June 12th, 2008

Microsoft and Yahoo stop talking, and Google wins

Posted by Garett Rogers @ 4:39 pm

Categories: Microsoft, Microsoft-Yahoo, Yahoo

Tags: Google Inc., Advertisement, Yahoo! Inc., Microsoft Corp., Garett Rogers

Today Microsoft and Yahoo officially stopped talking — the day, I’m sure, Yahoo investors were dreading. The hope that Microsoft and Yahoo might still work out a deal fizzled, and as result, Yahoo shares plummeted 10% before trading ended today.

today announced that discussions with Microsoft regarding a potential transaction — whether for an acquisition of all of Yahoo! or a partial acquisition — have concluded. The conclusion of discussions follows numerous meetings and conversations with Microsoft regarding a number of transaction alternatives, including a meeting between Yahoo! and Microsoft on June 8th in which Chairman Roy Bostock and other independent Board members from Yahoo! participated. At that meeting, Microsoft representatives stated unequivocally that Microsoft is not interested in pursuing an acquisition of all of Yahoo!, even at the price range it had previously suggested.

It worked out well for Google though — no Microsoft/Yahoo merger on the horizon, and a fresh partnership that lets them put ads directly onto Yahoo properties. Jackpot! They are careful to point out why this deal is good, and not evil on their blog:

• This is not a merger. Rather, we are merely providing access to our advertising technology to Yahoo! through our AdSense program.
• This does not remove a competitor from the playing field. Yahoo! will remain in the business of search and content advertising, which gives the company a continued incentive to keep improving and innovating. Even during this agreement, Yahoo! can use our technology as much or as little as it chooses.
• This does not prevent Yahoo! from making similar arrangements with others. This arrangement is not exclusive, meaning that Yahoo! could enter into similar arrangements with other companies.
• This does not increase Google’s share of search traffic. Yahoo! will continue to run its own search engine and advertising programs, and the agreement will not increase Google’s share of search traffic.
• This does not let Google raise prices for advertisers. Google does not set the prices manually for ads; rather, advertisers themselves determine prices through an ongoing competitive auction. We have found over years of research that an auction is by far the most efficient way to price search advertising and have no intention of changing that.

Here are some excerpts from the announcements made by Google and Yahoo:

“[Google] has reached an agreement that gives Yahoo! the ability to use Google’s search and contextual advertising technology through its AdSense(TM) for Search and AdSense for Content advertising programs. Under the agreement, Yahoo! has the option to display Google ads alongside its own natural search results in the U.S. and Canada. In addition, Yahoo! can serve contextually targeted ads on its U.S. and Canadian web properties as well as on its current publisher partner sites.” — Google

“Yahoo! believes that this agreement will enable the Company to better monetize Yahoo!’s search inventory in the United States and Canada. At current monetization rates, this is an approximately $800 million annual revenue opportunity. In the first 12 months following implementation, Yahoo! expects the agreement to generate an estimated $250 million to $450 million in incremental operating cash flow.” — Yahoo

May 4th, 2008

Microsoft withdrawals bid for Yahoo, Google wins

Posted by Garett Rogers @ 8:13 am

Categories: Google, Microsoft, Yahoo

Tags: Google Inc., Yahoo! Inc., Microsoft Corp., Mergers & Acquisitions, Corporate Law, Investment, Finance, Business Operations, Garett Rogers

In a press release from Microsoft yesterday, Steve Ballmer said that it officially withdrawals it’s bid for the acquisition of Yahoo, and cites the deal with Google as the main contributing factor for his decision.

“In our view, such an arrangement with [Google] would make an acquisition of Yahoo! undesirable to us for a number of reasons” - Microsoft Press Release

Now that the dust is settling, we can see what kind of impact this withdrawal will have. As Larry Dignan says on BTL, Google is the big winner. Not only do they not have to worry about a combined Microhoo working together to destroy them, they could also get a lucrative ad deal with Yahoo!.

Before Ballmer withdrew his offer to purchase the company, Yahoo! did everything it could to try and derail the efforts of Microsoft. That included reaching out to Google, and asking them to try using AdWords on their own search engine. Mind you, this is still only a “test”, and it could be subject to close scrutiny by regulators, but it is still looking pretty good for Google.

February 22nd, 2008

Sergey Brin nervous about Microsoft's bid for Yahoo

Posted by Garett Rogers @ 6:17 am

Categories: Acquisition, Microsoft, Microsoft-Yahoo, Yahoo

Tags: Yahoo! Inc., Microsoft Corp., Sergey Brin, Internet, Mergers & Acquisitions, Investment, Finance, Garett Rogers

While speaking at an event for the Lunar X-Prize, Brin said that Microsoft’s bid for Yahoo is “unnerving” — though I doubt Google really has anything to worry about in the short term. Many people think this is a simple case of the pot calling the kettle black.

“The Internet has evolved from open standards, having a diversity of companies, and when you start to have companies that control the operating system, control the browsers, they really tie up the top Web sites, and can be used to manipulate stuff in various ways. I think that’s unnerving.” — Sergey Brin

On Google’s official blog, David Drummond went on record opposing the merger with strong words shortly after Microsoft made the announcement.

“Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC? While the Internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies — and then leverage its dominance into new, adjacent markets.” — David Drummond

I suspect these worries will not prevent the deal from going ahead — but it might be enough to plant seeds of doubt in regulators minds. If successful, this could really slow down the inevitable acquisition process.

February 13th, 2008

Google sucks talent from Yahoo

Posted by Garett Rogers @ 6:46 am

Categories: Google, Yahoo

Tags: Talent, Google Inc., Yahoo! Inc., Workforce Management, Strategy, Human Resources, Management, Garett Rogers

In what may become a common occurrence, head of Yahoo’s Advanced Technology division, Bradley Horowitz was sucked up by Google. This news comes after word that Yahoo handed out pink slips to those 1000 employees expected to be cut. If this does become a trend, I bet Microsoft won’t be too ecstatic about this talent moving to Google before “the deal” goes down.

This is a blow for Yahoo. Most new products (at least the fun stuff) goes through his group, and he is often the face of Yahoo at industry events. He is universally liked and respected, certainly outside of Yahoo and, as far as I can tell, within. –TechCrunch

Yesterday, TechCrunch reported that Salim Ismail left Yahoo voluntarily as well — he led the Advanced Products group, which ironically was led by Horowitz. It sounds like this sector of Yahoo is beginning to fall apart at the seams.

February 9th, 2008

Yahoo won't settle for less than $56 billion

Posted by Garett Rogers @ 1:14 pm

Categories: Acquisition, Microsoft, Microsoft-Yahoo, Yahoo

Tags: Yahoo! Inc., Microsoft Corp., Corporate Governance, Business Operations, Corporate Law, Garett Rogers

It sounds like it’s official, Yahoo will be rejecting Microsoft’s bid to take over Yahoo for $44.6 billion in cash and stock. Yahoo’s board of directors is hoping that Microsoft won’t “go hostile” and just steal the company anyway. If Microsoft does goes against their wishes, it’s likely the partnership would ultimately be a failure.

Yahoo’s board appears to be betting that Microsoft doesn’t want to “go hostile” and try to acquire the company against the wishes of management and the board. Such a course could cause deep resentment among the rank-and-file engineers whose cooperation is crucial to the company’s success. — WSJ

A person familiar with the situation says that Yahoo will not consider an offer below $40 per share, which equals something in the neighborhood of $56 billion. Considering Microsoft must borrow to satisfy their original offer, throwing in an extra $12 billion won’t be an easy decision for Ballmer to make.

So there are three options Microsoft has:

• Take Yahoo for $44.6 billion and risk making it a failure before it even has a chance
• Borrow $12 billion more to secure the deal and have a better chance of the deal working out favorably
• Run away with their tail between their legs

Personally, the last option is the only one that makes sense to me. If Microsoft goes through with the deal, even after Yahoo’s rejection, it will be interesting to see outcome.

February 4th, 2008

Google pokes Microsoft in the eye and offers Yahoo a helping hand

Posted by Garett Rogers @ 6:31 am

Categories: Acquisition, Google, Microsoft, Yahoo

Tags: Google Inc., Yahoo! Inc., Microsoft Corp., Mergers & Acquisitions, Corporate Law, Investment, Finance, Business Operations, Garett Rogers

Google’s official statement on the hostile Microsoft/Yahoo! acquisition attempt is an angry one — Google is upset that Microsoft is doing this, and they are positioning it as a “monopolist at work” type of deal.

The obvious result of a tie-up would mean a stronger competitor for Google on the search and ads front, but something I never thought about was the combination of MSN/Yahoo! Instant Messenger and Hotmail/Yahoo! Mail. The thought of these services together could be enough to delay the deal.

David Drummond, Chief Legal Officer at Google, calls for regulators to take a careful look at the acquisition — but, in my opinion, there isn’t much chance of them blocking the deal as it stands. Many people are thinking that this is simply Google’s way to get back at Microsoft for slowing down their own DoubleClick acquisition, but could it be a carefully thought out tactic?

This long drawn out process gives Yahoo! plenty of time to thwart Microsoft’s hostile bid — and it could not be more poetic than a deal with Google. Eric Schmidt called up Jerry Yang (CEO of Yahoo!) to offer him a deal. There are no details on what was discussed, but some think that Google may entice other companies to submit competing bids by offering guaranteed revenue if Yahoo! agrees to use Google’s ads on Yahoo! Search.

Whatever happens, this is quickly becoming a very interesting story that I’m sure will have many twists and turns in the weeks and months ahead.

May 4th, 2007

Would MSN Yahoo make Google sweat?

Posted by Garett Rogers @ 12:47 pm

Categories: Acquisition, Google, Microsoft, Yahoo

Tags: Google Inc., MSN, Yahoo! Inc., Garett Rogers

Rumors are circulating that Microsoft is looking to purchase Yahoo for $50 billion.  If the deal actually went through (Microsoft tried this in 2006 as well), would it put significant pressure on their business?  I can already hear Eric Schmidt saying something along the lines of "Competition is good — in fact we welcome it" the day Yahoo turns the keys over to MSN.

Let's look at the numbers.  In terms of the search market share, a combined percentage between MSN and Yahoo would equal roughly 38% with a continuing negative trend compared to a rising 48% for Google according to comScore.  This deal would not make it much easier to compete with the agility and ingenuity of Google.  At least in the short term, I don't believe MSN Yahoo would affect Google in a negative way

The merger should not be ignored if it does happen though.  Looking down the road, you might well see competition between the two companies get fairly intense. The game might change quickly if Google finds itself in direct competition with another company with comparable market share and deep pockets.