Microsoft Walking Away from Yahoo Acquisition

Microsoft Walking Away from Yahoo Acquisition



On February 1st, Microsoft made headlines after publicly offering to purchase Yahoo for $44.6 Billion ($31/share). Microsoft's interest in Yahoo was primarily focused around their advertising business in an attempt to gain talent and technology in that sector to further compete with Google. On February 9th, Yahoo officially declined the offer due to claims the bid "massively" undervalued Yahoo.

Negotiations continued, opening the possibility for a hostile takeover from Microsoft. In the end, however, it appears Microsoft is walking away from the negotiations and will not pursue a hostile takeover.

In a letter from Microsoft's Steve Ballmer to Yahoo's Jerry Yang, Ballmer detailed his reasons. In the end, Yahoo was insisting on a $53 billion price ($37/share), while Microsoft's offer topped out at $47.5 billion ($33/share).

"Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo! has not moved toward accepting our offer. After careful consideration, we believe the economics demanded by Yahoo! do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal," said Ballmer.

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Another key factor included Yahoo's recent outsourcing of advertising services to Google, which could introduce regulatory hurdles in pursuing an acquisition.

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Confusing, but not unwelcome.

Confusing because the Borg, being who they are, should not have given up so easily.

That news could not have come at a better time from a market stand point.

miketcool said:

That news could not have come at a better time from a market stand point.

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I don't know...

Yahoo! shares will undoubtedly fall on Monday and Microsoft might see a slight increase on Monday. That might encourage Microsoft to try again in the near future.

Well, hopefully Yahoo's stock with rise again

Man I was tired of reading about this deal. So hopefully it is done.

I don't think MS really wanted to buy them. They just wanted to make sure a competitor has to pay a lot to acquire them.

$6.5 Billion? They let Yahoo walk away over a paltry $6.5 Billion? That doesn't sound like the M$ I know and loathe.

As already said though, definitely not an unwelcome development.

Good Bye Yahoo, thanks for being relevant.

Will be interesting to see what the major Yahoo! shareholders do, I am guessing everyone was just excpecting Microsoft to pay the higher price at the end. Well they did offer $33 per share as compared to about $19 when they first made the bid.

Microsoft shareholders in general will be happy as they seemed to be the ones most unhappy about the bid in general (except for Jerry Yang at Yahoo).

Will be interesting to see if Microsoft goes after Salesforce.com, SAP or maybe someone else, they obviously have the $$$ and the interest in an acquisition.

John01021988 said:

Well, hopefully Yahoo's stock with rise again

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That can only happen if Yahoo! gets its act together and starts delivering products people want.

Google didn't become popular simply because its homepage has a nice color scheme; Google offers better services than either Yahoo! or MSN, and that's why it is dominant in that market.

trip1ex said:

I don't think MS really wanted to buy them. They just wanted to make sure a competitor has to pay a lot to acquire them.

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That doesn't really make much sense considering Microsoft's weaker position in the online market. Microsoft actually needed Yahoo! so it could buy itself a larger market share in internet advertising.

If anything, Microsoft's sudden pull out today will make the stock fall on Monday and make it easier for someone else to buy Yahoo!.

BOSS10L said:

As already said though, definitely not an unwelcome development.

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Depends on what point of view one approaches this from.

The only real winner out of this development is Google.

Steve Yang!

That's a ugly sight (a mix between Steve Ballmer and Jerry Yang). Anyways, ya I'm sure honest mistake, but its Jerry Yang.

Death of Exchange!!!

Zimbra is Saved!!!!
http://www.zimbra.com/

Sun should buy them. Seeing as Apple wont.

Would love to see an Apple-Sun Merger Mac OS X + Solaris = Ultimate OS.

XRaid EOL? Replace with a ZFS enabled Raid with an Apple face lift. Sun knows Servers and Apple knows the Desktop/Client Side.

Apple needs to include an Exchange killer with Mac OS X Server they should integrate Zimbra if they don't buy them (else open exchange, Scalix port). Wouldn't mind a Content Management System either

VOIP: Asterisk, FreeSwitch

A video on demand system (Quicktime Server + Cataloging/FinalCut Server) combined with Joost front end.

backdraft said:

Zimbra is Saved!!!!
http://www.zimbra.com/

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... hunh?!

Edit: Oh you edited the post. Still don't see the relevance, though...

(And I sincerely hope you didn't post that, then edit it, just so you'd get the post space.)

As far as I see it the good guys won.

Well done to Jerry Yang for playing this one smartly. Who looks like the better leader now? I guess Ballmer was pragmatic, which is something I didn't think we'd see, but Yahoo definitely can score this a win. They never wanted to be taken over, least of all by Microsoft and now they have their wishes.

Microsoft should try buy AOL I reckon next. The “corporate cultures” the analysts like to talk about couldn't be better matched.

As an MS employee, thank goodness!!!

It's about time Ballmer stops wasting time. He should have been fired for Vista. He needs to stop wasting time and money.

MS has a great pool of talent. If there was real leadership, MS would be innovating not copying.

backdraft said:

Zimbra is Saved!!!!
http://www.zimbra.com/

Sun should buy them. Seeing as Apple wont.

Would love to see an Apple-Sun Merger Mac OS X + Solaris = Ultimate OS.

XRaid EOL? Replace with a ZFS enabled Raid with an Apple face lift. Sun knows Servers and Apple knows the Desktop/Client Side.

Apple needs to include an Exchange killer with Mac OS X Server they should integrate Zimbra if they don't buy them (else open exchange, Scalix port). Wouldn't mind a Content Management System either

VOIP: Asterisk, FreeSwitch

A video on demand system (Quicktime Server + Cataloging/FinalCut Server) combined with Joost front end.

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Sun Open Source most of the technologies in Solaris, so Apple can just hover up the bits they like (D-Trace, ZFS) and leave out the bits they don't and avoid the sticky issue of a merger.

Which is what they do at the moment.

This was a dumb idea from the start. There was upside but plenty of downside to the move:

• No upside. Microsoft already has MSN and Hotmail. What can the Redmond Monopoly hope to gain from Yahoo.com that it doesn't already have with its existing properties?
• Downsides. Yahoo.com is one of several pioneer web portal/search engines. However, it has lost the march to Google. A Microsoft/Yahoo combine would have left Google with fewer competitors, not a larger, stronger competitor. Result: A stronger Google, exactly the opposite of what Microsoft wants. As a technology company, Yahoo's primary assets reside in the brains of its employees. A buyout would have prompted a significant number of them to go elsewhere. Microsoft would have been left with the empty hulk of Yahoo.com.

For all of its bluster and the blind fear or adoration of most technology fans, Microsoft has been on the decline since 1999. Many ignored the larger implications of products like Windows Me and Windows Vista. They also paid scant attention when Microsoft's bailed on the MSNBC cable channel. They did not even fully grasp the implications of the fact that the Xbox and Xbox 360 lose money.

The general public may not yet understand, but clearly Microsoft's corporate colleagues and competitor's understand. The Big Bad Wolf huffed and puffed, but it could not blow down Yahoo's house of straw. What's next? Stay tuned.

elppa said:

Sun Open Source most of the technologies in Solaris, so Apple can just hover up the bits they like (D-Trace, ZFS) and leave out the bits they don't and avoid the sticky issue of a merger.

Which is what they do at the moment.

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I always thought Apple and SGI had more in common than any other computer company. But yeah Apple just use the best bits from Solaris without having to take on the extra baggage that Sun would bring. Although it would help them out in the enterprise market.

Well that was a lame anticlimactic ending

Good news. I don't think the merger would have worked in the long run.

Better for consumers and the industry as the merger would have eliminated choices ... Microsoft most likely would have killed Yahoo Messenger and Yahoo Mail.

what I think

This is the best news we could have gotten: if micro$oft had baught yahoo, then we would have seen a large chunck of the internet being ruled by a tyrent and that is never good for an industry or location.

Jerry Yang should be forced to resign. If I was the head of a fast-sinking ship, I'd take the money and run.

Dumb move by Yahoo, their stock will tank come Monday and they'll be begging Microsoft for their initial bid. That said, this may happen after all. Smells like classic Microsoft takeover tactic.

daneoni said:

Well that was a lame anticlimactic ending

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I have to agree.

My guess is the MS shareholders finally got through to Balmer with a message along the lines of: "You keep killing all the pets let you buy. Prove you can take care of your hamsters and then we'll talk about buying a pony."

This never made sense to me, and I don't know why MS seems to feel the need to get into online advertising. Take the $40billion and give it to charity, but there's no need to kill Yahoo in the process...

MisterMe said:

This was a dumb idea from the start. There was upside but plenty of downside to the move:

• No upside. Microsoft already has MSN and Hotmail. What can the Redmond Monopoly hope to gain from Yahoo.com that it doesn't already have with its existing properties?
• Downsides. Yahoo.com is one of several pioneer web portal/search engines. However, it has lost the march to Google. A Microsoft/Yahoo combine would have left Google with fewer competitors, not a larger, stronger competitor. Result: A stronger Google, exactly the opposite of what Microsoft wants. As a technology company, Yahoo's primary assets reside in the brains of its employees. A buyout would have prompted a significant number of them to go elsewhere. Microsoft would have been left with the empty hulk of Yahoo.com.

For all of its bluster and the blind fear or adoration of most technology fans, Microsoft has been on the decline since 1999. Many ignored the larger implications of products like Windows Me and Windows Vista. They also paid scant attention when Microsoft's bailed on the MSNBC cable channel. They did not even fully grasp the implications of the fact that the Xbox and Xbox 360 lose money.

Click to expand...

I understand the brains of Yahoo do not want to become MS employees. On the other hand, Yahoo is not worth anywhere near what MS was offering. It was an interesting battle of wills. I think (hope) Yahoo won out.