ranks.
Well, Microsoft has done the right thing by quitting. Cheers to Microsoft !!