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.
- 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.
Total Votes: 7894
Started: May 4, 2008
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 m not agre with that kind of think
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
i think so too.
they are far behind
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.