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.

Amazing news today that Microsoft are set to provide software blueprints on their website and promise not to sue developers who make use of them (for non-commercial purposes).

Have Microsoft grown up and realised that a closed environment is not the best for fostering innovation, something which Microsoft used to have in heaps but seems lacking lately?

Really good news for those working on online office solutions as interoperability should be much easier to proved. And great news for users as this could open up many opportunities to make software more accessible and open to all.

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)?

Lot’s of Yahoo coverage in the blogosphere at the moment. Here’s a few key pieces:

Yahoo are still launching new products and innovating. Examples include the News Globe mashup (via Mashable) and the exciting new mobile product oneConnect (an app allowing email IM and social networking to all come alive on your mobile phone, very promising).

The layoffs have started (again via Mashable).

Key players are leaving, Bradley Horowitz a key figure responsible for the area of Yahoo who come up with new and innovative products is apparently jumping ship to Google (via Techcrunch). This is a big loss, I’ve seen him at conferences and he’s a very sharp guy.

Microsoft are still pushing for the merger to happen and rumours are that they may take their offer straight to the shareholders (again via Mashable).

And to top it all, Yahoo are said (via Techcrunch) to be in continuing talks with News Corp about a deal which could see them become a massive powerhouse with the properties to compete with Google (although not quite on eyeballs).

Where will this all lead? Who knows, but Yahoo need to resolve the merger issues and rebuild confidence in their employees and shareholders, losing key hires and all this talk of deals is going to begin to hurt them if they don’t settle on a direction to follow soon.

The IDC have announced that the market for U.S. internet advertising grew by a massive 27% in 2007.

Interestingly though, while Google grew by 40% year on year in Q4 that was down on their growth a year earlier. That made their market share slip by 0.5%, but they do still own over 23% of the market. Something to do with the coming saturation of search marketing perhaps?

IDC says a merged Microsoft-Yahoo would command 17% of the U.S. online ad market, so still not enough to topple Google from the top spot.

One wonders if the figures for Google include DoubleClick yet??

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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