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Microsoft Withdraws Yahoo Takeover Offer 336

Posted by timothy
from the brinksmanship-in-the-pac-no-west dept.
mksmac writes "According to the KOMO TV Website, Microsoft has withdrawn its bid for Yahoo after presenting them with an increased offer that was subsequently declined by Yahoo. Frankly, this seems like a smarter decision on Microsoft's part, but I'd like to hear how other people feel about the deal. Should Microsoft have walked away, pressured Yahoo via a hostile takeover or sweetened the pot until Yahoo gave in?" For those who prefer it, the NYT also has coverage, and the story is also at news.com, among many others. I like the Beeb's version as well. And for the Microsoft-centric explanation of why the courtship is over, see Steve Balmer's letter to Jerry Yang.
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Microsoft Withdraws Yahoo Takeover Offer

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  • My question is... (Score:5, Interesting)

    by kithrup (778358) on Saturday May 03, 2008 @09:10PM (#23287842)

    This doesn't seem to have been a particularly well-handled, or deeply-sincere, attempt by Microsoft... so what were they really doing?

    This is a sincere question; I've seen a lot of acquisitions (and even hostile takeovers) happen, and this seemed lacking in many ways. Maybe I've missed some of the machinations; maybe not.

    • Re:My question is... (Score:5, Informative)

      by j0nb0y (107699) <`moc.oohay' `ta' `003yobnoj'> on Saturday May 03, 2008 @09:20PM (#23287916) Homepage
      Where did you get that idea?

      The general consensus on the street seemed to be that Microsoft was offering *too much* money... which is why Microsoft stock dropped when the offer was first announced...

      I'm not a big fan of Microsoft, but it really looked to me like they wanted Yahoo. It was Yahoo's executives who didn't want the deal to go through.

      Maybe I just watch too much CNBC.
      • by smitty_one_each (243267) * on Saturday May 03, 2008 @09:37PM (#23288048) Homepage Journal

        which is why Microsoft stock dropped when the offer was first announced...
        Very Interesting Statement That Almost
        Ventured Into Suspicious Territory And
        Vital, Insightful Stock Threat Analysis.
      • Re:My question is... (Score:5, Interesting)

        by CodeBuster (516420) on Saturday May 03, 2008 @10:36PM (#23288310)
        It wasn't just the Yahoo executives who weren't interested in the deal. There was no way that Microsoft could win a proxy fight for Yahoo at anything approaching a reasonable price. The founders and various other individuals (including the board) owned about 34% or so of the outstanding shares and there was at least 25% more owned by individual investors (who rarely bother to vote in proxy fights which means that the board would get to vote those shares too). So the board and the individuals opposing Microsoft controlled at least 60% or so of the outstanding shares, making any hostile takeover direct shareholder tender offer a non-starter (unless Microsoft offered an insane price which they obviously weren't going to do). Microsoft did the only thing that they could do, they made the prudent decision and walked away.
      • by blind biker (1066130) on Sunday May 04, 2008 @04:09AM (#23289816) Journal

        The general consensus on the street seemed to be that Microsoft was offering *too much* money... which is why Microsoft stock dropped when the offer was first announced...
        MS stock dipping on news of takeover talks is hardly an indication that MS offered too much: every time a publicly listed company offers to take over another, their stock will dip, at least a little bit.

        You imply intelligence in the stock market whereas there isn't any, nor does it have an inherent rationality.
      • Re: (Score:3, Insightful)

        by RobertM1968 (951074)

        Or perhaps MS theorized that they could take the stock value hit for this little escapade, full knowing that it would drop Yahoo's stock value considerably when this outcome was "decided upon" by Microsoft?

        Of course that is just speculation/a possible alternate theory based off what happened. Either way, Microsoft, in one way or another, wins to some extent... either they own Yahoo, or Yahoo becomes "worth" less.

    • Credibility lost? (Score:3, Interesting)

      by Lord Satri (609291)

      This doesn't seem to have been a particularly well-handled, or deeply-sincere, attempt by Microsoft... so what were they really doing?

      I don't know, but am I the only thinking Microsoft lost credibility in the process? Am I just not understanding what this was all about?

      I'm happy because it means more competition, but I admit I'm also somewhat confused as you are about what they are really doing...

      Maybe it really is about some high-level finance strategy that only people in the know can grasp?

      • by Linus the Turbonerd (1138133) on Saturday May 03, 2008 @09:25PM (#23287962) Homepage
        Well, losing credibility generally implies that it was present in the first place, so...
      • Re: (Score:2, Interesting)

        Oh, MicroSoft got plenty of free press out of the deal, and drew attention away from their odious behavior with ISO over OOXML.
        If they acquired Yahoo!, fine, if not, fine.
      • Re: (Score:2, Insightful)

        by somersault (912633)

        Maybe it really is about some high-level finance strategy that only people in the know can grasp?
        "Shit! We just wasted a metric assload of money on Vista and now everyone's just running all their apps inside their browser anyway! Go look for a growing internet based company we can buy before the bubble bursts again!"
      • Re: (Score:3, Insightful)

        by Znork (31774)
        I don't know, but am I the only thinking Microsoft lost credibility in the process?

        Credibility in what field? In the field of business I'd actually say they gained credibility; a merger with Yahoo would have been horrific for both companies. The fact that the board stopped this shows there's some perspective in the company at least.

        Am I just not understanding what this was all about?

        Ballmer not being able to stand being second or third in any field? Now, if instead of credibility, you mean Ballmer lost face
        • Re: (Score:3, Informative)

          > a merger with Yahoo would have been horrific for both companies

          I always thought so too, but let me assure you, the rest of the finance world disagreed. Completely.

          There's a certain momentum to mergers that has absolutely nothing to do with the companies involved. It has to do with cash flows and balance sheets. It doesn't make a difference what happens AFTER the deal is closed. That's the distant future, science fiction.

          MS had cash, they needed to spend cash, this was a vaguely profitable company to sp
    • by NMerriam (15122) <NMerriam@artboy.org> on Saturday May 03, 2008 @09:34PM (#23288024) Homepage
      I think the deal was sincere, that basically MS was genuinely trying to buy Yahoo as a way to get a lot more presence online and try to slow down Google. I suspect they believed most Yahoo execs and stockholders would have been excited at the prospect of getting so much money, and never anticipated Jerry Yang really being able to get so much of the board to think it was a bad idea.

      Without an alternate reality time machine, we'll never know if it was really bad or good. Yahoo is not a leader in much of anything at the moment, but I don't think it's crazy for such a company to believe their best days might yet be ahead of them. It's not like they're AltaVista or Ask.com, they have quite a bit of clout and a lot of popular services despite Google's dominance.

      MS was certainly not getting much of anywhere with MSN or whatever they're trying to push this week. With their new "Live!" stuff being integrated into Windows and Office, they finally have a decently compelling online product to try and spin off of, but they don't have anywhere to spin people *to*, in a way that would keep them in an all-MS ecosystem. Yahoo could give them all that in one deal.
      • Re:My question is... (Score:5, Interesting)

        by hairyfeet (841228) <bassbeast1968@gma i l . com> on Saturday May 03, 2008 @11:10PM (#23288476) Journal
        Actually I believe that MSFT wanted yahoo because Yahoo mail [email-mark...eports.com] is the number one web mail,followed by Windows Live mail. That combination would not only give them a big chunk of the web mail but tons of new data to mine. I am personally glad they quit as I would have hated to see my Yahoo mail end up some nasty Hotmail copy. But that is my take on it,YMMV.
        • by Associate (317603) on Saturday May 03, 2008 @11:21PM (#23288550) Homepage
          You could have always dumped the account and filled it with solicited SPAM telling Microsoft you were a 45 year old gay midget into tranny foot fetish porn with interests in RC cars, the Book of Mormon, and central Asian camel farming.
        • Re: (Score:3, Insightful)

          by NMerriam (15122)
          Well, yeah, Yahoo Mail plus Flickr plus a lot of other stuff (their jobs and personals sites are quite significant, for example) that ties in well with their push into more entertainment and online ventures that serve to convince home users to stop using XP and Office 97. Having an MS Photo Editor that automagically syncs with "MS Flickr Live!" would be a great boon. They'd get the best online maps service outside Google, as well.

          Don't forget that Apple is working so closely with Google these days, the two
        • Re: (Score:3, Insightful)

          by bughunter (10093)

          I am personally glad they quit as I would have hated to see my Yahoo mail end up some nasty Hotmail copy.

          As a paying Yahoo Mail Plus customer, this is precisely my opinion as well.

          Good riddance, MSFT. Go embrace and destroy something else.

        • Re: (Score:3, Insightful)

          by blind biker (1066130)
          And that is also my take on this. I look at Hotmail, then I look at Yahoo mail, and the conclusion comes naturally.

          But also, the Yahoo search engine is as good as Google's (in pure search, but it doesn't have fancy features as Google Math, though) while Microsofts is in a different - lower - league.

          I am also quite fond of Yahoo Groups and Babelfish. So for me, as a customer, this is very good. Sorry I can't muster much concern for shareholders. Perhaps this is good for them, too, in the long term.
    • This doesn't seem to have been a particularly well-handled, or deeply-sincere, attempt by Microsoft... so what were they really doing?

      This is a sincere question; I've seen a lot of acquisitions (and even hostile takeovers) happen, and this seemed lacking in many ways. Maybe I've missed some of the machinations; maybe not.

      From appearances Yahoo seems to be a terrible acquisition target; it is large and healthy enough to be very expensive and burdensome, but not growing rapidly or successful enough to be a major asset to someone like Microsoft.

      One theory I've heard floated is that they didn't actually want Yahoo, but by making a show of trying to acquire it hoped to bait Google into buying Yahoo on the basis of denying it to Microsoft, with the net result of burning a chunk of Google's resources and bogging them down with

      • by CastrTroy (595695)
        I fail to see why MS would want to compete with Google so much. Sure, they are both really big companies, but that's about all they have in common. MS makes the majority of their money from Windows, Office, a bunch of other software, and also by selling hardware like XBox, or many varied computer peripherals. Google makes money (I'm still confused here) by selling advertising space on their extremely popular search engine. Microsoft also has a search engine, although I'm pretty sure I've never used it, a
        • by 3HackBug77 (983153) on Saturday May 03, 2008 @10:31PM (#23288288) Homepage
          MS and Google don't just sell ad space on their own pages, they both handle advertisement on a variety of pages. That's how they make money and generate traffic. Yahoo does this as well, and actually have the highest traffic generation worldwide still today, so it makes sense that MS would try to acquire Yahoo to try to compete better with Google. I do agree that MS should try to stick what they are good at, but the fact is that almost everything is shifting online and MS needs to stay competitive.
        • Re:My question is... (Score:5, Informative)

          by CodeBuster (516420) on Saturday May 03, 2008 @10:44PM (#23288348)

          I fail to see why MS would want to compete with Google so much
          Google is earning economic rent [wikipedia.org] through their strong franchise business in search and online advertising. There is no way that they are not going to attract competitors. Microsoft is in the technology business too, so it is difficult to explain to your shareholders why you are not trying to capture a piece of that lucrative market for yourself, especially when you seem well placed to compete for a share of the spoils. Microsoft is trying to earn the best possible return for their shareholders and that means competing for a share of the market in which Google is earning strong profits going forward.
        • Microsoft also has a search engine, although I'm pretty sure I've never used it, and can't recall anybody else using it either.

          People use it because it is the default search engine for IE: they tend to be the sort of people who do not know what a search engine is, they will tell you that to search "I just type it into the internet"

          Google's office suite is severely limited compared to MS Office. I don't understand why MS would be so afraid of Google.

          For most people Google's suite does what they need. I know plenty of people who only use a word processor to write letters, and a spreadsheet to format tables. Google's spreadsheet has some nice touches, like being able to incorporate live securities prices.

      • From appearances Yahoo seems to be a terrible acquisition target; it is large and healthy enough to be very expensive and burdensome, but not growing rapidly or successful enough to be a major asset to someone like Microsoft.

        Yahoo would be the ideal vehicle to push (force?) Silverlight [microsoft.com] out to millions of people in one foul swoop. Note the system requirements in the link -- linux users are not welcome.

      • Re:My question is... (Score:5, Interesting)

        by 99BottlesOfBeerInMyF (813746) on Saturday May 03, 2008 @10:59PM (#23288426)

        From appearances Yahoo seems to be a terrible acquisition target; it is large and healthy enough to be very expensive and burdensome, but not growing rapidly or successful enough to be a major asset to someone like Microsoft.

        Yahoo combined with MS's own Web and internet services would have been enough to give MS majority market share in several new markets. More importantly, many of yahoo's services are pretty decent and doing quite well. For some other company they might not be a good acquisition, but for a company like MS that has several monopolies and is not at all shy about illegally leveraging them, Yahoo makes a lot of sense. When you have 25% market share, breaking compatibility with everyone else hurts you more than them. When you have 52% and it is growing because it is tied to Windows and MS Office and IE, breaking compatability with everyone else hurts them more.

        One theory I've heard floated is that they didn't actually want Yahoo, but by making a show of trying to acquire it hoped to bait Google into buying Yahoo on the basis of denying it to Microsoft, with the net result of burning a chunk of Google's resources and bogging them down with the process of absorbing something that large.

        It sounds unlikely to me. If that was their plan, it probably backfired. All it seems to have done is to get Google and Yahoo talking and making technology partnerships.

        • Re: (Score:3, Interesting)

          by Ilgaz (86384) *
          I use Yahoo since it was founded and I opened account there right after Hotmail got acquired by MS.

          If we could get into Yahoo stats, I bet there is a huge explosion of user accounts at Yahoo mail back in 1998, when Hotmail got acquired.

          If you buy Yahoo as Microsoft, you don't automatically have 250 million active users (just mail!), you may have 130 million since the rest would purge their accounts and move to other services like Google. It is just 3-4 clicks to purge one Yahoo account, of course I checked
    • Re:My question is... (Score:5, Interesting)

      by Anonymous Coward on Saturday May 03, 2008 @09:38PM (#23288056)
      Microsoft is in the process of buying back stock with their oh so massive capital. They just got to spend months doing this with a defalted stock price because of the buyout offer. Now that the offer is off the table, the stock price should start to go back up.
    • by Serapth (643581) on Saturday May 03, 2008 @10:09PM (#23288204)
      No machinations, at least nothing subtle. Basically MS is walking from the deal because Yahoo threatened to do a long term alliance for search revenue with google, which would have completely ruined any possible value for Microsoft.

      The audience for the letter wasnt Wang though, it was the shareholders. Lots of people in the Yahoo camp are pissed they didnt already accept the deal. Lots more are going to be pissed they turned down 33$ a share. Even more are going to be pissed when the stock price plummets on Monday, as its been going up on the assumption that the acquisition would happen. I wouldnt be suprised to see a single day 6 - 8 $ a share drop. That will lead to even more shareholder lawsuits and I don't doubt that in the near future Wang will be out on his ass, as his position was hanging by a thread already.

      If this happens, MS could actually swoop back in and buy Yahoo for a discount ( see BEA/Oracle for example ) in the future. Otherwise Microsoft may have managed to damage a rival by causing such chaos and internal strife.

      Personally as someone who holds MSFT shares and watched them drop 3$ the day this (horrible!!!) deal was announced, I say THANK GOD! My only prayer is that this is finally the thing that gets Balmer ousted. I can only pray.
      • Re: (Score:3, Interesting)

        by Tawnos (1030370)
        Internal strife, I think, hit both companies. Word from the inside was that the mere offer severly damaged morale at MS.
    • by supabeast! (84658) on Saturday May 03, 2008 @11:57PM (#23288736)

      This doesn't seem to have been a particularly well-handled, or deeply-sincere, attempt by Microsoft... so what were they really doing?

      Screwing up. Microsoft has a history of big failures, and the bigger the company gets, the bigger the failures. Putting Uncle Fester in charge certainly hasn't helped. One of these days the board will realize that the Xbox team is the only one left with a fucking clue and put them in charge.
  • I'm torn (Score:5, Insightful)

    by JanneM (7445) on Saturday May 03, 2008 @09:12PM (#23287860) Homepage
    On one hand, I'm of course happy I can stay with Flickr. On the other, it would have been a great deal of fun seeing Microsoft get bogged down and distracted for a good few years as it struggled to digest Yahoo (and, likely, killing any value of that company in the process).
     
    • Re:I'm torn (Score:5, Interesting)

      by Anonymous Coward on Saturday May 03, 2008 @09:15PM (#23287876)
      Well, as an employee, I saw it as a win-win, assuming I could find another job. Either Microsoft would turn over a new leaf and actually make the combo work well. Or it would be the death of Microsoft.

      And, unlike a lot of the folks there, I'm fairly confident that I'd be able to find a new job the second it became official.

      It's one of those dangerous ideas that you really need to be a nerd and know microsofties, googlers, and yahoos in order to understand exactly how stupid of an idea it really is.
      • Re:I'm torn (Score:5, Insightful)

        by div_2n (525075) on Saturday May 03, 2008 @09:25PM (#23287964)
        You kind of left out a party in your "win-win" analysis. How about customers? I have one very real group of customers in mind--Zimbra customers.

        What are the odds Microsoft would have allowed it to flourish? I'm betting that, at a minimum, they would have jacked the price up until it was no longer as cost effective over Exchange.
        • Re:I'm torn (Score:4, Interesting)

          by IGnatius T Foobar (4328) on Saturday May 03, 2008 @11:12PM (#23288488) Homepage Journal

          You kind of left out a party in your "win-win" analysis. How about customers? I have one very real group of customers in mind--Zimbra customers.
          What are the odds Microsoft would have allowed it to flourish? I'm betting that, at a minimum, they would have jacked the price up until it was no longer as cost effective over Exchange.
          I'm not so sure that Zimbra is ever going to provide any real value to Yahoo, even without the threat of a Microsoft takeover looming.

          Zimbra has effectively painted itself into a corner when it comes to value in terms of cost/benefit. They helped themselves to FOSS underpinnings in order to develop their product quickly, and because of this they are obligated to offer a feature-crippled free version. Because of their well-funded PR department they were able to spin this as "see, we're an open source company" in order to gain some street cred, but anyone who has taken a serious look at Zimbra knows that if you want it to be useful to anything more than the most simplistic of installations, you have to buy the "Network Edition."

          This effectively locks them out of the marketplace for true open source solutions such as Citadel [citadel.org] and Kolab [kolab.org] and eGroupware [egroupware.org] because they're not true end-to-end FOSS. At the same time, they can't raise their prices high enough to make real money with the product, because customers would just as soon go with Exchange.

          Disclaimer: I'm a Citadel developer, and a proponent of end-to-end FOSS solutions rather than weird commercial hybrids such as Zimbra (or Scalix, for that matter). But I think there's a lot of weight to what I'm saying here.
          • Re:I'm torn (Score:5, Interesting)

            by Foofoobar (318279) on Saturday May 03, 2008 @11:52PM (#23288712)
            Actually, I've been part of two Ziwbra installs at companies now and both were due to constant problews with Exchange. After switching to Zimbra, all users (mac, Linux and Windows) were able to interoperate smoothly and since the server was on Linux, we had no downtime. The stability in Zimbra and cross platform capabilities puts the original product to shame.
  • No future. (Score:5, Funny)

    by owlnation (858981) on Saturday May 03, 2008 @09:14PM (#23287870)
    Bad day to be a Yahoo employee, bad year really...

    Yahoo's got to the point where not even MS wants them. They're doomed. That's not really a bad thing. Yahoo is evil after all.

    AOL called, they want their business plan back.
    • Re:No future. (Score:5, Insightful)

      by rsmith-mac (639075) on Saturday May 03, 2008 @09:22PM (#23287944)

      Frankly the general idea is correct, the reasoning is not. MS (publicly) doesn't want Yahoo because they effectively loaded themselves with a poison pill to keep Microsoft from taking them over. They've done things like partnering with Google and giving executives very large golden parachutes that make it very unpalpable if not outright hard for Microsoft to acquire the company and not end up with a mess and/or FTC troubles.

      It is bad news for Yahoo employees and shareholders though. The company really is going nowhere, it's going to limp on for years like AOL or get picked up for pennies by Google if it could be cleared by the FTC. The best deal for the shareholders would have been to approve a buyout, but Yahoo's poison pill plan did a pretty good job of stopping that.

      • Re:No future. (Score:4, Insightful)

        by explosivejared (1186049) <hagan...jared@@@gmail...com> on Saturday May 03, 2008 @10:04PM (#23288186)
        I don't know about all that. Personally, I don't have all that much faith in Google. Granted it's a hard lesson to learn, but things do change and market variables do in fact vary. Online advertising is far from being a mature field and there is a great deal of value left in Yahoo. You may be right about them sort of just drifting listlessly, but again this whole market is crazy.

        One thing I can tell you for sure is that being acquired by Microsoft would have ended Yahoo as we know it. Everything the company had to offer would cease to exist in order to be replaced by microsoft's own stuff. So don't be so sure about it being the best deal for investors. It's been profitable up to this point, and there is no reason it won't be for a long time. There is nothing wrong with investing in a company that has non-astronomical growth. They don't all have to be hedge funds.
        • Re: (Score:2, Insightful)

          by NDPTAL85 (260093)
          The good deal for the Yahoo investors would have been the instant payout. They would have gotten a combination of cash and Microsoft stock at a value that Yahoo just isn't worth and is unlikely to ever get to on its own. So it wouldn't really matter what would have happened to Yahoo in the meantime.
        • Re:No future. (Score:4, Insightful)

          by kesuki (321456) on Saturday May 03, 2008 @11:03PM (#23288446) Journal
          being acquired by Microsoft would also have killed BSD. Yahoo runs on Yahoo BSD and a lot of yahoo's internal coders are important in various BSD projects in their spare time...

          right now running FreeBSD really doesn't make sense compared to say, Ubuntu because Ubuntu makes desktop Linux easy, but for a simple server, FreeBSD is still a viable choice, thanks in large part to yahoo.

          Microsoft was running FreeBSD machines to host hotmail for a long time after acquiring them, but eventually they shifted them to MS operating systems just to demonstrate to customers that MS could run a complex free webmail site with computers 20 times more powerful that they needed to run it with a BSD os..

          so having the experience, microsoft would have killed BSD and force upgraded all of yahoos servers from a lean custom built OS to a bloated general purpose OS that was never really designed to be a server platform.

          just to say 'this is how you use microsoft server to quadruple the cost of running a massive web portal' yeah, yeah i know they would have pretended like it was cheaper, with FUD about how much it costs to 'maintain' a custom light weight OS designed to be used in server farms...

          • Wait, that might have very well been MS' ulterior motive. Acquire a whole shipload of BSD "developers, developers, developers, developers" that could help them get out of the corner they have painted themselves into with the current state of Windows. Windows 7 might be basically Mac OS X Redmond style...a Microsoft GUI on top of BSD internals they can fork proprietary. That is the best explanation of any I have heard for why Yahoo was a MS target. Without Yahoo developers they can raid, this might be a more
          • Re: (Score:3, Interesting)

            by Just Some Guy (3352)

            but for a simple server, FreeBSD is still a viable choice

            Could you possibly make that praise any fainter? FreeBSD is still the preferred choice of many server admins for a lot of reasons, including the fact that the newly-released 7-STABLE series is ludicrously fast. For example, when researching PostgreSQL performance tuning, a fairly common recommendation is to run it on FreeBSD.

            It's not exactly the limping dinosaur some people around here seem to imagine.

  • ...don't let the damn door hit your ass on the way out!
  • by Jeremiah Cornelius (137) * on Saturday May 03, 2008 @09:15PM (#23287874) Homepage Journal
    Competitive Value of Yahoo! Demolished!

    Ballmer creates AOL Redux.
  • by phat_goat (836325) on Saturday May 03, 2008 @09:18PM (#23287894)
    After Google and Yahoo announced their advertising "experiment", i'm sure that was what killed it for Microsoft, i'm sure a few chairs were sent across meeting rooms in Redmond too.
    • by game kid (805301) on Saturday May 03, 2008 @09:58PM (#23288152) Homepage

      ...

      We regard with particular concern your apparent planning to respond to a "hostile" bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo! today. In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo! undesirable to us for a number of reasons:

      • First, it would fundamentally undermine Yahoo!'s own strategy and long-term viability by encouraging advertisers to use Google as opposed to your Panama paid search system. This would also fragment your search advertising and display advertising strategies and the ecosystem surrounding them. This would undermine the reliance on your display advertising business to fuel future growth.

      ...

      No need to speculate on what Ballmer has all but confirmed. :)
    • by Strudelkugel (594414) * on Saturday May 03, 2008 @10:33PM (#23288298)
      Actually I doubt Ballmer threw any chairs for this one. I'm no fan of him as Microsoft CEO; I have a hard time understanding how he has managed to stay there this long given the lackluster (with the exception of the enterprise platform) product performance. That said, he is supposed to be a good poker player, and this offer, then rejection of the Yahoo counter-offer has something of a poker feel to it.

      Think of what happens now: The shareholders of Yahoo are going to go ballistic. Yahoo management just left $47.5 billion on the table! (The total at $33 / share for Yahoo.) This has to be the dumbest corporate move since Time Warner buying AOL. My guess is that the Yahoo board is going to have to fend off a shareholder insurrection the likes of which we have not seen for a while, which will serve as a huge distraction for Yahoo. I don't think Google can get too close to Yahoo, because the DOJ (let alone the EU) will not like the concentration of search advertising in the hands of one company.

      Microsoft let out that they allocated $1.5 billion for employee retention. If you are a good performer at Yahoo, you now have three choices:

      • Stay at Yahoo
      • Go to Google
      • Go to Microsoft

      If you stay at Yahoo, you get to work for a company were top management is going to have a major distraction on their hands. The people who were going to jump ship to Google if there was a takeover are going to leave, and a few people who might not have thought of it at all are now going to explore going to Microsoft.

      In the end, Yahoo fizzles, and is less competition to Microsoft. Not a bad result from Ballmer's point of view. Watch the stocks on Monday. Yahoo will likely plunge, Microsoft will more than likely be up a few dollars. Over time, Microsoft and Google will pick apart Yahoo. Then Ballmer will have positioned Microsoft to be #2 in the business, which is good enough for Jack Welch (Former CEO of GE), who I believe Ballmer admires. This is probably the smartest thing Ballmer has done during his tenure as CEO.

      • by achurch (201270)

        Think of what happens now: The shareholders of Yahoo are going to go ballistic. Yahoo management just left $47.5 billion on the table!

        Assuming, of course, that said shareholders think Microsoft was actually going to let Yahoo live. I don't think I'd have been that optimistic (but then again, I don't hold any YHOO anyway).

        • by everphilski (877346) on Saturday May 03, 2008 @10:54PM (#23288416) Journal
          Shareholders don't care. Shareholders cash out. Again, watch stock prices on Monday. MSFT will be up YHOO will be down, YHOO is overvalued as-is, and MSFT was offering a premium at that.
          • Re: (Score:3, Interesting)

            by downix (84795)
            I see why you're for McCain, as you believe that all stockholders practice the bad habits which have led to the current economic conditions (cashing-out). Truth is, Yahoo is incredibly undervalued as demonstrated by the value of it's customer information, software solutions, etc. In addition, Yahoo rolled out new products after the initial bid, showing a growing company with a dynamic development, not a company needing Microsoft. Investors worth billions, such as Buffet, do not "cash out", they invest lo
      • by kesuki (321456) on Saturday May 03, 2008 @11:24PM (#23288566) Journal
        I still remember when yahoo was worth $500 a share... sure they've had 2 2:1 stock splits since then, and plus the internet bubble collapsed int he interim, but still at yahoo's Highest valuation, adjusted for stock splits they would be worth $125 a share, or 180 billion dollars... true, it was a bubble, but if the company was at one point worth over 378% more than what was offered... and the execs for whatever reason believe that they are currently undervalued by the street... well... they are, the stock market is way down, on concerns over the economy, and yahoo is worth way more than 47.5 billion dollars, when you consider that every year the technology they rely on is getting cheaper and better, while the over head costs are going down, and demand for their services are rising...

        really the stock market DOSE NOT currently value yahoo for where technology is going, because for all the computers they use to keep track of stocks, they don't fundamentally understand how to value a company that will halve it's operating costs ever ten years, so long as certain technologies get better every year...

        nobody knows exactly when or how technology prices will bottom out, because even if we no longer can shrink the size of transistors etc, the economy of scales might still drive prices lower, as they already have for microprocessors... just 5 years ago, a viable single core server processor cost $1,000 but today, a quad core server processor costs $230-$300 because of economies of scale for both multi-core consumer and server products...

        honestly in another 5 years, when a 16-core mutli-processor sells for $49.99 and uses the same electricity of today's quad core processor, do you really think that then, in that far away future land that yahoo or google will have fewer customers than they do today? they will have more, and the cost per customer will be lower, and the cost of advertising higher.

        Even if google or some other competitor is ahead of yahoo, yahoo will still have an enormous customer base... and technology keeps kgetting better.
  • by Anonymous Coward
    This was never about Microsoft really wanting to buy Yahoo!. Based on everything we've seen, I think it's safe to assume that this was all about disturbing Yahoo!'s shit, at a time when, for Yahoo!'s sake, such shit disturbery needed to be avoided at all cost.

    Now Yahoo!'s shareholders are up in arms. The faith in the executives has been damaged. Microsoft is still as strong as ever, but now Yahoo! has a cloud of uncertainty hanging over it. In a way, Microsoft has made Yahoo! look like a small player by jus
  • So why do we care that this MIcrosoft was bidding on Yahoo? IIRC, the big story was Microsoft bidding on Yahoo!... Of course, I'm surprised we didn't hear about Microsoft's competing bid for Yahoo, but I suppose that the obscurity of the latter could very well be the reason for that.
  • Savvy move (Score:5, Interesting)

    by MillenneumMan (932804) on Saturday May 03, 2008 @09:23PM (#23287954)
    Yahoo's market cap takes a hit, shareholders initiate lawsuits against the Yahoo board. Microsoft may be able to swoop in next quarter and accomplish this via hostile takeover for significantly less. Surprised Microsoft didn't do this sooner
    • Re:Savvy move (Score:5, Insightful)

      by tsotha (720379) on Saturday May 03, 2008 @09:54PM (#23288132)
      That's what I've been thinking. If I were a Yahoo shareholder right now I'd be very, very pissed off. The board of Yahoo was really looking out for itself here and not for the shareholders - no way no how Yahoo was even worth what Microsoft offered originally.
    • Re: (Score:2, Insightful)

      by Anonymous Coward
      Yeah, similar to the Intuit deal that fell through ten years ago... Intuit seemed to lose its momentum after that.

      Don't forget, though, that Microsoft's online division is now a *really* bad place to be right now, thanks to the vote of no confidence and continued uncertainty over Microsoft's interest in Yahoo. Yahoo and MSN are both big losers. Of course, that doesn't keep Steve Ballmer awake nights.
  • Watch out AOL (Score:2, Insightful)

    by lenin (18679)
    You know if Microsoft had all of that money and stock set aside ($1.5 billion just for employee retention) and didn't buy Yahoo!, they are going to buy someone else. AOL makes sense and the price is right, as Time Warner wants nothing to do with them.
  • MS, you lucked out (Score:5, Insightful)

    by Verity_Crux (523278) <notacommie AT gmail DOT com> on Saturday May 03, 2008 @09:51PM (#23288114)
    Honestly, do you possibly think you could recover that much money with goods from Yahoo? This crazy idea to buy Yahoo was a combination of two things: ignoramus upper management and pressure from Google. Too many businessmen only understand how to make money from advertising. Who put them in charge? You need to weed them out and put in upper management that understand the beauties in your software that is currently making you money. Let Google make the money in the internet. Quit worrying about them or your silly MSN or other sundry internet ventures.

    Instead, you should invest that money in your operating system, the APIs for your OS, the tools to make it easy to create applications for your OS. Make a serious real time OS. Unify your OSs. Architect them so that you can crank them out faster and safer. Make your driver model easy to understand and code for. DirectX seems to do good for you, but you had better keep up on it. The same is true of C#. Give these Java folks some stiff competition in language, libraries, and tools. Make the speed of your CLR rock. Make it vectorize, use the SIMD, automatically use multiple cores, etc.

    In summary, make businesses want to run on your platform, develop for your platform. You want every office to use your software tools. It won't matter if every office uses your search engine when they go to get info off the internet. That's not the most effective way for you -- a company with an already vast installation base -- to make money.
    • by Serapth (643581) on Saturday May 03, 2008 @10:30PM (#23288278)
      Instead, you should invest that money in your operating system, the APIs for your OS, the tools to make it easy to create applications for your OS. Make a serious real time OS. Unify your OSs. Architect them so that you can crank them out faster and safer. Make your driver model easy to understand and code for. DirectX seems to do good for you, but you had better keep up on it. The same is true of C#. Give these Java folks some stiff competition in language, libraries, and tools. Make the speed of your CLR rock. Make it vectorize, use the SIMD, automatically use multiple cores, etc.

      This is kinda a silly mindset as you seem to think the limiting factor in all of the above is money. I highly doubt on any project within Microsoft, the limiting factor is ever budgetary. Throwing more money at something that is already sufficently funded has *ZERO* positive results and infact can cause a negative.
      Frankly that is part of why MS was making such boneheaded deals... they have too much money and too much of a lock on their own markets. They need to expand into new areas, or die. This is why they are willing to lose 10 billion dollars on the Xbox and are willing to pay 32 billion for a washed out internet company. Well that, and Balmer is a fucking idiot.
      • Re: (Score:3, Informative)

        by Anonymous Coward
        Surprisingly yes, budget is a limiting factor in a lot of things at Microsoft. They can't or won't pay the premium needed to keep really top notch developers around, so their staff is made up of "company men" with no perspective on reality, mediocre developers who slipped through the hiring process, and the small contingent of good developers who just haven't gotten pissed off enough to leave yet. It's a problem a lot of companies seem to have when the stock payoff days are over but the management still buy
    • by eebra82 (907996)

      Honestly, do you possibly think you could recover that much money with goods from Yahoo? This crazy idea to buy Yahoo was a combination of two things: ignoramus upper management and pressure from Google.

      As it looks now, neither Microsoft nor Yahoo can take on Google as their rival is expanding heavily and innovating at a faster pace. Together, this could obviously turn for the better as such a giant could pose a serious threat to Google, which is what it's all about.

      Pressure from Google? Of course! Would they be any better if they completely ignored the fact that they are being run over by stronger competition?

      Last but not least, I don't think Microsoft bid so much money in panic, but rather after a

      • As it looks now, neither Microsoft nor Yahoo can take on Google as their rival is expanding heavily and innovating at a faster pace.
        Innovating means buying existing products from small companies and rebranding them? Okay. The only good thing they made themselves was the search engine, and I only call it good out of respect for the Slashdot consensus, not because it actually ever produced enough good results to justify the single-handed creation of the spam-website phenomenon.
    • Re: (Score:3, Insightful)

      Instead, you should invest that money in your operating system...

      While users and everyone in the computing industry would like to see that happen, it doesn't make sense from a business perspective. MS has a monopoly on desktop OS's. Investing in that same market will result in less return than in pretty much any other market. It doesn't matter how crappy Windows is, because a tiny investment in breaking compatibility with others and adding in new lock-in technologies will retain pretty much all your users without investing any more money. MS makes more money leveraging

    • Firstly, I really can't see Microsoft being able to do much towards improving its OS if it was unable to provide the internal API in the US anti-trust case (no such documentation apparently existed). It's hard to fix something safely if you don't know why or how it works in the first place. Bugs may be depended upon, for example, and you'd never know until that specific arc through the code was hit in testing.

      Secondly, a cynic (such as myself) might suspect Microsoft pulled out of what most speculators co

    • Re: (Score:2, Insightful)

      by AlexBirch (1137019)
      I'm probably wrong, but I see the desktops of today like the mainframes of the 70's. I think they're going to be dead soon enough and people will be able to dock their iPhones or gPhones into docking stations.

      How many CPU cycles do you need to post on Slashdot? To focus on a desktop monopoly would be suicide. The future is smart phones and the internet. To ignore this would be to become the next IBM.
    • by Bazouel (105242)
      How can the OP be modded as insightful is beyond me ... You may not personally like the way the OS, etc. is made, but with 90+% current market share, I don't see why adding 10% would warrant such a move. You do realise that to make existing OS/applications as you wish them to be, they need to be rewritten, right? And then the question remains ... will the result be so much better than the original ? Enough that it is worth for everyone to switch over and recode everything ? Backward compatibility is what is
    • Re: (Score:3, Insightful)

      by gwait (179005)
      The internet is the OS.

      In five years no one will give a rats ass what local OS is running under the web browser that connects you to your office app server, or remote app server.

      Microsoft knows this, and thus killed Netscape to prevent anyone from going AWOL from the windows platform. It almost worked, but darn these other new kids on the block with cloud computing, javascript, flash, ODF, html, php, ruby, apache - this is where all the action is in software these days, not in adding even more unwanted bell
  • Yahoo has a lot of great things inside of it. However, they got about 7 billion a year in revenues and a net income of around 600-700 million. Microsoft pulls about double that for margin.

    I think Microsoft just basically screwed yahoo for this round. After all the expenses they added. It's going to take them a while before they can come out ahead on this.

    I predict layoffs.
  • ... that in years from now yahoo will take over microsoft.
    • Re: (Score:3, Insightful)

      by Anonymous Coward
      Because you don't know anything about business or finance, at a minimum.

      Microsoft made a huge error bidding on Yahoo. It was never worth that much, especially considering the time it would take to digest the acquisition.

      Yahoo made an even bigger error not taking the offer. Their business is in the toilet, shows absolutely no signs of improvement, and this was one fabulous way for investors to cash out. (And if you are a Yahoo investor and hadn't sold yet, that was an error as well.)

      Of course, the arbs ar
  • Now my Yahoo email accounts are no longer in danger of being turned into "Yahoo Express 2.0 Live!". MSFT really sucks at anything "webcentric" and I'm sure they would have turned Yahoo Mail into some bloated ad drowned monstrosity that would only work in Windows. But that is my 02c,YMMV.
    • I'm sure they would have turned Yahoo Mail into some bloated ad drowned monstrosity
      I'm sorry, are you using the same Yahoo Mail I am?
      • by hairyfeet (841228)
        Actually I stick to the "classic" view for low bandwidth users,even though I'm on cable. Between that and Noscript and Adblock in FF I get a nice clean interface that is quick and easy to navigate. I agree that the "new" interface is a bloated Outlook ripoff. So as long as I have my classic view I'm a happy little camper.
  • It's a true shame (Score:5, Insightful)

    by theolein (316044) on Saturday May 03, 2008 @10:16PM (#23288230) Journal
    I personally am kind of sad that Microsoft didn't buy Yahoo. I had a kind of deja vue about the whole thing which I couldn't place, and it only occured to me yesterday: Time-AOL.

    When AOL was so bloated with cash they didn't know what to do with it, they bought time. It was a marriage made in hell. Time didn't have anything that AOL needed and AOL couldn't offer Time anything. When the dot bomb crash happened, AOL lost value quickly to eventually become the struggling company today that only exists because of a legacy of users who never switched to better offers.

    I had the kind of feeling that that would have happened to Microsoft as well had they bought Yahoo. They would have parted with almost half their operating capital for something that would have given them nothing. Given the fact that Microsoft is not exactly rapidly gaining marketshare at the moment, it could have hurt them badly.
    • When AOL was so bloated with cash they didn't know what to do with it, they bought time. It was a marriage made in hell. Time didn't have anything that AOL needed and AOL couldn't offer Time anything.

      Actually, they were potentially a very good match. AOL had Web services, technology, subscribers, and data infrastructure. Time-Warner had cable subscribers and numerous media content producers. Together they could have delivered mainstream TV content over the internet years before anyone else and pretty much been the established channel for such content, even if they'd locked it down to their own portal or format or DRM. That is in fact what they pitched to investors. They had potential, their management

    • by v1 (525388)
      You'd be amazed just how many people are still on AOL, simply because there is no broadband in their area and the small local dialup ISPs generally stink.

  • by Just Some Guy (3352) <kirk+slashdot@strauser.com> on Saturday May 03, 2008 @10:41PM (#23288328) Homepage Journal

    âoeWe continue to believe that our proposed acquisition made sense for Microsoft, Yahoo! and the market as a whole. Our goal in pursuing a combination with Yahoo! was to provide greater choice and innovation in the marketplace and create real value for our respective stockholders and employees,â said Steve Ballmer, chief executive officer of Microsoft.

    Microsoft is very interested in providing choice to customers, even if it requires buying out the competition.

    I am disappointed that Yahoo! has not moved towards accepting our offer. I first called you with our offer on January 31 because I believed that a combination of our two companies would have created real value for our respective shareholders and would have provided consumers, publishers, and advertisers with greater innovation and choice in the marketplace.

    Can't you see how sincere he is? It's all about choice! That's why Yahoo! was supposed to sell to Microsoft. Choice!

    But wait - what if Yahoo! were to ally with, well, other search providers?

    In addition, it would raise a host of regulatory and legal problems that no acquirer, including Microsoft, would want to inherit. Among other things, this would consolidate market share with the already-dominant paid search provider in a manner that would reduce competition and choice in the marketplace.

    That would be bad. See, Microsoft buying Yahoo! means giving people more choices. Yahoo! doing business with Google means reducing choice.

    That's why it is crucially important that Yahoo! picks the right megacorp to associate with. Think happy puppies. Think Microsoft.

  • Oh no, my Karma just got run over by my dogma..

    All things aside it just shows you Karma can screw one over when least want it to.
  • Yeah - good thing they pulled out in time. Otherwise, they would have to support Yahoo for at least 17-18 years.
  • It'll be funny to see what happens to Yahoo's share price on Monday morning. A number of their bigger shareholders purchased additional shares after Microsoft's initial offer because they expected a deal. Now some of their biggest shareholders are caught holding the bag because of the arrogance of Yahoo management. Ouch.
  • by hyades1 (1149581) <hyades1@hotmail.com> on Sunday May 04, 2008 @01:20AM (#23289148)

    Yahoo has places to go and ways to grow. They might tank, but that depends on how smart they are.

    Microsoft, on the other hand, has Vista hanging around its neck like the proverbial albatross, and Windows 7 is looking a lot like some glorified version of shareware that I'm going to start calling "Rentware" whenever anybody asks me to describe it.

    Yes, Microsoft owns the world right now. But they've pissed a lot more people off world-wide than Yahoo has with its "Send A Dissident To Camp" policy (ratting out Chinese patriots to the corrupt pack of mass murderers currently infesting Beijing). And don't forget Microsoft has kissed its share of fascist ass, too.

    Yahoo was right to tell Microsoft to put serious coin on the table or fold.

Their idea of an offer you can't refuse is an offer... and you'd better not refuse.

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