More Random Thoughts on ‘Micro-Hoo’

If you haven’t gotten enough, in just 72 hours, of the spin and speculation around the proposed $45 billion acquisition of Yahoo! by Microsoft, you can OD at Techmeme, the NY Times and elsewhere.

Here are some additional Sunday morning, incomplete thoughts and observations…

Other potential bidders and regulatory approval:

Yahoo! is buying time to bring others into this process.

Silicon Alley Insider speculates about the chances of private-equity being enlisted as a “white knight” to avoid a Microsoft takeover. But as the post indicates there are few that have the stomach or the means to compete with Microsoft in a bidding war.

Given Google’s dominance in search and its global brand position, regulators aren’t likely to block the acquisition in the US. Europe, which has greater antipathy toward Microsoft, might be a harder sell.

Yahoo! employee morale:

I spoke to three Yahoo! employees and former executives on Friday several hours after the deal was announced. While one employee discussed how some of the rank and file might be “stoked” because options would immediately vest in the event of a takeover, the general feeling was that this move would not be welcome by Yahoo! employees and might send more people out of the company — or tip the balance for those already on the fence.

Microsoft has promised “incentives” to retain Yahoo! personnel, especially engineers.

The Yahoo!-newspaper consortium:

While this is an extremely desirable set of relationships for Microsoft as part of the larger deal (and ad network), I suspect the newspapers themselves are nervously going to look around for strategic alternatives. We are now unlikely to see the full realization of the vision for the consortium. Some in the industry are probably saying “I told you so,” in terms of tying their fate and futures to a single large entity.

Google becomes the “cool” underdog again (maybe):

My memory is that I started using Google in 1999 when it was a cool alternative search engine. Since then we all know what’s happened; it has become one of the world’s most powerful technology and media companies that inspires fear among many and even cynicism and loathing among a few.

Google’s rise was one of the best “political” developments for Microsoft, which became something of an “underdog” and more lovable accordingly. Google took some of the general anti-trust heat off Microsoft too. A Microsoft-Yahoo! combination would potentially recast that landscape and turn Google again into the more sympathetic party of the two — maybe.

There’s also the strong chance that as Microsoft is integrating Yahoo!’s assets that the process proves to be a big “distraction” for both companies, allowing Google to continuing ramping and make further gains in current Yahoo! areas of strength. The biggest danger-area is potentially mobile — even though there’s arguably more “synergy” here for Micro-Hoo than redundancy — because the market is still so new but is rapidly developing.

Thoughts, reactions to any or all of the above?


4 Responses to “More Random Thoughts on ‘Micro-Hoo’”

  1. cohn Says:

    If Microsoft is using the HP / Compaq merger as a model and even though it was a hardware not a software business, what minimum time line could they expect integration and execution to be complete – 3 years? 5 years?

    Couldn’t it also end up being more like the AOL / Time Warner time line?

    Its hard to imagine the transaction being anything other than a distraction.

    If so and provided Google doesn’t take its eye off the ball, isn’t it an opportunity for Google to reinforce and strengthen its position?

    I think the one factor that no one in the press or in the industry has accounted for is
    that Yahoo and MSN/Live haven’t yet developed a superior search product / result.

    Search obviously isn’t a Netscape ground attack deal.

    Without the product, it will be business as usual.

  2. David Dalka - Creating Revenue and Retention - Chicago GSB MBA Says:

    Have We Entered The Era of The Functional Web?

    The New York Times has an article on how the potential sale of Yahoo! to Microsoft could be bad for minnows, i.e. small Silicon Valley companies looking to be acquired. I think this is a short sighted viewpoint.
    In the late 1990’s era, th…

  3. Soniac Says:

    I think that Google’s cool underdog days are limited (regardless of the Yicro! deal).

    I also believe that the integration will be (nails in the coffin level) challenging for booth companies.

    Unless the two decide to delve into a blue ocean, the thought of focusing on search as a strong card against Google could be a mistake. Their strength is in entertainment and in ad revenue generated by advertisers that are still hung up on TV and mass reach. I’m reminded Greg, of your post about how digital TV will impact search etc. I think that this could be a space they could possibly explore.

  4. Yahoos Say Microsoft Is “The Frosting On a Double-Layer Suck Cake” | Business | Wired Says:

    […] Granted, Yahoos have been through a hard time lately, enduring several years of Terry Semel’s ineffectual management (for which he got paid nearly half a billion), then watching as company’s stock price dove into the toilet early this year. So for some employees, last Friday’s roughly 50 percent run-up in YHOO’s stock price was a welcome relief. And there’s the promise of vesting stock and engineer retention bonuses to help ease the potential transition, as blogger Greg Sterling points out. […]

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