Anyone wondering who got the better deal today (my detailed thoughts later) need only look at the stock movements of Yahoo and Microsoft. Yahoo dipped 12.08% to $15.14, knocking $2.91 billion off their market cap. Microsoft gained 1.41% to $23.80, adding…$2.94 billion to their market cap.
So net/net about $30 million in new value was created today by the market, All of that plus everything Yahoo lost went to Microsoft. Yahoo got Binged, to the tune of $2.9 Billion. Oops.
Our complete coverage of the deal is here.
Hm
Thats assuming all those investors know what they’re doing, right?
Wasn’t Jerry (ousted former Yahoo king of the hill) against this? And wasn’t his rejection of notion of selling or partnering with MS what got him fired?
Hummm?
You cannot make conclusions based on a immediate market reactions. The deal is great for Yahoo and MS in the long term. Also, Yahoo shares rose yesterday when there were rumors of a deal buzzing about.
this deal is good for Google in the long term.
can you be more specific?
Maybe he means it’s good for google because competition will force them to keep innovating? Not sure what he means actually…
it’s good for google because the competition is fucking around.
so you don’t believe in the great future of bing … i thought it looked promising – don’t like it myself
I disagree.
Search is at the heart of everything Google stands for. It’s the sole reason they dominate the Internet and people have been saying for years that nobody could ever compete. Even TC recently said that the battle for search was over.
But Bing came along and proved they could match Google for quality. And now their market share is approaching half that of Google’s. And that’s in the space of a few months.
Give it a year and (say) a deal to become the default search in Firefox, and Google’s position would start to look very fragile.
It’s great for users because there’s finally a decent search alternative out there. But I don’t think it’s good for Google in any way shape or form.
MSFT & Yahoo just bought themselves 1+ year of stagnation. Google will just further extend the lead.
agree completely. the only deal that makes competitve sense is for both search technology and search advertising to be concentrated with one player. the current agreement validates the aphorism that “truth is stranger than fiction.”
while it does favor microsoft, that favor is long term. in the near term, yahoo will screw up the adsales effort sufficiently.
They have setup a joint site at: http://www.choi...al/Default.aspx
yeah thats true
It’s just a deal that will benefit Microsoft in the long term. Search and advertisement being the first money makers on the internet and will keep growing, it’s a step toward a merge in the future. Only issue is to find agreements acceptable by the market between giants. One day Yahoo will be part of Microsoft and sooner than later.
Silly article, Michael.
You forgot to mention that the Dow dropped 0.5%, and the S&P dropped 0.6%
Based on your logic, the Microsoft-Yahoo deal caused wealth to be transferred from the Dow Industrials to Microsoft, or from the S&P 500 to Microsoft.
Reality is that the market dropped between 4 PM Tuesday and 9:30 AM Wednesday. And the deal was struck during that period. One did not necessarily cause the other.
Repeat after me: “Correlation does not equal causation.”
Exactly.
Even if you want to consider the drop as a cause of the deal, you have to look at it form the point when the first rumors of the deal came out.
My guess id that the initial drop is indicative of two things. One, the market reacted emotionally and two, the majority of sellers were small sellers who ere hoping to make a quick buck when the deal comes through.
We need to wait for some time to see how the stocks do to draw any conclusions about the street’s verdict
400-500 million dollars up front were needed for yahoo’s industry leading techs such as BOSS and searchmonkey.
Advertisers, rush to AdCenter..
SearchMonkey and BOSS are not even part of the deal.
searchmonke and boss are not part of this deal.
a lot more than 2.9 billion
each percentage of search marketshare is worth almost 1 billion correct?
ok. 8 to 28 percent = a lot
> each percentage of search marketshare is worth almost 1 billion correct?
They are sharing revenue so it’s not a complete gain on either side.
YHOO was at 14.38 only a month back and I’m assuming it trended up because people thought the deal was going to be a lot more lucrative than it ultimately came up to be.
So today’s close at $15.14 can hardly be interpreted as a Yahoo “loss”… its just the premium did not materialize. If this was a real loss, the drop in stock would be much more pronounced.
give it time.
“… before they’re evenly matched (Google and Bing).”
Finished it for you.
I guess we seen this coming
can we please limit the post to technology news instead of financial analysis?
Concur. Definitely not their specialty.
+1
This is where tech meets finance. You can’t have one without the other on this one dude. This is big stuff. AKA the beginning of the end for Yahoo. A fatal mistake that will have a big impact on the future of the web.
epic owned!
YHOO was at 14.38 only a month back and I’m assuming it trended up because people thought the deal was going to be a lot more lucrative than it ultimately came up to be.
But its hardly a Yahoo “loss”… its just the premium did not materialize. If this was a real loss, the drop in stock would be much more pronounced.
It was also at $34 when MSFT first went public with their $44B offer.
That about a $20B FAIL by the goofballs in Sunnyvale.
yes.
no.
take recession into account. Goog quote was 700$ that time, now 400$, how many FAIL goofballs there?
It is nice to see Yahoo getting a little leg up. We’ll see if the ad revenue is still there to make it all worthwhile.
I don’t know what Yahoo plans to do now…beginning of the end?
Interesting to hear about internet companies with revenue, but what I want to know is how this affects Twitter.
‘bing’ sounds a good name for a twitter alternative (otherwise it’s really uninspiring). maybe if their search venture fails, they’ll try to outdo twitter
Steve not only binged Carol but Carl Ichan as well…thats really interesting
Carol got binged alright. Now that’s what I call poppin’ a cherry.
ha. good catch.
there is an excess of $0.04 billion there – if you don’t need it, could use it myself
Great deal to get market share for ‘our’ friends @bing
Congrats. Next we see a #merger
Jerry Yang will go back to delivering egg drop soup?
Why bash him???? Wasn’t he against this???
Tool
Just what Google needed… a stronger #2 in the search space.
Yahoo pwn3d, yet again.
No, Yahoo got pwn3d, yet again.
Rise and shine – $29.. Bingoo!
This alone doesn’t tell us that wealth was transferred around….
1) Yahoo’s volume of trading was 126M shares, average is 21M.
2) MSFT saw 73M trade with an average of 63M.
What does this mean? It made an impact in Microsoft, but a small one, trading was only 15% higher, whereas Yahoo’s was 6 times normal trading, and so Yahoo was affected more.
3) Yahoo’s stock valuation was increased on speculation and thus, increased expectation, that something great would come of this, like a large sum of cash right away. Microsoft had not increased due to speculation, and so one clearly had more room to fall.
4) This also assumes that the true value of the stock is actually indicated by the markets. On the whole, the markets do a great job of evaluating securities, but it’s clearly not perfect, and so who says this isn’t a mistake? Yeah, there’s the efficient market theory and such that say that all public information is factored into the stock price, but sometimes the markets are clearly just wrong, and I think we’ve seen that over the past year – you can pick almost any stock and find that at some point, it was ridiculously under/overvalued.
Are you trying to teach finance to a Tech-TMZ site?
+1
Rise and shine – $2.9.. Bingoo!
Yahoo in recent months was moving towards an open search platform. With this deal finally inked, I wonder what happens to all those Yahoo initiatives/offerings such as BOSS, SearchMonkey, etc that developers may have come to rely on for their mashup, apps, etc.
I agree with Michael. You now have two inferior search players futzing around. While they frolic Google will gain more share.
Really, $30 mil in value was created? Is that what took place today?
Hopefully together they can do something constructive.
Having #2 and #3 join forces against the #1 is a great argument #1 can use to deflect antitrust accusations. So yeah, I guess this suits Google just fine!
Reminiscent of when Sears and K-Mart merged to combat Wal-Mart. We saw how that worked out. I’m sure we’re in for something similar.
We think CEO Bartz was out maneuvered by Microsoft on this deal. Yahoo received no upfront payments for their IP… and lost tremendous value – and what gains…500M in ad revenue and 250M in savings – over 10 years.
http://www.thin...or-does-it.html
Time will tell if this deal works – however, we believe it spells the end of Yahoo – and perhaps Bartz’s job. And in the end, Google will be no worse…. bad deal.
why exactly did this happen?
Frankly, Yahoo! is now a simple portal. That’s so 90’s. Shame.
But it makes a profit….
Is twitter “the wonder tool” profitable? Hummmm….
As an investor in both YHOO and MSFT, I’m not sure how I should feel about this.
Piffle.
To use how the market moved on a single day as a measurement of “who got the better deal” is silly.
Please go and read what Ben Graham says about Mr. Market. In the short-term, it is pretty irrational. In the long-term, it will be get things right. But a day is not the long-term.
What will be interesting is to see Yahoo’s free cash flow situation and net margins 2-3 years from now.
Carol Bartz is a swaggering, blustering idiot. Just watch Kara Swisher’s interview with her. She will dismantle Yahoo and walk away still thinking the world of herself.
She’s halfway there. And it really didn’t take long either. At least she’s efficient.
Think about it. MICROSOFT, the largest SOFTWARE MAKER on EARTH and YAHOO is just there as an alternate SEARCH compared to the GIANT GOOGLE.
However, YAHOO has been in the reckoning from early computer days when we used to wait four minutes to log in DIALING out on a MODEM.
MICROSOFT will go from strength to strength is what i feel.
YAHOO just needs a small push in a break even kind of atmosphere,
THEY will take GOOGLE in a matter of weeks.
together make it
Wow at least they created $30 million in value!
I wonder if this was what Yahoo! has in mind, what exactly is their business strategy?
What is Microsoft’s too, are they holding on desperately to their old business model (software + OS) while trying to move into Apple’s and Google’s territory?
How did Techcrunch come to this conclusion? They used Google Finance charts……
MSFT has made such idiots of themselves with search (bing cashback, bing search club, etc.) that I will NEVER take them serious.
Congratulations Yahoo!
You now have nothing. Seriously, what do you have? A cereal box full of AJAX snacks, news wire feeds, and some articles you cut out of your friends’ magazines. You have nothing that two guys in bedroom can’t put online tomorrow. And that’s who your new competition is. Every niche publisher out there. Yahoo is now just another content site. Carol Bartz didn’t even sell the golden goose, she gave it away. I mean it is just astounding.
The reason I’m pissed is because Google’s route to total domination has just been cleared. Yes Bing is a decent search engine, but it’s still not where it needs to be. Now Yahoo has just given up search. Search is the key to being king of the web. Without owning search, you will not be a player and I don’t see that changing in the next 10 years or even the next 20.
So what does Yahoo have? Content aggregation and a bunch of users for now. Their position in display advertising is based on their sheer number of users. Yahoo now has nothing that can’t be found somewhere else and done better somewhere else in many cases. They’ve got no draw and I think they will begin bleeding users as they will no longer be able to differentiate themselves from sites like Comcast.net. How absolutely pathetic.
Its always funny when they get into financial stuff on this site. Oversimplifying and twisting facts to their liking, worst is that people believe that bs. Imho you want to push your own shares further with posts like this.
Looking forward to your comments when this deal works.
Yahoo+Big=……1/10000Google. That’s is VN! He he…
Anyone keep track of this over the long term? These were short term investors making a quick buck. The stock didnt actually go down, nice financial review TC
What I never see covered: the quality of the actual search results. This is where Google is the champion. Sure Bing is new, but MS will screw up anyways. Take their track record of failure in this particular business as proof.
Best article on the matter:
http://calacani...-seppuku-today/
Incredible. Yahoo have given away their only asset that has a large barrier to entry. Small, light-weight innovators will eat the rest of Yahoo alive.
I can’t believe how short-sighted Yahoo has been here. Search IS today’s portal – control search and you control where people go. And they’ve just given that control to MS.
As for MSFT – can’t see them going anywhere but backwards from 28%. Unless they buy in the innovation they’re going to need.
Yahoo talks about synergie?
We’ll see if the ad revenue is still there to make it all worthwhile.