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

[Ivan Pope]

>
>
>
> Some slightly muddled thoughts:
>
>  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.
>
> 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.


Paul,
Follow your own logic. If the company as you say makes money and has
potential, i.e. has value, then it has that value to Microsoft in the same
way as it has it to existing shareholders. The problem seems to be that the
existing management can't work out how to really get to the value. Whether
Microsoft can is of course moot - but the value is there for anyone who owns
the company.
The only people who don't own the company are the management (well, apart
from Yang who owns part of it).

You say that you don't understand why Microsoft would pay that amount for
them - but they only look at the same as the stockmarket looks at - Yahoo
has been worth more and could be again - a lot more. So they are willing to
take a punt.

That's not to say I like the idea, but frankly I don't think it will affect
me one jot.

Ivan

>
>
> 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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Ivan Pope
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