Interesting and surprisingly detailed story in the Wall Street Journal tonight about the ongoing (never ending) Microsoft/Yahoo deal. The headline is that Microsoft, apparently not happy with simply destroying Yahoo’s credibility, is now hoping to rip it apart and divide up the pieces.
Microsoft Corp., positioning itself for a new run for Yahoo Inc.’s search business, has approached other media companies in recent days about joining it in a deal that would effectively lead to Yahoo’s breakup, say people familiar with the discussions.Microsoft has held discussions with Time Warner Inc. and News Corp., among others, say people involved in the talks. In the past, Microsoft has floated an arrangement under which it would acquire Yahoo’s search business and another partner, such as News Corp.’s MySpace or Time Warner’s AOL, would combine forces with what remained of Yahoo.
But the interesting part of the story is the long timeline that contains more details than have been previously disclosed. Much of this information has already been disclosed, but new details are emerging on the more recent talks, specifically the new negotiations that began in the second half of June (see image to right).
In one meeting in May where the bankers weren’t present, both sides apparently blamed those bankers for the breakdown in communication (Microsoft used Morgan Stanley, Yahoo used Golman Sachs):
Early in the discussion, Messrs. Bostock and Ballmer lamented the bankers’ influence on the negotiations, with Mr. Ballmer concluding that bankers had “screwed everything up.”
What’s interesting isn’t that the statements were made (throw away comments like this are made all the time in negotiations), but that they’re being leaked to the WSJ. Perhaps someone (Yahoo Board) is looking for anyone to point a finger at but themselves. That may be absurd, since its been very strongly rumored that Yahoo actually incentivized Goldman Sachs through the fee agreement to kill the deal.
So…..we’ve got evil monopoly Microsoft possibly teaming up conservative nutball Rupert Murdoch’s News Corp. to tear apart Yahoo. And the kleptocrats on Wall Street will cheer this on, of course.
Well, all you can say about that is….
I’m loony toony nuts in the head. Please pass the ketchup, I think I’ll go to bed.
Oh well, not sure when it is going to end. Yahoo! needs to do something as their stock is down too much with no hope of recovering and deal with Google is under close watch by anti-trust guys.
I may skip the rest of this deal and just wait for the movie to come out.
Too late Michael, Charles Schultz already made the movie (just hit replay a dozen or more times).
I am tired to hear this kind of news. When will Microsoft really give up on the Yahoo! thing.
Is that Bankers with a capital A?……;-)
Great stuff. Deals take time. This one likely will still happen — makes great sense for both sides.
Mike, follow your own advice amd leave this soap opera alone for a while. I’m sure there must me plenty of other interesting stuff to report on.
After all those top execs leaving the company, Yahoo is not as valuable as before… Microsoft probably can ask for a price cut. I wonder how much money Icahn will lose if the deal doesn’t go through eventually.
@ 3 .. lol
i will buy you dinner at whole foods ayear from now if yahoo isn’t one of the sharper, leaner, more focused companies around (imprecise, i know)
i think the last few months are the best thing that could have happened to them, is what i am trying to say, and they will be fine
I’m actually still surprised the Yahoo stock hasn’t surged past $26 on the news that MSFT is back at the table.
The timeline doesn’t give the full picture of YHOO’s arrogance and mismanagement, omitting MSFT’s January 2007 bid of $40 per share - a gift to shareholders. What a cluster.
I wonder how much Yahoo regrets not taking the first offer, now that their shares are almost below $20.
I never understood this idea of just buying up the search business- I agree with Microsoft 90% of the time, I share a similar vision with them about where and how computing is evolving- but for me the great value of Yahoo is in the whole package, not merely search.
Yahoo has a lot of services, which when given the resources Microsoft has could become really successes- and if not then at the very least it would be a good spring board for getting Silverlight out to more desktops.
Search is valuable, don’t get me wrong (well really it’s advertising that’s profitable I guess) but I think features that are (very nearly) unique to Yahoo are what gives it value:
1. Still the most visited domain IIRC
2. Great Mail client
3. Yahoo Lyrics search (Part of music, rather than search I assume)
a) Could be used in the Zune software- people find more songs, people buy more
b) Could be used on the live.com homepage “Images, Video… Music” - it’s the logical progression and could provide links to the Zune marketplace
etc.
Originally I thought the offer they gave was high but ultimately worth the squeeze- as it would give them access to tools that had taken hundreds of man-hours to produce, however now I see them as scrapping for pride or something- at this point I would rather see them keep Powerset as a separate group focusing only on refining semantic search (which sadly is still way off being usable) and giving them heaps of resources for new staff.
Example of Powerset searches:
What is microsoft’s market cap? - gives me the answer- great but not what I first typed…
What is microsoft’s value? - this is what I wrote originally and received garbage results for.
These guys need a lot more resources but could eventually make something brilliant. MS should either take all of Yahoo or walk away and invest in themselves- even if the mind share problem is hard to overcome it does happen in time, I have numerous people who have switched to Live search Images and Video for it’s superior results… get regular search done in house for cheap and they can still come out on top.
I think Yahoo now will take the MS offer… if not, their shares will drop more than last time… and the shareholders will scream more then never.
so interesting — I really would like to see Yahoo Search go to Microsoft, I just think they’ll be able to step up & be a real competitor to Google which is what we need.
BTW, spelling error:
…Yahoo used Golman Sachs… should be …Yahoo used Goldman Sachs…
I’m just glad you were right about ongoing discussions, Michael.
What an article this morning. Yahoo was excited because Ballmer wore a purple polo?
Ballmer was doubtful about the acquisition because of integration issues?
What a joke.
Just make a good OS, Mr. Ballmer. You don’t need a broken Yahoo.
Congrats, Michael.
Isn’t this all just a play by interested parties to keep Yahoo’s stock above $20?
Either to lighten up the mood at the August shareholder meeting
or to help some large investors sell off at least parts of their shares.
sure, can’t blame MS…
microsoft is finally doing the right thing, it should look at acquisitions and stay in touch with the real consumers who flock to yahoo (not so recently now). but yahoo is a good bet for future. they can replicate their ‘96 magic
Breaking up Yahoo! is a great idea. Yahoo! has some excellent properties in numerous verticals, and internationally, their growth is excellent. A vertical break-up makes sense, IMO, and would unlock value which is trading at $21.67 as of right now.
Of course, Yahoo could make all this hubbub about acquisition and breakup go away if they *actually* delivered on any of the promises they’ve been making.
But that is asking way too much of Yahoo, apparently.
That’s right derk@18! None of this could possibly be construed as a face-saving move by Microsoft. Listen, the WSJ came to BALLMER for the real story, he’s just laying out the facts. If Microsoft had misjudged here they would be the first ones to admit it. It’s always been like that. Remember when BillG went on Nightline to apologize for Windows ME? Same thing.
Yahoo has a lot of services, which when given the resources Microsoft has could become really successes
Right. It will go just as well as the other Microsoft acquisitions: rape and ruin.
Look, the fact that Microsoft is jumping from this to discussions with other search providers is proof that Microsoft needed Yahoo more than Yahoo needed Microsoft.
Sorry to burst your bubbles fanbois, but Arrington was wrong all the way down the line on this one. Notice how he is no longer drawing conclusions based on stories such as these. How many words do you think he would have typed about this story two months ago? Now we get 20 sentences. Go suck your thumbs in the corner (but don’t forget to link to your blog/linkfarm).
This is seriously the deal that never ends.
I thought the real story in the WSJ article was how MSFT was a lot less serious about doing a deal than is usually made out. Before they ever pulled out, they were looking for reasons to do so, having rethought whether it was actually a good idea.
dt: Yes, of course. “We didn’t really want to anyway.” Right.
It’s MS’s board who is calling for heads, not Yahoo’s. I wouldn’t necessarily say this means Yang is safe, but Ballmer has much more to answer for since his tenure so far has been much less “performant.” That’s why there’s so much more info in this story: Ballmer needs to save face.
Like Microsoft, people won’t pay as much attention to Arrington if he admits he was wrong on this whole deal. MBA + Econ degrees, wasn’t it?
I am curious if Federal regulators would allow Microsoft to acquire all of Yahoo! considering that Hotmail and Yahoo Mail would provide Microsoft with a substantial share of webmail users. This is evidenced by a February 2007 article by Michael Arrington stating Yahoo! had 250 million users, Hotmail had 228 million users, and G-Mail had 51 million users. Although, Arrington’s comparison left out AOL Mail which I am certain has a substantial user base as well.
That being said, if Microsoft cannot purchase the entire company, they would most likely prefer to see Yahoo! Mail go to a friendlier competitor.
There seems to be a great lack of logic in discussions about these deals. The benefit for MS is not nearly as simple and obvious as some make it out to be. For one MS can’t simply use the tools and properties they gain from Yahoo. They are built completely on competing technologies. They will have to move these things to their platform or risk hurting their own image. What I thought they were after was simply traffic and user base. But after thinking about it I don’t believe they could be that stupid. For whatever reason people prefer Yahoo services to MS services. People will simply move…probably to Google.
The only benefit I can see is buying their way into the #2 spot so that in a year or two they can blow smoke about actually being competitive on the web. If anything this has to be about perception. If they believe they are going to benefit in any other way I believe its going to backfire like some of their other big moves. I could easily think of a few ways to build up Google type status for MS on the web without Yahoo. They have the tools to do it but when it comes to creating a buzz with the average person they fail miserably at execution. They squandered their Xbox Live fame by sticking Live on everything else as if that was going to create buzz all by itself. MS simply doesn’t move in this arena until someone else does. They will always play catch up here.
What are the odds that a merger would effectively destroy yahoo and any of the popularity that it still holds. History is littered with stories of companies (MS) thinking they can buy another company (YHOO) to strip it of it’s value while what actually happens is the two companies start a downhill trajectory.