MicroHoo updates

February 23, 2008

Some updates on the Microsoft-Yahoo approach:

Kevin Johnson, president of Microsoft Platforms and Services Division sent an internal email yesterday. The email was obviously designed to be leaked (and ended up on Microsoft.com after it got into the blogosphere) judging by the language in it and the mentions of looking after both companies employees in the event of the merger going ahead. Trying to stop people jumping off the ship? Or just a good PR exercise?

Yahoo are facing another lawsuit, this time from some pension funds who claim that by declining the Microsoft offer they are not returning value to shareholders and are actually risking their investments by dragging it out looking for other parties to strike a deal with.

Lastly, Sergey Brin has expressed his nervousness at the deal going ahead, saying that ‘when you start to have companies that control the operating system, control the browsers, they really tie up the top Web sites, and can be used to manipulate stuff in various ways. I think that’s unnerving’.

So no progress really, rumours still fly about Yahoo trying to find anyone else to deal with and Microsoft seem confident as ever that the deal will go through in the end.

Interesting fact about the possible Microsoft-Yahoo merger. It turns out that 90% of Yahoo’s institutional investors also hold shares in Microsoft and most of them have more interest in Microsoft than in Yahoo.

That could mean that they are more interested in the deal going through than in securing a higher valuation for Yahoo.

It would be a real shame if shareholders decide the future of Yahoo. Times like this you need a strong CEO…

In a letter from Jerry Yang Yahoo have explained why they turned down the Microsoft bid. Is this just an attempt to appease them to prevent any further lawsuits (via Techcrunch)?

So Yahoo have confirmed their no to Microsofts offer today and at the same time rumours emerge about the possibility of Yahoo buying AOL.

I can’t see Yahoo-AOL happening at all, it just doesn’t sound like a good fit for anyone. There isn’t enough to be gained from AOL to help save Yahoo from their predicament of slowing revenues.

More likely Yahoo are playing a game to get the offer price up from Microsoft I reckon. I really believe the only options for Yahoo are innovate to survive or merge with MS.

Yahoo to say no to Microsoft

February 10, 2008

The word is that Yahoo made a decision on Friday to reject the Microsoft offer. Whether that’s a ploy to get a better bid out of them is not know yet. However the way Microsofts share price has dropped in the last few days, their offer of cash and stock is less attractive than when they first made it.

If Yahoo go it alone for the future they will really need to pull something out the bag to survive. Major changes will be needed and they must come up with a way to better monetise all the page views and eyeballs they get on their expanse of web properties.

It’s surely not that difficult to strategise a way to make better profits out of what is still one of the best web properties around?

Mike Arrington over a Techcrunch has a great article with his usual insider insight on the Microsoft-Yahoo merger. He believes that today will be the day for an announcement of sorts.

He’s also got some very relevant points about what might happen if Google got into bed with Yahoo. Go have a read!

So finally after months of speculation that this was coming (me too) Microsoft have bitten the bullet and written a letter (via Guardian) to the Yahoo board to show their intention to buy them.

It’s a handsome offer as well, $44.6B in cash and shares, that’s 62% up on Yahoo’s closing share price from yesterday. I guess this means MS are really serious, I’m sure they could have put in a lower bid but this bid should make it very difficult to turn down by Yahoo as it’s extremely attractive to their shareholders. I hope it’s the right play for MS sake, if it’s not and Yahoo really is slowly dying as many have said then they could be buying a very expensive load of traffic.

There’s a very brief response from Yahoo here

A conference call is being held at 8.30 EST in the U.S., should be more news after that. Techcrunch UK rightly mentions that a deal this big will see a great deal of scrutiny from Euro regulators (possibly putting Google/Doubleclick in the shade).

Will a deal like this produce a competitor for Google? Well maybe in terms of traffic and eyeballs but not in terms of search relevance, advertising technology, ad dollars earned, innovation or any of the other good things you can measure such companies on. This could get interesting!

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