One thing about Jerry Yang that I always have admired is that he cares. He cares about his employees. He cares about his products. He cares about his shareholders. Most of all he cares about building a world class company that can be great at what it does.
If you look at Yahoo singularly, it is a great company. For he and David Filo to build a company with more than 6B in sales and more than 25B in market cap is an astounding feat . Unfortunately for Yahoo, it has had to weather both the Internet Bubble Bursting and the emergence of Google as a force in search and online advertising.
These are both issues because Wall Street has made them issues. The bubble speaks for itself. Google is a Wall Street issue for Yahoo because Wall Street wants Yahoo to keep up with the Googles.
That’s a problem for Jerry. Building a world class Yahoo to be the best company it possibly can be using the management skills that Jerry and company have is a far different challenge than optimizing the stock price. Particularly when Google is your stock comp.
Which is exactly why Jerry and David should sell to MSFT.
If there is one thing Microsoft does well , its ignore Wall Street and invest in its corporate strategies. It has so many huge lines of business, that Wall Street has learned to just let those that need to germinate do so. XBox. MSN. Online. Microsoft gets more leash from Wall Street to develop businesses than any company on the planet.
So the question isn’t whether Yahoo should sell. It should. The only question is what the structure of the deal should look like so that Jerry and David can achieve many of the goals they set out to accomplish on the net under the MSFT umbrella. Jerry definitely is about customers first. This is his chance to show it. This deal accelerates his opportunity to get customers where he wants to take them if he negotiates it right. Something I dint think would be that hard. There is too much upside for Microsoft to nitpick the non financial deal points.
What about Google ?
Google also is a company that wants to put its strategic goals ahead of what Wall Street wants. When the stock is trending up, that’s easy to do. If we are in the middle of a market correction of any severity at all, then Google could get hit with its own Wall Street “double whammy”.
First the downward pressure on its stock price. After several days of seeing the stock down 50 bucks during the trading day, Google is feeling exactly what Yahoo felt when the bubble burst. That queasy sense of fear around the company. The questioning of what could possibly happen to the stock, the impact on employee options and the inevitable questioning of Google traditions. 10 to 20pct of your time on other projects ? Not when the stock price is down 200 dollars in the past 3 months. Again.
The 2ND whammy would happen if Yahoo was no longer a stand alone stock. Even if the Google stock price suffered, there was always the comfort of “outperforming Yahoo”. Wall Street, employees, small stock owners always had the Yahoo stock comp to give it confidence. If its not there, all the eyes are staring right at Google evaluating and questioning every number and corporate action.
Its a level of scrutiny and pressure that can and will change the corporate culture of any company going through a maturation phase.
So Yahoo should say yes. Its less about the money than about finally achieving the corporate goals set out more than a decade ago.
One time Jerry told me that Yahoo stood for You Always Have Other Options. This time Yahoo doesn’t, but their customers options could improve exponentially if Yahoo says yes.
61 thoughts on “Why Yahoo should say Yes to MicroSoft”
To Mark Cuban I’m in the process of getting a solar energy system business the products I represent are top of the line in solar there not panel’s there called sunslates the back part is a slate material made in europe shipped to the east coast where the solar cells are put on thes sunslates will withstand a steel ball at 65mph and winds up to 180mph these slates we’re specifically designed for Texas and Florida for more imformation please contact me at email@example.com thank you very much and I hope we can meet sometime David Hughes Sunbelt Solar Systems or call 817-416-4284 cell 817-716-2656
Comment by David Hughes -
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I think yahoo will refuse to microsoft,the world still needs more outstanding enterprises.
Comment by rose.uml -
What happens when two dogs mate?
You get another dog.
Google had it right: hire the right people and let them figure out the business. Hire the wrong people and you get Yahoo!
Comment by Thomas -
Every time MS acquires assets it does it only to milk them. MS has screwed up not only the entire world\’s desktop environment but everything else they touch. The users of the Yahoo services will be F..d. Get out ASAP!
Comment by xyzzy -
If MS gets this done I will immediately drop my Yahoo services and move to Google as will millions of others. FY MS. The acquisition will be worthless!
Comment by Stephan A. DeRodeff -
I think Yahoo management are going a bit over their heads. There has been much argument of how much more valuable yahoo is but technically speaking yahoo shareholders can\’t get the same price MS offered on the open market. What MicroSoft really needed with yahoo is popularity and popularity only.
Comment by Nikola Dachev -
I agree that Yahoo should say yes but I just don\’t know if it is going to happen. I guess we will just have to wait and see.
Comment by Brett T. Smith -
Erm. Ok, well, Microsoft did alright by Mark Russinovich (of Sysinternals), so there\’s hope that Yahoo could be a semi-autonomous entity within the Microsoft juggernaught.
But what would happen with Yahoo!Mail and its UNLIMITED storage vs Hotmail\’s 5GB? Admittedly, the difference is (well, infinite but practically speaking) not much, but this is just a start. Microsoft would have to maintain two brands simultaneously (Live and Yahoo!) – this is not easy.
Comment by Greg -
Great post. I could not agree with you more.
Comment by Jason Berkes -
really interesting insight about Microsoft\’s position as far as Wall Street goes.. I must say that thus far I\’ve been a \”Google fanboy\” for the most part, but I, too, wouldn\’t mind another company giving Google a reason to continue innovating if that\’s at all possible.
Comment by Kevin -
Nice Stuff… Keep It Up.
Comment by Eliseo -
Customer service is bad. That comes from poor management and poor systems.
Comment by Kevin -
Letter to Yahoo Stockholders from Mr. Yang
We have no choice but to accept Microsoft\’s offer. I don\’t want our company to be involved in a proxy war which will just end up Microsoft winning it by a mile. I have suggested to name the company Yahoo by Microsoft so as not to lose our identity and brand. Either way, if they insist on putting their name together with Yahoo then I am not considering MicroWho? because it is a kitchen appliance like a Microhood. I like the idea of naming it Yahoo by Microsoft or YAHMIC! This way, our brand Yahoo will always come first.
This will be a great company and we are moving quickly to make it come true.
Comment by grx -
Your article is Awesome.
Comment by Charles -
When I was in school, almost every day I read news, reports, pictures and stories in Yahoo, and I have a yahoo mail account which are still under using so far. I like the name Yahoo so much, therefore, being a customer, I don\’t want to see yahoo becomes the outcome of the fierce compitition in internet business world. Wish that there is a better way out.
Comment by Echo -
Yahoo should sell. I like the way they are trying to incite a more lucrative offer by suggesting they are not properly accessing the true value of the company.
Well, they offered a nice premium for a great company that is sooooo great it must slash 1200 jobs.
Comment by Raja -
Jerry Yang should make Microsoft squeal like a wet cat! Microsoft can see the writing on the wall about Community Programming and the impact it\’ll have over the next 10 years! More and more each day EPIC 2015 – http://www.albinoblacksheep.com/flash/epic is coming true. Yahoo can probably see Through the Web Programming will erase all the little consulting companies.
And I hate to say it, some of Larry Ellison\’s – Oracle predictions are coming true as well! Steve Jobs has been pushing Through the Web Programming (TTWP)for the last 20 years and probably didn\’t realize it until recently. A large amount of the XCode Tools that come with Mac Developer are gear for TTWP!
Turn about is fair play as far as Microsoft is concerned. And Microsoft will double it\’s size if they can get out of their own way and allow the youngsters addicted to Web 2.0/3.0 run the show!
Seeya at the Top! 😉
Comment by Mike Addison -
McCain is are next President. Experience will rule in the end.
Comment by John -
I agree with Mike. Google should have some real competition. In my opinion it would help small businesses!
Comment by EdwardDupre.com -
Brilliant and spot on. Yahoo should sell to realize Yahoo\’s full potential, which is languishing for reasons nobody really understands. Sure there are risks but they are likely greater if Yahoo keeps on this same track, slowly withering away in terms of morale, search market, and most importantly stock value.
Now it\’s going hostile and Yahoo will waste time and innovation fighting where they should be innovating…together…with Microsoft.
Comment by Joe Hunkins -
I am reasonably sure that many such as myself will abandon Yahoo if it becomes part of Microsoft. How much this will affect the business of Yahoo – Microsoft may be trivial, but it is my money and I have no interest in supporting Microsoft and haven\’t since experiencing it\’s tactics from year one. And I do mean year one, having been in the computer industry since coal fired Cobol computers. I already have a G mail account so it will just take a few clicks to make it so.
Comment by wildflecken -
This merger has the potential to sink both companies. M$ will have to borrow $20+ Billion to complete the deal. Yahoo\’s technology will be destroyed by the forced conversion from BSD/PHP to Windows/.Net. M$ will do the same thing they did to hotmail and the predecessor to MSN. Destroy the technology because it does not run on Windows. The merger will consume M$ entire focus for a long time and drain it of cash. Yes, I am a pessimist.
Comment by Joseph Simkins -
[Jerry definitely is about customers first.]
You\’re so right, Mark. Except, of course, when Jerry\’s customers write blogs that the Chinese government doesn\’t like.
Then Jerry happily turns over the customer\’s IP address so the Chinese government can throw him in prison.
Better that then give up a fat government contract, right, Mark? Isn\’t that how business is done?
Comment by Wen Ho Lee -
At first glance I don\’t think Yahoo should sell. I believe it\’s time for a change at Yahoo Inc. but not one as drastic as allowing Microsoft to purchase Yahoo.
Michael Dell in his book \”Direct from Dell\” made a comment about different levels of management. Keep in mind this is not a quote but Michael Dell says something along the lines of, there is $100 million dollar managers and $1 billion dollar managers. We were running a billion dollar company with $100 million dollar managers. Mr. Dell made a change at the top and it worked.
Another theory that comes to mind and can be applied to the Microsoft/ Yahoo proposed deal is talked about by Joseph Schumpeter who references others before him – \”Creative Destruction\”.
In my opinion I think this sort of logic needs to be applied to Yahoo Inc. and its not time to sell. A time for change yes time to sell no. That\’s my first glance look at that offer.
Comment by Jerry Calliste Jr. -
I often agree with you, but here, I have to disagree.
I don\’t want to see Microsoft swallowing up anything else, or to get any more power. In my opinion, they build products set to self-destruct in a finite amount of time, to keep sucking money out of their customers. They expect customers to pay for software that doesn\’t work, instead of testing it properly and fixing the bugs before putting it on the market. The list just goes on and on. The dumbest thing I ever did was start my computer life on Microsoft products instead of Mac, and I\’ve paid on every level since, in frustration as much as financially. I\’ve only experienced a complete lack of respect for customers from them.
Yahoo going into Microsoft hurts Yahoo\’s customers. I have no doubt that Microsoft will implement all sorts of changes to Yahoo, especially in a way to get money out of people who have accounts with them or use them, and what\’s been wonderful and unique and worked with Yahoo will be destroyed.
I\’m very much against this.
Comment by Devon Ellington -
Robert Cringley blames Mark Cuban for the demise of Yahoo!:
Comment by Jon Noel -
I am anti giant corporation and I like Google, (I don\’t like the big amount of data that is collected about me, I like google search); but I think Yahoo should sell. This will make Microsoft bigest player on the internet if they play hard with Yahoo Directory and with all other engines that get top results from Yahoo (AskJ, Overture, Lycos, etc).
Comment by Edi -
Jerry should negotiate for whatever he can. At $44B on $6B of revenues, there is no real justification to say \”No\” to anyone. Yahoo\’s core earnings won\’t grow to justify that price. Ever.
For as much as people have slammed on Yahoo\’s stock price performance over the past few years, after a good look, it becomes clear that even the pre-bid value of the stock included more dreams than reality. If Microsoft thinks that Yahoo is a good investment at $44B, it must be counting on huge cost synergies – not massive revenue improvements.
Comment by Jonathan -
Jermaine Fanfair – Yahoo should stand up for itself in this one. many others have done the same. It sets a terrible precedent for similar companies growing in popularity and strength and not yielding to the numbers. You have to admire companies like Apple for its perseverance.
Comment by Jermaine Fanfair -
I think as a responsibility to it\’s shareholders, yahoo should accept. I don\’t see it getting any better than MSFT\’s offer, in the near term, anyways. What does that mean for the employees? Alot will lose their jobs. Hopefully, the stock premium will help make up for some of that loss and they can move on to new positions with other companies. With the serialization in the valley, it\’s like \”what\’s Next?\” Let\’s move on, shall we? Got vision? 🙂
Listening to: Monster Hit by Shpongle
Comment by Mark-O -
What is everybody stoned out there?
Look all you Googlites, Microsoft isn\’t going after Yahoo for search but as an avenue to deliver goods and services to a market that has been herded into an online coral.
Google search works but isn\’t the cure for the information challenged people.
Who the $%%$ clicks past the second page of googles search results?
I certainly do not click any of the paid ads on top because they tend to be redundant. If I am looking for a hp notebook , there it is in the first few results, hp.com. Plasma tv, what is there any other real choices, 99% of people go to circuit city, best buy or someone in the natural top results.
Google is selling snake oil to the big fish companies for billions and companies like reachlocal are making 100 millions
selling to the little fish-small business owners promising that there business will be made or broken based on search result placement.
Look at google as the discovering the americas. The Google model is based on colonization of the entire search continent.
As us, the users, get tired of the ad taxation of irrevelant search results grows heavier, a revolt which is happening now, will break this googleamericas down into territories, then states, cities and towns and eventually grouped back into regions of the world. We will soon not throwing tea into the sea but google\’s useless search results.
Search is has just beginning and google is not ready for semantic web making you thing that horse and buggy will never be replaced.
HISTORY REPEATS AND REPEATS BUT MOST IMPORTANT
Alright enough ramble, it\’s getting late here in the windy city and will end with this.
Good luck Google. You are like a public library and are not a business.
Amazon, Cars, Overstock, Pricegrabber, Costco, Target, Ebaystore and others are asserting there right to be free of you eliminating ad taxation.
All I can say is know your history and Napoleon Bonaparte\’s inventing the system of street addresses. This is the future of search results…physical and numerical addresses and name in the subtext descriptions.
HUH, time to go…
Comment by Peter -
I\’d never thought about the shielding from Wall Street that Microsoft enjoys. Interesting thoughts and how they could apply to Yahoo and help them refocus on their core strength, search.
Comment by Jason -
I know I\’d say yest to 40+billion. I think the Facebook guy is crazy to still be working there. Sell sell sell. It worked pretty well for you Mark. Take Care. rivaljabs.com
Comment by Jeff DeMeo -
wow, can\’t believe someone who runs companies and is successful can even fathom caring about employees, the product and the shareholders.
would you like to buy a scrappy major metropolitan newspaper?
(really, imagine the possibilities of owning the Chicago paper that is NOT the Tribune. Besides, its Internet presence is lacking sorely, and few people if any who are in a position to buy the company have any idea how to make the Web work for news.)
Comment by james -
Yahoo and MicroSoft will make a good team. Yahoo has to say yes. Google will try and stop it.
Comment by John -
Antitrust issues! This merger may never happen! The internet is just now taking off and the last thing we need is microsoft cornering it, reducing competition, and increasing internet advertising cost. The Feds will be looking down the internet sector throat just to get at Microsoft and enforce \”antitrust\” laws!
Comment by Mitchell -
As a search marketing professional, Yahoo\’s search results are a joke. page one might be good some of the time but page two is a dumping ground and page three is worse.
Some new idea people would do Yahoo some good. Besides, Microsoft has the capital to wage an effective war with Google and Yahoo doesn\’t have a chance.
Comment by Affordable SEO Consulting - Terry Reeves -
I am convinced that GOOG gets the triple whammy. They might even cause the burst of current Internet bubble, and be caught in the crossfire in the worst imaginable way. Let\’s face it – GOOG was always overvalued, especially as a one-trick pony (monetizing search through text ads). $200 appears to be much more realistic than, say, $495.
A while ago, I had the \”pleasure\” to meet a number of Googlers as part of a project, and well, I can only say that they are the most arrogant, unethical, and unprofessional bunch of guys I have ever met.
I love to see the tide turning. It is good news.
Comment by Not a GOOG fanboy -
First of all, I have no idea why Google stock is worth so much. When you compare google to other companies in terms of revenue, or compare other companies with a similar stock price in terms of revenue they make, then you should wonder too.
Having said that, I don\’t quite understand why it should be such a good idea technology wise. You mention why they should in the large scheme of things, but think about it. . .
Microsoft just spent a lot of money overhauling their search service to meld with Vista & Office Suite and called it \”live\”. Why go through all of that, THEN buy yahoo who has similar web technologies?
Please write a follow-up story Cuban.
Comment by Brant Tedeschi -
\”What you all are missing about Google\”
By Robert Scoble
Comment by RobbHand -
lakers got gasol. mwhaha
Comment by vincejs -
Very thought provoking. Have you seen Google\’s post on the acquisition? Looks like they are posturing to object.
Comment by David Mackey -
I hope Yahoo accepts if only to stir up the search industry. For about 5 years now Google has been a virtual monopoly with a 60 to 80 percent of all searches. We need some competition.
Plus there\’s the fact that MS hates Google. If the deal goes through it will make for an even hotter war between the two.
I\’m keeping my fingers crossed.
Comment by How Billionaires Do it -
I think its unfortunate that Yahoo is in this situation. I hate to see them merge with the MSFT whose online strategy is and has always been lacking. I hope that MSFT doesn\’t screw this one up!
Comment by Barrera -
I\’m an ex-MSFTie with 12 years in the company ending in \’03 including time at MSN at the end of my tenure. The model that Jerry should be shooting for in his negotiations is Xbox. Xbox operates largely as a separate company and culture well off the main campus. When MSN\’s ad business was off the radar early this decade (all the sr exec focus was on building an ISP AOL-killer), MSN had a renaissance making its first profit, establishing its leadership role in the ad industry (ask anyone who was involved with the IAB – the industry trade group), etc. Once it was obvious that the AOL-killer strategy was braindead and MSN\’s ad business became a $1B business, it got the sr execs attention to its demise. They started hooking everything in MSN to Windows and Office (from a branding and technology standpoint).
Meanwhile, Xbox had a long leash and wasn\’t shackled by Windows. Look who is having greater success now. Xbox is kicking MSN/Windows Live\’s tail. The fact that Yahoo is in the valley is a blessing. All the Internet business should be HQ\’ed there well away from Redmond yet have the long-term orientation that Microsoft is famous for that Yahoo doesn\’t have the benefit of given its public company status.
Comment by Dave Chase -
Cause The Microssoft have to much and we don\’t want monopolist in the web.
Comment by Tworzenie Stron -
You\’re right on money. Syncing Flicker with My Photos. Syncing Yahoo mail with free outlook. Merging IMs. Extending pipes. And turning that and all the rest into ad supported services will craft a place for brand advertisers online. MSFT&Yahoo has a much better chance to snag the top 500 advertisers from TV than Google does.
Comment by Morgan Warstler -
The thought of Microsoft getting bigger makes me sick to my stomach. Right now, there are three consumer based IT companies that matter: Google, Microsoft and Apple. They\’re no longer just \”IT\” companies, either; they\’re forcing their ways into every facet of the lives of anyone in a developed country. That\’s three companies, and now Microsoft wants to get bigger?
No. We need a lot more smaller pieces, not two big behemoths slamming it out, because when that happens, the losers are the consumers. We don\’t have any choices at that point; the only question is just a matter of the size of the phallus that\’s screwing you. This wouldn\’t be a problem if Americans would educate themselves better than what large corporate entities throw at them, but since everyone feeds from the trough like good little pigs, it\’s hard to get anyone smaller.
There is nothing good that can come out of Microsoft buying Yahoo for the consumer. The shareholders are geeked, but the consumers are screwed.
Comment by Christopher Bowen -
I would argue that this development could be viewed through a different lens – Microsoft trying to build on its strategy of dominating ubiquitous computing. Google can win search and advertising race; Microsoft can try to win the race for dominating mobile, automotive and living room computing.
I have a more detailed analysis on http://www.anshublog.com
Comment by Anshu Sharma -
I agree, putting yourself in yahoo\’s situation, sell sell sell. But for me personally I would like to see the deal fall through just because I\’m not a fan of giant corporations eating their opponents.
Comment by Adam Pritchard -
How do you see AOL in this mix ? whats the next move for these guys ?
Comment by T.H. -
Gee, Mark Cuban pressing the \”greater sucker\” theory again? I told you awhile ago, Yahoo was a dying business. Now you want them to pull a Cuban… sell while the company still has an illusion of value. Great strategy from a guy who has made a fortune selling dreams…
Bad part is that you are right. Yahoo should sell now while it is still semi-relevant. But Yang should do what you did and cash out. Because MS would just be buying an anchor. Both companies have failed to mount credible charges on Google, even with the advantages of cash (MS) and imbedded position (Yahoo). So what could either of them gain by merging? Stupidity + stupidity = guess what? Google has better MINDS and a long-term strategic vision… has Yahoo ever? As for MS, this move is sheer desperation, a stop-gap at most. It\’ll give MS the APPEARANCE of having a relevant strategy related to search and online advertising but that will just be a mirage. The reality is that it will be the blending of two companies NEITHER of which has a credible strategy regarding Google. And the improved market share benefit to MS won\’t hide that fact. The move won\’t stop the Google train.
Trust me, if Google opposes this move it will only be because it knows that it has Yahoo and MS against the ropes and would prefer to \”divide and conquer\” while it has the advantage rather than deal with Microhoo (or Yahoosoft?), which would fail just as surely but be around a lot longer.
Tell your man to snatch those chips while they\’re still on the table. Because the price will be dropping every day from here on out. In a couple of years, Google will buy Yahoo for a song if MS doesn\’t snatch \’em first. And it won\’t do it as nicely as MS.
BTW, nice move hooking up with the Weinsteins. Too bad that did nothing for the actual quality of your movies. You can\’t get away with selling puffery with movies, you have to have a good product. Keep trying though… you know what they say, even a blind pig finds a truffle once in a while.
Comment by James King -
Mark, it\’s Microsoft (lowercase \”s\”), not MicroSoft. Just like it\’s the Dallas Mavericks, not the Dallas MavEriCks.
Comment by Scott -
I agree, Y! should jump all over this. Yes, yes, yes! What I\’m having a hard time with is why MS wants to buy Y!? I mean, they already operate a search engine / portal. So it has to be for the Y! properties, right? But wait, if the properties are re-branded after a MS purchase, don\’t they lose all their value? Buying market share? Maybe, I\’ll go along with that…but $44B? Is there something else going on that I\’m missing? Patents maybe, IP locked deep within the dark caverns of their data centers? Help me understand…
Comment by Thom -
I\’ve been using Yahoo since almost day one, have had an e-mail account there for more than 10 years now. I\’m not sure, as a consumer, that I welcome the acquisition.
As a shareholder, that\’s a different question.
Comment by David -
This deal does not excite me either way. As you can explain to us all, tech survival is about innovation. If a Yahoo acquisition gives a rebirth to Microsoft\’s lost ability to innovate, then they win. If not, they lose and take Yahoo down with them. A premium offer like this is a must for the folks at Yahoo to strongly consider and then take. Same rules apply to Google, innovate or become the next Microsoft. If this fuels their ability to innovate, then everybody wins, especially the tech consumer. Let\’s just hope Microsoft does not do to the internet, what they did to the PC.
Comment by Nick -
oops – I meant fund a contest to get to the MOON and not Mars
Comment by Wayne Schulz -
Nice points. Aren\’t you making a rather optimistic assumption that Yahoo HAS a choice of whether to say yes or no.
After almost crashing the ship, I don\’t think the commanders will have the confidence to stand up to the shareholders and suggest any of the more complex transactions people have been floating around the blog world.
Nope – this is going to morph to a shareholder value play. Bye-Bye Yahoo independence (I will not totally rule out a Google bid here either).
Thanks for pointing out the road ahead for Google. I was roundly ridiculed in mid November when I wrote about the craziness of Google sponsoring a $ 30 million contest to get to mars, funding \”hundreds of millions of dollars for green energy\” and obtaining NASA landing rights for their twin wide-body Boeing 767-200s.
Comment by Wayne Schulz -
I\’m a Google fanboy, but I hope Microsoft buys Yahoo just so that GOOG will have competition. As we all know, the customer suffers when there is no competition. And even though I\’m a shareholder in both companies (actually, all three companies) I can\’t help but look at this from the perspective of a customer/user first.
Comment by Mike MacLeod -
Comments are closed.