[BNM] the potentially massively long and drawn out MSFT/YHOO thread

[Paul Silver]

On Fri, 1 Feb 2008 12:54:24 +0000, "Josh Russell" <josh at overdose.com>
said:
> so someone had to start this discussion...
> 
> thoughts?
> 
> http://news.bbc.co.uk/2/hi/business/7222114.stm
> http://biz.yahoo.com/rb/080201/microsoft.html?.v=1
> http://www.guardian.co.uk/business/2008/feb/01/microsoft.useconomy

Some slightly muddled thoughts:

I realise the offer is about shareholders wanting to cash in as Yahoo's
shares have been dropping over the last year (from a $34 high, $3 higher
than Microsoft's offer) however, I'm not sure I see where this is in
Yahoo's interest. They're a profitable company, making 'only' $205.7m in
Q4 last year (so, around $800 million across the year), they've got
their new advertising platform, which still needs some changing but is a
good improvement, and they've got some extremely popular web properties
to advertise to people through. 

While a lot of Yahoo's acquisitions are geek friendly so we might see
them as more important than they are, the do seem more clued up on
understanding the web than MS are. I suppose that's well worth some
money.

I'm not exactly sure what MS gets out of this that is worth the amount
of money they are spending - they get a bigger/better advertising
system, but is that really worth the amount of shares/money they'll be
handing over? Yahoo search is bigger in the States than over here, but
again, that seems like a lot of money to be spending to get at a service
a shrinking number of people use. 

To me, this seems a bizarre sort of desperation on Microsoft's part -
their own advertising system isn't going too well, their search engine
is a bit of a joke, so they think buying the by-far second player in the
market is a good idea. That's a heck of a lot of money to spend for what
they're getting. 

Hmm, I realise this looks a bit schizophrenic - to hopefully clarify a
little: I think Yahoo as a business can certainly keep going and improve
if they improve their management, but I don't see them being worth so
much money. I can't see why MS would buy them when Yahoo has a lot of
problems MS would need to solve before getting much profit out of the
acquisition. 

Still, I'm sure there will be plenty of volunteers for redundancy when
the downsizing of departments happen.

Cheers

Paul
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