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Summary:

You know the joke about Microsoft — they normally get things almost right on the third try. After failing miserably to get Yahoo in two initial attempts thus far, Steve Ballmer and Co. might be returning for yet another try, reports The Wall Street Journal. Indeed, […]

You know the joke about Microsoft — they normally get things almost right on the third try. After failing miserably to get Yahoo in two initial attempts thus far, Steve Ballmer and Co. might be returning for yet another try, reports The Wall Street Journal.

Indeed, two weeks ago, Microsoft Chief Executive Steve Ballmer called Yahoo Chairman Roy Bostock to suggest they meet to discuss a new idea involving other partners, according to a person familiar with the matter…Yahoo remains skeptical about the viability of a deal that would break out its core search business. But the company remains open to discussing any proposal from Microsoft, people close to the company said.

This time they are looking to team up with News Corp. and Time Warner and bid for Yahoo, and essentially carve it up. That said, the whole story is full of caveats.

New details are now emerging that show a critical period in which Yahoo, under increased pressure from shareholders, pushed to sell itself to Microsoft. The overture came on May 17, two weeks after Microsoft officially dropped its pursuit of Yahoo.

The Journal captures a lot of behind-the-scenes drama, though it doesn’t quite convince me that there is something major in the offing. However, it does remind me of the often-seen scene on National Geographic of the African Serengeti, lions and hyena circling a buffalo that’s bleeding from a previous attack. The buffalo, in this case, is Yahoo.

I’m not sure how many people agree with me, but the whole Microsoft-Yahoo situation is just insane. I don’t even want to comment on Microsoft’s rationale to keep coming back to this deal. The desperation to go for Yahoo’s “search” business shows the world that Microsoft doesn’t put much faith in its own abilities. Well, at least that’s out of the way! The saddest part of this whole thing is watching Jerry Yang make missteps in public that might lead to the end of a company he helped start.

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  1. Chetan Sharma Tuesday, July 1, 2008

    I agree. Online Search wars are over. Google won. It is time to move on.

  2. Om,

    I think MS is running scared. One can foresee problems with Microsoft’s current product mix eroding their near term financial performance, and they don’t have much ammo in their quiver.

    As I mentioned in a post a couple weeks ago, Yahoo appears to be at the end of its’ lifecycle.

    For what it is worth, I don’t think Microhoo would be a good marriage.

    My $.02.

    Best,

    Curtis

  3. As many have learned its a mistake to underestimate Microsoft. While Valley folks are tired of the Microsoft-Yahoo! drama we (I am a Valley folk) forget that the underlying assets are Yahoo! are significant — 100M+ Mail users, 40M+ MyYahoo! users, and 21% search share (US) in a market where the leader brand name is now a verb while it maintains a lead in other large and growth markets (Japan, Vietnam, Tawain, etc.). The issue with Yahoo! is one of management leadership — the leadership team accepts mediocrity, fails to inspire employees or investors, and is more concerned about whose up/down politics then with our products. Now — with the right management team a few extra billion dollars Yahoo! would become a serious competitive threat to Google in search and ad marketplace and would clean up in the areas of Mail, Front page, News, Sports, and Finance.

    So — while 6 months of Microsoft and Yahoo! drama seems like an eternity for valley folks in the grand scheme of things this is simply a negotiation that has hit some big bumps (albeit public ones) along the way, but the Yahoo! assets are simply too valuable to just walk away from and Steve recognizes that.

  4. Its interesting to see how everyone has an opinion about yahoo these days. I’m quite taken back from the lynching mentality and the “hate” that is pouring out of the media/analyst/etc.

    They may be 2nd when it comes to search, but people forget the 0.5B people they serve on the monthly basis. This range from mails, IMs, their front page portal, fantasy sports, finance, movies, etc. They are still the largest display advertising company in the world.

    All i’m saying is, Yhoo is still a great company. One that is still healthy, holds its ground, churning out good products and has amazing potential. Its definitely being painted otherwise and i think its a little unfair. As a user, i’m still using their services and products, and will continue to do so for many more years to come.

  5. Microsoft has less than 10% of the search market. Yahoo has 20%. Buying Yahoo’s search operations and gaining 30% of the search market is a huge difference and the right move for MS if their intention is to be a strong competitor to Google. If they’ve got the $$ why should they alternatively spend the next 3-10 years trying to prove they can innovate.

    Buying just the search operations and becoming a part owner or strategic technology partner to Yahoo is also preferable to buying the whole of Yahoo.

    I believe that this deal will get done and both Yahoo and AOL will eventually be using MS Live Search technology.

  6. It is not about ability to deliver on own, but to jump ahead by 20%.

  7. A split deal flys in the face of several posts that attribute Yahoo’s attractiveness to it’s non-search assets. If MS wants only the search portion, then they leave a lot on the table.

    I’m in concert with Om. He’s called this very well since inception.

  8. assassination is what is going on. yahoo was fine. lumbering along minding its own business until ms started this buy out. now the media tells us daily yahoo is suddenly failing, yang is an idiot, everyone is leaving, omg. you are right it is insane. its more like watching the discovery channel then business.

    yahoo is a very cool property. it is getting more and more valuable. it has one the top pages on the net and this is like early television where there was only 3 channels, nbc, cbs and abc.

    ms couldn’t bring down the wildebeast by itself but it has weakened it and this has attracted others.

    animal imagery aside i am rooting for jerry. i can imagine how very difficult it must be to both guide the company forward and deal with all this nonsense.

    i like diversity. i hope yahoo continues as yahoo and not another part of the ms, msnbc, media empire.

  9. Microsoft busca socios para comprar Yahoo – Foros de CHW Wednesday, July 2, 2008

    [...] de Yahoo sólo lo que Microsoft no quiere, como quien dice las sobras? Fuente: Wall Street Journal, GigaOm, ValleyWag. addthis_pub = [...]

  10. Software Mandi Wednesday, July 2, 2008

    Even if Microsoft gets successful to purchase Yahoo, it will still be far away from Goolge. Integration of Gmail with mail servers of corporate entities has set a new trend and a big threat for Live and Yahoo mail. MSN and Yahoo have to follow foot prints of Google

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