Does Ballmer Need To Go?
Erick Schonfeld
185 comments »
Microsoft’s dramatic decision this weekend to withdraw its offer for Yahoo and not pursue a hostile bid raises a whole host of questions. What happens to Yahoo now? What happens to Microsoft? Or is this just a tactic to drive down the price of Yahoo’s shares so that Microsoft can go hostile with a lower offer? And if the deal really is dead, does Steve Ballmer need to start looking for a new job?
This last question may not be so hypothetical. Ballmer has been the big driver behind this deal at Microsoft—some would say to the point of obsession. After the disaster that has been Windows Vista (Microsoft’s core product), Ballmer may have realized he needed to redeem himself in the eyes of Microsoft’s board. And the “transformative” deal with Yahoo was the way he was going to do it.
One reading of Ballmer’s obsession with the deal is that he felt his job was on the line if he didn’t get it done. According to one secondhand account that leaked to us yesterday before the deal was called off, over the past week Ballmer increasingly has been “yelling and screaming at employees for almost no reason” and is being “more of a tyrant than usual.” One executive on the Microsoft deal team supposedly made a comment about “not having to worry about Ballmer anymore” if the Yahoo deal fell through. What the exec didn’t know, though, was that Ballmer was in earshot, and he screamed back that the deal would go through and that he wouldn’t let the board “crucify” him.
As things stand, the fact that Ballmer was not able to close the deal could put his job in jeopardy. The big questions are: If he really does walk away, can he put this distraction behind the company? Or is it too late for Ballmer? If Microsoft’s board loses patience with him, it might have to ask Blll Gates to temporarily come back as CEO until it finds a replacement. After all, Ballmer has already made a strong and convincing case for why Microsoft needs Yahoo to make its online and advertising strategy work (it needs the scale of Yahoo’s display and search advertising inventory to compete with Google). It is not clear how it can achieve its objectives on its own or through other acquisitions.
Maybe Ballmer backed down because he realized the deal was becoming too big of a distraction and he didn’t want to drag it out further given Yahoo’s continued resistance. (And save his job in the process). Or perhaps he thinks he can still get it done by making Yahoo’s stock price collapse and come back with a hostile offer. (After all, if you are going to go hostile, you’d want to drive down the stock price of the target company to make your offer look even more attractive to shareholders). We’ll find out later this week.
No, he’s an interesting guy!
With the money and leverage microsoft has . They have other options .
On another note : Nobody is using the Video Comment . Why ???
Your polls are loaded… The first choice always wins.
@2 — too involved and complicated, and less likely to get heard… seriously.
I’m not using the video comment because I just got up, my hair looks like a rooster, my voice doesn’t work, and I’m in my underpants.
As for Ballmer, I hope he stays as long as necessary to drive the company into the ground.
I know the polls aren’t meant to be scientific but such bias!
# Too soon to tell. This deal is not over yet
# Yes, the board will ask him to leave.
# No, he saved himself by walking away.
What about “No, his job is not in jeopardy regarless of what happens with this deal” ?
my.2c
Maybe they’ll wait to see if Jerry Yang goes first. In either case, Google is the big winner.
What is this sensationalist BS? You newbies have not been around the tech world to understand that Balmer has a history of cutting of people’s testicles to get what he (Microsoft) want. This is not over, far from it. You will now see a combination of two factors drive Yahoo to their knees.
1) The stock price will plunge and MS will do whatever it can to make it plunge then come in with a hostile takeover offer.
2) Do you know how many engineers MS can steal away from Yahoo with the billions that separated this offer? Look for Balmer to start a massive recruiting drive stealing away Yahoo’s top talent in all departments, leaving them a relic of their past.
3) Balmer once said to a friend that offered to sell a fix to their Windows OS, “if you don’t take the money I’m offering you, I can put a team of 100 MS engineers and have the same thing done in 30 days”. My friend got 10% of what he was asking for.
Bottom line, MS did not get to be MS, and Balmer did not get his reputation by “walking away”. Instead they got it by being smarter and more ruthless than the competition. Learn some history dude and stop this sensationalist BS that Balmer is on the way out.
Balmer is gearing up to do what he does best, and that is in his ruthless, take no prisoners mentality —- screw Yahoo and make them pay for their stupidity.
This is a huge risk on both sides. Ballmer is betting that Yang will fail and he’ll be able to swoop Yahoo up for pocket change. Yang is betting that he can turn the company around in less than a year. Long bet if you ask me. I’ll bet on MS.
Of course not, it would put fakestevebalmer out of business
I went with Too Soon to Tell, but really think it’s time for the Board to show whether it can make decisions to move MS forward, including a decision to dismiss Ballmer. Nowhere else but the US Government can someone spend $9B developing a product very few like (Vista), one that is considered a step backward, and get away with it. I’d say this is just as much of a test for the Board now as it was for Ballmer.
It is definitely too early to tell how things will unravel. Microsoft needs to change to get a better position in online services, especially content-heavy online services. They need to learn the Marketing 101 and start to realize that overbranding kills the underlying brand (a lesson that consumer-goods giant Nestle had to learn as well…)
Microsoft can build an online content empire by itself, but it will need to understand that those services need not be named Microsoft Live xxxx. Each single brand of its online portfolio needs to have enough quality and traction by itself. Online services needs to be a division without Microsoft branding that can thrive in today’s market environment.
@Righteous:” Do you know how many engineers MS can steal away from Yahoo with the billions that separated this offer?” - ask how many y! enggs love MS products! Unless MS starts transitioning to open source, Steve Ballmer will need to scream “developers developers developers ”
4 words:
I
LOVE
THIS
COMPANY
YEAH!!!!
Microsoft won’t go for hostile takeover. Only way they can come back if yahoo management is fired.
As Fake Steve Jobs said a couple of months ago, buying your competition suggests that you are just out of ideas and can’t innovate anymore. That certainly seems like Microsoft, buying their way out of trouble.
What can Ballmer do? Go hostile with Yahoo after their stock falls? That won’t make the employees happy and he may be buying a broken Yahoo that will do more harm than good.
It may be far from over but I bet Yahoo and Microsoft wants it to be.
If you are going to go with the vista as a disaster storyline you better link to something other than the moronic gartner story as your backup. MS is troubled but only a braindead moron such as yourself would take that “analysis” drop dead seriously. Not that you have any credibility anyway.
Totally agree with #7
The show is not over yet
I don’t know why exactly, but the letter Balmer has sent out has left me with the feeling that this is not the end of the story. I may be wrong, but I don’t think MS is able to graciously move away.
This is gossip and tablid-style speculation, not journalism. Your core premise is faulty in that is presumes that any acquisition attempt initiated by an exec must be completed else he/she is deemed to have failed in his/her job. That just makes no sense. Heck, even the poll choices reveal your clear bias, Erik.
Not what I expect from Techcrunch.
Microsoft is stealth like a Ninja and Ballmer is smart like emperor. Just look at Time Warner’s acquisition of AOL to see the future of a Microsoft Yahoo deal.
go ballmer go!
That chief yahoo is gonna get eaten alive…
I just don’t get Microsoft.
There is so much to do in the enterprise environment, so many challenges, sorting the data, displaying the correct documents to the correct people. making all the data accessible from anywhere, why oh why do they have to nudge into the advertising game - when it’s clear they won’t really gain significant market share.
Imagine a Microsoft that is laser dedicated in making our enterprise environment better, in making the best intra-enterprise search engine, and if they still want advertising, why not focus in the enterprise advertising landscape - allowing advertisers better access to enterprise decision makers and allowing enterprises choose the right suppliers.
Microsoft seems to be heading the wrong way fast, and it seems it all began since balmer took the steering wheel.
Am I the only one seeing it?
Eytan - Israel
It may not be so much that the deal was lost
It could be the nerve and arrogance of
Microsoft leaking their email to the press at the very beginning.
The negotiations could have been done as most acquisitions are done - without fanfare.
If Steve wanted to see the effect this would have on Yahoo stock and wanted to get the stockholders on his side - he must have realized that the pendulum could swing the other way from a PR standpoint, if MS appeared to aggressive and arrogant.
If Yahoo can not survive on its own - what will become of it?
Any other company that acquires it will attempt to exploit it - and only Google could do any justice to the Yahoo search engine.
What Freaking crack are you smoking, First I thought it was just Yang, but now I think your sharing the same pipe.
Over rated Hype machine at full power now, just not doing a decent job.
Silicon Valley echo chamber turned up to 11.
As Paul Graham noted quite some time ago: Microsoft is irrelevant (I mentioned PG’s name because he was the first one to notice this trend - as far as I know).
Of course MSFT corp will still exist for years to come (like IBM)…
Most people in the mainstream media haven’t quite caught up with this, but for techies it is clear: MS dominance of the industry has died with the advent of the open internet. And good riddance
BTW It is interesting how the comment section of each post is literally hijacked by special interest
The stock market will decide. If Yahoo share price sinks on Monday, Mr. Ballmer would have won and will come back with a lower bid, as he already said.
If the stock market backs Yahoo (it falls less than 15% this week), then there is a chance Mr. Ballmer is in trouble.
Perhaps Ballmer should refocus the company on doing what it used to do best — the operating system — which is just about due for some reinvention. The issue here I think is that Microsoft has been distracted by products-as-services. But that’s all IMHO.
Ballmer won’t go (yet), even though he should (look at the MSFT chart for his tenure), too much history, too much relationship with the inside directors. Maybe when Bill is no longer chairman. I suggest to you that his #2 and point man on the deal, Kevin Johnson, will be the fall guy.
#9 Christoph is dead on with the MS brand. #15 Eytan gets my vote on what Ballmer should be doing instead of worrying about Yahoo and Google.
Maybe not, but certainly he’s lost credibility.
After Vista & Yahoo disappointments , the scorecard would be
MSFT = 0, GOOG = 2
MSFT = 0, APPL = 1 (for Leopard)
Haven’t you read already from his letter to Yahoo, what he’s going to do is: “Ultimately, our goal is to build the industry-leading business in search, online advertising, media, and social networking.”
Of course this is a maybe, but most probably, now their intentions are no longer related with the idea of creating #1 OS!
The corporation definitely has to change their points of view, and this may include Ballmer’s leave…
This is a silly article. What’s behind this assumption? Seriously!
Might you please hit the delete button on this post. Thanks!!!
Seriously MS needs to look and learn from at Oracle- they’ve done a bunch of deals. Many of them without the support of the team they were buying. The rule is, make up your mind before you start and then keep going till you are done.
I agree with #15.
Even if MS office and Windows should become cheap commodities, there will still be so much money to be made with enterprise software and solutions.
4 words:
I
LOVE
THIS
COMPANY
YEAH!!!!!!!!!
Steve Ballmer IS Microsoft. He won’t go. He just changed the rules of the deal. And he is a good player of the game.
Is this a serious question?
Why isn’t anyone asking if Yang needs to go- to be replaced by a CEO who knows how to set and execute strategy within a large organization, and how to manage expectations on Wall Street.
Ballmer is the real deal, it’s Yang you need to think about.
Wow, Erick. Your poll options remind me of the “so when did you stop beating your wife” jokes. In yesterday’s Gillmor Gang we talked about what, if anything, Microsoft did wrong in the negotiations. Overall it seems they were handled as well as could be expected right from the beginning.
I agree with Chris Desouza: an extremely silly article! Also, Gartner’s Windows statement does not make a very professional reference!
No Ballmer will never go.
I think Ballmer looks very smart for not overpaying for Yahoo. Ultimately, MSFT and GOOG are the winners in all this.
Also, some startups might be winners since MSFT still has that $30 billion to spend.
This article is so lame. I feel like watching local news talking about murders and fires somewhere. Who is Erick Schonfeld? Your logic is so local newsie, you must be writing this article for Google fans and local sillicon valley folks.
I’m sure you know that Steve Ballmer is (about??) the third largest share holder behind Bill Gates and Paul Allen and he has the support of both. Do you actually think his job is in jeopardy? For the last eight years, MSFT has done nothing but made money. The latest quarter MSFT made $4.5B+.
You mentioned Vista was a disaster. Do you know how much money Vista made compared to Apple OS or Linux?
This is my first visit to TechCrunch.com because I found Arrington articles quite informative. But having read Shonfeld’s writing on this site, I’m not sure I care to come back.
JW
Nothing is going to happen to Ballmer - you don’t understand corporate politics within big companies well enough. Steve Ballmer wouldn’t have made any moves without his board’s consent. Microsoft isn’t walking away from the deal - its board is. And everyone know’s it has nothing to do with what Ballmer could have done - it’s simply Yahoo’s lack of desire to get absorbed into the Borg - at almost any price.
Heck of a way to start a rumor. The power of media amazes me every time. It will be a shame if all that power landed were to land in the hands of one dominant player. Irrespective of the outcome of this story the net needs to have a real alternative.
An unexpected take on the whole Microsoft/Yahoo story, I tip my hat.
I don’t think the shareholders or the board will force Ballmer to go; the recent quarterly report was disappointing, but the last annual report was surprisingly good, with the Xbox division finally returning a profit. It would seems like a knee-jerk reaction to get rid of Ballmer due to the failed bid for Yahoo, but I could be wrong.
Good journalism at work.
The guy is incompetent if you look at the barometer of Microsoft stock and his fiduciary responsibility to shareholders. His job is to increase the value of the company, period. This deal and his reputation for managing by screaming at people, which never works, are indications of a major lack of judgement. However the real deal is Vista which may go down as one of worst strategic messes in corporate history. It could be the end of their dominance in corporate IT.
This guy is toast.
Yes, this Ballmer bashing sounds like a plant from the Office Group hoping to stave off Live Mesh. Won’t work though. Ballmer stays put until a successor is picked, and it ain’t Steve Sinofsky.
Steve is a smart guy. He will stay around Microsoft for a several years
“Never launch a war which you know you cannot win.” — Sun Tzu (500 b.c.)
Whether Ballmer knew he would meet fierce resistance from the Stanford-Silicon-Valley mindset (versus his Harvard-Seattle mindset) or not, we would have to wait to find out from the historians. The theory is: a better leader would anticipate the determination of his enemies.
“Faking attack from the west before launching a true attack from the east.” — Sun Tzu
The one scenario that could salvage General Ballmer’s reputation would be if he had planned this all along, knowing full well that this was not a real war but a probing attack to ascertain how his enemies (both Yahoo and Google) would counter-attack, in other words, this could be Ballmer’s “war of deception before the true war”. Again, we would probably never know.
Those close to the old man will relate that he is tired. Tired of doing the heavy lifting, and tired of making the behemoth bend to his will. vista almost killed him, and plain bad staffing in key positions just about did him in.
the old man couldn’t find what to do with 20B$ (cash part of deal) 20B! The idea that such a monumental merger so fraught would have sped time to market….even he couldn’t make himself truly believe it when the lights went out and the cover were turned down.
Rest now, here ye olde man…rest ye now….take the treasure that the lord of Moore has surely laid up for thou and rest.
Every once a while, when I see this kind of BS on techcrunch, I’m tempted to remove TC from my subscription list. However, the reason I keep reading TC is that some of you guys at TC are still doing some great reports.
But, please fire those incompetent writers who can not report. They are hurting TC’s credibility.
I don’t think Ballmer is in any trouble - my outsider-looking-in perspective tells me that he has been Gates’ right hand man almost from the beginning. You *know* that any big-picture things that Ballmer does involves at least some consultation with Gates. Whatever you say about Gates retiring from an ‘active’ role in the company, this is still his baby and much of his wealth is tied to its stock.
That said, I doubt this decision was Ballmer’s alone - i.e. it probably came with the blessing of Gates and/or other board members - so I don’t expect his head to roll for it.
Steve will stay, MS is very loyal to it’s employees.
Is Tech Crunch racist? I just posted as a White name and they made my post. But my two posts as an E. Indian got disqualified. Wow, Tech Crunch racist against E. Indians?
This is not over. Ballmer is way too much of a control freak and way too much of a hardline negotiator to walk away like this. He’s backing out right now as a tactic. Next week, Yahoo!’s stock drops through the floor and he comes back with a lower offer than before - a hard lesson in playing hardball with Steve B.
@ Allison - do you really believe that all deals must close successfully? That just isn’t sensible. How do account for unrealistic buyers?
Let’s see if this post goes through? Steve Ballmer will stay at MS, but will resign as the CEO. This deal is too important for MS for the sake of it’s online future.
Ballmer is doing great and he is still the guy for the job (remember that Gates is still pulling the strings, and Ballmer is Gates’s best friend.)
Yahoo’s stock was up more than 10% (including after hours activity) last Friday night, on speculation that a deal would happen.
What if there’s no more deal ahead? Yahoo’s stock will drop,
Gordon (Crawford) will call his buddy Terry (Semel), who will call his friend Jerry (Yang), who will realize that nobody’s happy (read really pissed) with the withdraw from Microsoft.
I think Microsoft are testing what a withdraw would do to Yahoo’s stock.
The week end is the perfect time to do it.
If they are really walking away, then Yahoo is lucky and I’m happy about it.
But if history repeats itself, there’s more to come from the Redmont Behemoth… and now, they have the big guys on their side.
er, and sellers?
How bout - if Balmer doesn’t end up going , does Erik need to go?
Tech Crunch is racist, how do I know? They are moderating my comments, when I use an E. Indian name, My own name. When I use a non-Indian name, they don’t moderate my comments. Wow, a blog will hit the air ways tomorrow. This is crazy, in this day and age. Arrington, do you know what is going on here?
Ballmer did nothing wrong during the process. I do disagree with the acquisition from the beginning. But if MS board backed him up then, they will continue to back him now.
Yang, on the other hand, handled this rather poorly. You can’t bargain without anything to offer. If you want to sell your company for double the market evaluation (jan 31st), you need to either have something to show for (he doesn’t) or get more (stupid bidders).
Will this post make it through? Hey Tech Crunch moderator, are you a racist against E. Indian Names, the CEO will hear about it tomorrow, and Arrington too. What is up dude?
I mean, seriously, how about “He’s played this perfectly from start to finish”
and it isn’t over yet.
I think they should spend 5% of that buy out cash on marketing and I think they would do alright.
lets face it, if they started sponsoring Nascar, F1, football, TV spots they might pick up the market that Yahoo owns. Yahoo visitors are the average internet users so they don’t care about microsoft past.
PHOTO CREDIT
Yahoo users are not typical users. Yahoo users tend to be the least tech savvy users. Have you not read the profile of a non-tech savvy user yet? They use Yahoo.
It’s over, a racist organization trying to hide between the white lines. It’s over, Microsoft is way better than any Valley company will do! Arrington, can you explain my previous comments?
41 are you joking? you think there are the that many tech savey users in the world.
yahoo is a mainstream portal at the end of the day.
Despite the big news today, it seems Erick feels that its a slow news day (which it may be), but posting drivel like this is not to be expected from credible (tech) news sites.
As if to emphasise your bias, your options on the poll just left me aghast, and that was before I noticed that you linked to THAT earlier Gartner story!
At times like this it’s just best NOT to post.
No, C’mon. Everyone knows that Yahoo users today are like the AOL users of the past. They are not the coveted tech savvy fans of Google.
Also, did you notice that I have to be White to comment here? Is this how America got here? I have been in the US for 27 years this weekend. I think America is still the best country in the world, even though it has racist organizations like Tech Crunch. Sad that I have to say this about one of my favorite websites. I will still read it often, but keep them honest.
None of my E. Indian posts but the one named “Rakesh Sharma” made it through.
Yahoo is main stream, but within the main stream there are the technorats, the coveted crowd, the Type A’s. The older crowd is what Yahoo has as it’s main group. But other properties such as MyBlogLog and Flickr are a very important asset for distribution and traffic.
I can’t remember the last time Eric posted anything with substance about Microsoft.
Do you even know who Ballmer is, what his relationship with Bill is, and what Bill’s relationship with Microsoft is?
By the way Joe, I use to work at Gartner for 3 years. So my E. Indian comments were smart, and I do live in Seattle. Though not a huge MS fan. I really did want MS to buy Yahoo.
MS should pursue a hostile bid, as Yahoo shares crash on Monday and this week, MS will continue it’s accumulation.
@Chris yes we are basically saying the same thing, I miss read but please stop banging on about racist stuff, maybe its the wordpress spam plugin thats stopping your comments.
I very much doubt they give a damn where you are from in the world or what race you are.
He deserves credit for walking away. A lot of dumb acquisitions happen when CEO ego drives companies to overpay, though Microsoft’s offer was probably too high, as we’ll see when YHOO shares settle on the ocean floor next week.
Check this out Arrington: Google indexes some blogs very fast!
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I’d imagine that a hostile takeover from Microsoft will probably drive the price up further rather than allowing them to acquire Y! at a cheaper price - especially since Yahoo have decided to keep the whole discussion open to the public eye. They have also clearly anticipated this kind of action in the past and implemented a number of ‘poison pill’ strategies to stave off such a move:
http://www.reuters.com/article.....6120080201
More recently they have been offering large and guaranteed salaries (for several years) to key members of staff - at least in europe - to make it increasingly difficult for Microsoft in the future, should the acquisition actually go through. If the deal is definitely off then this could spell trouble for Y! in the years to come - not good!
It’s difficult to tell - since the press always twists things - but it would appear that this is really a battle of egos between yang and especially balmer. In which case neither of them are properly serving the needs of the shareholders who are only interested in the share price - so they should both go!
@Chris Thompson/Rakesh Sharma,
I think TechCrunch’s comment moderating system is experiencing a glitch, one of my comments got a “waiting for moderation” notice forever…
Take it easy, buddy, don’t be so overly sensitive. Are you the type who thinks if a waiter or store clerk of a different racial group from you serves you too slowly or does not smile when serving you, you would conclude that he or she is a racist?
Ballmer needs to cut his own testicles. MSFT has been flat for the past 5 years. YHOO has doubled. What exactly has Ballmer done? Okay, he had a lot of leverage when the OS was king. But that king is dead. Is it a guarantee that you will be using MS Word 5 years from now…might you use a web-based Word processor?
MSFT stock has gone nowhere for a long time. Star tech employees like stock options. MSFT doesn’t offer them anymore. And the stock goes nowhere. Who’s going to join them? In retrospect, the best thing that could have happened to them is a break up into smaller parts.
Smart, testicle-cutter or not. Stock price needs to go up or the CEO will be out. That’s a fact. It’s been a long time in the 20s.
Also, if the deal was worth $33, why not $37. What’s the difference. Why let 4 months go by rather than go hostile after month 1. Why walkaway when you’re $4 away…it doesn’t make any sense.
Not at all Sober note, I am actually married to a White woman, and I love people of all races. I do appreciate the 80% plus non-racists in this country. I do think the numbers are that high on the positive side. I live in a predominately white upper class neighborhood in Seattle. I did some searches on Google and found out that others may have seen similar experiences.
I love this country because of the opportunities it has given me. But, I did wonder my posts in the pasts never made it, and today I decided to test their waters and I got proof. I will be contacting some mainstream media tomorrow and some famous bloggers, to see what Arrington has to say for him self.
just thought I would add a RARE video comment for no one to watch, they want me to register for an account?
gave up
Balmer actually accomplished one positive thing for Microsoft through this failed deal, he exposed a crack in Google’s “Do No Evil” front.
Google, a company with a monopoly in search, should have just stood by and watched the trains either come together or pass each other on the rails. Instead, they immediately started talking with its competitor about how to thwart a deal with the #3 in the market that would have threatened them. They jumped into a short term deal to further that purpose and hired Quatronne to coordinate their efforts behind the scenes, a guy with deep connections to Apple and most other companies that have a beef with Microsoft (Sun, etc.).
he need to stay.
Good Comment on that HyLoka. Apple seems like the perfect partner for Yahoo. I think Apple should be more involved in the online portal/community space. Coming from a non-white friendly guy:-)
@Chris Thompson/Rakesh Sharma,
Sir, you really think 20% of the population in this country are racists? 20% of 300 million is 60 million. If you think there are 60 million racists in this country, maybe this country is not good enough for you, or maybe you are the one who has a problem?
Ballmer should be crucified by the balls!!!
Since 2000 he has done nothing but tank M$
.NET is a failure, Silverlight is a failure, Live is a total failure and Mesh is a disaster!
Ballmer should go as soon as posible.
Or, better yet, leave him there so he finishes his job of sinking M$
To add to another “conspiracy theory”, the comment I wrote earlier that got stuck in the “comment moderating hell” was written on an Apple iMac.
These comments that are getting through (well, we will see) are written on an XP machine.
Go? I thought he was already gone.
Now than Microsoft has a good understanding how how Yahoo works internally then can reduplicate the most profitable areas of the business.
The great thing about an American company is their agility. Microsoft can easily go into an entirely new direction in less than 2 years. This is just another chapter in the Microsoft History book. IBM is a good example of this.
The Microsoft leadership has to decide who they want to be besides the most-profitable-IT-company ever. Where’s the next big real money maker?
Ballmer’s surely made some mistakes in the past, but IMO, walking away from this deal is definitely not one of them.
So he got aggressive, pitched a bold “bear hug” offer to buy Yahoo, and, when rebuffed, ultimately decided that the price would be too high and that MSFT wouldn’t do a hostile acquisition.
I was not a big fan of doing this acquisition in the first place (mainly on price), and am glad to see it not happening.
But has there ever been a highly successful hostile acquisition in the software space? Not sure if PeopleSoft can be considered successful, but perhaps.
In this case I give kudos to Ballmer for realizing that overpaying isn’t good, and neither is a hostile takeover of an intellectual property company, where the very best assets leave the parking lot every night. I also have to admire him a bit for being bold… we’ll see what’s next. Facebook? Amazon? Hmm. Not sure.
(Disclosure — I was a MSFT employee & senior manager from ‘91-’97 and was in a lot of Ballmer meetings.)
“Never launch a war which you know you cannot win.” — Sun Tzu (500 b.c.)
Whether Ballmer knew he would meet fierce resistance from the Stanford-Silicon-Valley mindset (versus his Harvard-Seattle mindset) or not, we would have to wait to find out from the historians. The theory is: a better leader would anticipate the determination of his enemies.
“Faking attack from the west before launching a true attack from the east.” — Sun Tzu
The one scenario that could salvage General Ballmer’s reputation would be if he had planned this all along, knowing full well that this was not a real war but a probing attack to ascertain how his enemies (both Yahoo and Google) would counter-attack, in other words, this could be Ballmer’s “war of deception before the true war”. Again, we would probably never know.
One thing that hasn’t been mentioned much over the weekend is the one group out there that must by crying in their cornflakes over the deal going away: The bankers. While I’m sure the bankers get some payout for the failed deal, it is probably peanuts compared to the commissions they were hoping to score on a completed deal.
and another weekend fun article to stay fresh on BitchMeme and increase the number of comments…
Erick, did you spin that idea yourselves or did Yahoo PR suggest it?
He actually saved his ass. cos it would be very difficult to mix two culture yahoo (open) and MS (closed). Yahoo would definitely loose big heads (already lost many). And deal would be just temporary market share gain nothing more. Why its running for just market share ? Instead putting cash to grow talents which it already have and beat others ? (Can try …:) i know hey are never innovative:))…But when it comes to cash and using Yahoo’s weak financial structure nothing can be said…IS not over…(And will never be…until M$ either comes up with really innovative or Yahoo really comes up wih something that can erase its past)
I’m flummoxed. Yahoo is, and was, on the ropes. Why can’t Ballmer close the deal?
As a former Microsoft employee of 16 years, I’m convinced that this was Ballmer’s Waterloo. Steve is a really good guy, nothing like the caricature painted of him by people who may never have met him and who see only the reports of chair throwing and monkey boy dances. He is very smart and a very dynamic individual.
But he’s a terrible manager. And the whole MicroHoo fiasco has been precipitated by what can charitably be termed a failure of Microsoft’s online businesses to anticipate market needs ahead of competitors and execute even when they’re behind and copying someone else’s work. Throughout its history, Microsoft has always been the “fast follower”, letting someone else stake out a market before swooping in and copying the initial effort and improving upon it rapidly (the well-known “version 3″ issue with the company’s products).
The company today is too slow, too bureaucratic, and too incompetent in its middle ranks to react to market trends. Further, management is often too stuck in their ways to see bigger trends, and is merely content to milk its cash cows. You can see that in the industry trend towards hosted software vs. Microsoft’s stubborn unwillingness to wean itself off its lucrative server business. This entrenched group of middle managers is directly responsible for the failure of Vista, Office, the online businesses, and missed future opportunities around social networking, TV, and others.
While Erick’s post is salacious, it nevertheless begs a bigger question: if Ballmer were to go, who would replace him? A long-time Microsoftie with a history of being a non-sycophantic change agent a la Eric Rudder, or someone from the outside who could sweep out the vestiges of the old guard DNA and breathe new life into the company?
As Yahoo suffer, Microsoft will also struggle. Windows seems like certainly to collapse as Microsoft struggle to battle with piracy and unable to attract enterprise customer.
Dont worry about MS. Their research=>implementation pipeline is a few years ahead of the nearest competition when it comes to operating systems, compilers, frameworks. Vista was just a brief snapshot of that long term pipeline. Have a little patience and they will change the landscape when their web programming platform dominates in the business sector.
Eric,
All I can say is Wow!
Where were you during the Gilmore Gang call last night — Obviously not listening or not even on the call.
There is too much influence and strength in the Microsoft presence and Ballmer is a large part of that presence. To say that Ballmer’s job is in jeopardy after this change is negotiations could mean that you just lost a bunch of money by watching the Yahoo stock price collapse.
I have agree with others that this process has gone the only way that Yahoo would let it go.
Ballmer would probably be let go if he had actually thought of purchase Yahoo for the price it might have been negotiating for. Further, walking away leaves Yahoo’s stock price to be set by the market — If Yahoo deserves its current stock price, then it will remain close to its current price-point.
If Yahoo the market was bidding up the stock price in a effort to get in on the potential Microsoft purchase, then we will watch Yahoo’s stock price tumble over the next week. If that happens, then Jerry Yang will most likely be out of a job and Yahoo will most likely be dealing with a few shareholder lawsuits.
I really think Yahoo has a tough week ahead.
Gimme a break. The withdrawal of the offer is all part of their master plan. They will come back in a month or two after Yahoo’s stocked has hit $10 or less. Ballmer knows what he’s doing.
Even if they don’t, it still shows great discipline on Microsoft’s part. Yahoo put a lot of stuff in place to make them an unattractive buyout, and rather than deal with that shitstorm, MS just walked away.
Zoul,
Microsoft has 90% of desktop market (be it 2000, XP or Vista!) and more than 80% of companies use Office suite… it would take few years for people to migrate even if we had a better alternative Today!!
Collapse of Microsoft is not imminent in near future
But to compete with Google on the Web, Microsoft has a long way to go!!
1. Ballmer don’t need to go
2. Nothing special happens to Microsoft, they will just continue with their bussiness
3. Nothing special happens to Yahoo, they will just continue with their bussiness
(4. Vista was not a disaster)
that’s kind of a clown article. He was very casually perusing the sports fields yesterday at his son’s game. he’s been very very relaxed in the mornings, casually strolling through starbucks at 730am or so to grab coffee / tea - taking his time, laughing on the phone. It doesn’t seem like - from someone who’s actually seeing him - that’s he’s stressed. You know what it does look like? like he knows exaclty what he’s doing! You guys in California maybe need to start spending just a little less time in the sun…
oh yeah, and arrington..you need to start doing more video responses. seriously! I don’t know what your hearing from all your friends close to the fire down there, but those are very, very cool / compelling. keep doing those. just believe me - those are going to work.
#7 Perfect comment. Couldn’t agree more!
Steve Ballmer is some kind of Gordon Gekko. Just wait and see him taking over Yahoo!
Sounds right. MS is in deep trouble and for the first time could lose everything if it does not make some moves. Unlike last time against Netscape, there is no Bill Gates to move the company so Ballmer has to do something.
As you said tiny Web 2 buzz bubbles starups with unkown ad revenue like DIGG, Twitter, Ning, will not move the needle. The top 10 sites not counting Google, MSN, Yahoo, Wikipedia, eBay & Amazon, Apple by comScore Media Metrix Top 10 would::
1. AOL 100M Uniques ($10B)
2. Fox/MySpace 88M Uniques ($10B)
3. Ask/IAC 55M (10B)
4. About/NYT 47M (Unknown $5-8B)
5. Viacom 44M (Unknown)
6. Weather Channel 40M ($5B)
7. Facebook 36M ($10-15B)
8. CNet 35M ($2-4B)
9. Glam Media 35M ($1-2B)
10. CBS Online 39M ($5B)
Ballmer can buy all of them for the price Yahoo wants!!!
If the deal was about Ballmer’s ego he would have paid up no matter what the price was. He actually did something that CEO’s rarely do which is walk away when the price being asked is unrealistic.
Does anyone really believe that Yahoo have any more clue today how they are going to turn the company around? They spent the last 3 months figuring out how to fend of Microsoft, not compete more successfully with Google (oh yes, their new best friends). Yahoo are even more screwed now, their stock will tank tomorrow. Microsoft’s will bounce.
A much more likely next scene for this saga is that Yahoo will continue to underperform, their stock will slide and Microsoft will come back in 6-9 months with a lower offer (and they will get it). Unfortunately for Yahoo stockholders, Yahoo is not the modern day Sibylline books!
This article reminds me of the useless speculation the MSM has resorted to during the Dems primary race (i.e Hillary must win Indiana, whites are fleeing Obma!”).
I don’t see the point of this speculation. Methinks Arrington is the new Perez Hilton of web 2.0.