Danny [Sullivan] and I just got off the Microsoft conference call. Microsoft CEO Steve Ballmer said at the outset, “This is a decision I’ve thought long and hard about. This is the right path for Microsoft and it’s the right path for Yahoo.” Ballmer added that “a year ago the Yahoo management team told us it wasn’t really the right time to discuss an acquisition.” Microsoft obviously feels that now is the right time, especially as the Yahoo stock has weakened (though now it’s up because of the offer).
The discussion and tone on the call made it sound like the deal was farther along than it actually is. The bid is unsolicited and Microsoft acknowledged that other companies may enter the negotiation. However, Microsoft’s general counsel Brad Smith opined that Google would not be one of them because “it controls 75 percent of search” worldwide and anti-trust regulations would preclude Google from bidding. That had the sound of a very calculated chess move.
The rest of this post is at SEL.
Screenwerk 
February 1, 2008 at 2:59 pm
How will their cultures mix?
February 1, 2008 at 3:02 pm
That’s precisely the question. How well these two could be integrated would determine how well the paper “synergies” would be realized.
February 1, 2008 at 3:16 pm
“it should be quite an accelerant” … to Yahoo’s stock price and to Google’s increase in search market share.
February 1, 2008 at 5:13 pm
I honestly don’t see much sense in this deal. Search seems like a winner take all market and it is clear that both Yahoo! and MSFT have lost. So unless they come up with a radically different product than what they currently have — and Google’s — they are unlikely to make any more headwind combined than they did as two separate companies. While there are synergies in the portal/display ad businesses, all of the major portals (yhoo, msn, aol) all seem to be networks in decline. People are increasingly gravitating to more specialized content and services (even offline) and I don’t see how this merger will change that trend. In my opinion, MSFT is been better off purchasing $10-20b worth of other specialized online content businesses and trying to create one ad platform for them. BTW, when does the DOJ and FTC come in and block these deals? I would guess that with the acquisitions of AQNT, DCLK and YHOO, 80-90% of all US online ad dollars and traffic would flow through Google’s and MSFT’s systems. Not only troubling from a business perspective, but also a consumer privacy one.
February 1, 2008 at 9:55 pm
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