Microsoft and Yahoo: Bloggers React
Even in the snarky blogosphere, tech industry commentators were taken aback by Microsoft's (MSFT) unsolicited bid to acquire Yahoo (YHOO). Though the gossip mill had long speculated that such a marriage might be coming or at least make sense, there had been no serious buzz of late that Microsoft was about to make such an audacious move.
BusinessWeek's Rob Hof writes: "For all the reasons a Microsoft acquisition of Yahoo! doesn't make sense, one factor trumped them all: a bargain. Early this morning, Microsoft made an unsolicited bid for the Internet pioneer for $31 a share, 62% higher than Yahoo's closing price of $19.18 yesterday. Yahoo's stock fell far enough that, even though Microsoft is offering $44.6 billion for a company the market valued at only about $25 billion, it was too much of a steal to pass up."
Click here to see the rest of Hof's analysis.
Here's a quick roundup of what other bloggers and tech analysts are saying:
• A posting from TechCrunch's Duncan Riley, which did indeed begin with "Wow," says that "Microsoft + Yahoo = a stronger competitor to the Google borg."
• In a posting entitled "Microsoft to Yahoo: Join Us, Join Us or Die (and here's $44.6 billion to help you decide)," MG Sigler of ParisLemon says it's "interesting that Microsoft would do this right after Google announces their earnings and for the first time fell short of expectation. Is that the 'strike while your opponent is weakened' strategy? (In all fairness it probably had something to do with Yahoo's stock hitting a four-year low on Wednesday as well…)"
• Standard & Poor's software analyst Jim Yin says: "We view this acquisition positively because it would help MSFT compete more effectively against Google in search engine and online advertising. Although the merger presents integration challenges, MSFT identifies $1B of synergies in areas of online advertising yield, capital expenditures, and research and development." (S&P, like BusinessWeek, is a unit of The McGraw-Hill Companies.)
• S&P Internet analyst Scott Kessler took note of Microsoft's statement that it had been rebuffed by Yahoo on a prior overture last year, with Yahoo saying it saw "potential upside" with new initiatives such as the new Panama search advertising platform. "MSFT concludes these efforts have not changed YHOO's 'competitive situation.' We think YHOO is under enormous pressure to realize value, and such a deal would serve this purpose."
• Danny Sullivan at Search Engine Land, not so surprisingly, focused on the search aspect of Microsoft's needs: "Search is important, and Microsoft has failed to build much less maintain search share while Yahoo has held steady against Google."
• Rebecca Lieb at SearchEngineWatch.com writes: "It's about the advertising. From the press release: 'The online advertising market is growing at a very fast pace, from over $40 billion in 2007 to nearly $80 billion by 2010. The resulting benefits of scale along with the associated capital costs for advertising platform providers make this a time of industry consolidation and convergence. Today this market is increasingly dominated by one player. Together, Microsoft and Yahoo! can offer a competitive choice while better fulfilling the needs of customers and partners."
• Andy Beal at Marketing Pilgrim writes that "this could become a hostile takeover very quickly. Microsoft CEO Steve Ballmer is already taking shots at Jerry Yang et al's attempts to revitalize the company, saying, 'A year has gone by, and the competitive situation has not improved.'…On the other side of the equation: Will buying a company that has failed to stand up to Google in any way help Microsoft, which has equally poor performance? Do two losers make a winner?"
• Joseph Weisenthal of PaidContent.org, raises some regulatory worries about the proposed deal: "Microsoft expects that the deal would close, with all of the necessary regulatory approval, by the second half of 2008. Microsoft may be right, but expect regulators to take this purchase seriously, particularly on the other side of the Atlantic. At the moment, however, the [European Union] states that it has no comment on the proposed tieup…not surprising, since nothing is official yet."
• Zach Epstein at Boy Genius Report: "It's not the first time the West Coast software giant has gone after Yahoo, but it's very likely to be the last…. Analysts and basically anyone with a keyboard seem to agree that the timing for this acquisition couldn't be better, and the deal is expected to go through unless a surprise third-party pops up to intervene with a competitive bid."