As I began to research online for potential marketing issues for my next post, I came across a number of articles and posts that involved two of the largest corporations in the United States, Microsoft Corp. and Yahoo Inc. It all started on January 31, 2008, when Microsoft made an offer to takeover Yahoo. This acquisition would combine the most powerful software giant (Microsoft) with one of the most powerful internet pioneers (Yahoo). Microsoft's original bid for Yahoo, offered at $31 per share (which amounts to $44.6 billion), was rejected and the two companies are still in negotiations. After Yahoo rejected Microsoft's offer, News Corp. (FOX) and Time Warner's AOL began talks with Yahoo about possible mergers. But while researching online, I came across two posts: one that argued the acquisition would be beneficial for Microsoft, and one that explains how Yahoo should just accept the deal before it's too late. I came to the conclusion that Microsoft and Yahoo can only benefit from this deal, and I do not believe that Yahoo will sell or merge with any other company that is also in the bidding war. However, Yahoo does need to make a decision fast, especially since their employees are being targeted by other competitors and shareholders are losing their patience. I also believe that with Yahoo as an asset, Microsoft can and will be able to compete with the highly praised Google enterprise.The first post I explored, "Microsoft buying Yahoo!-Good or bad?" explains that this takeover is the right decision and it will be ideal for Microsoft. Accordingly, the second post I came upon, "Do or die time for Yahoo," argued that Yahoo has no choice but to merge, saying that Microsoft will just force a hostile takeover and the internet mogul will end up selling for less if it does not deal now. I have read that people are worried about internet start-up companies and entrepreneurs getting the short end of the stick, but I do not think this deal will affect them that much. True, Yahoo has been and still is one of the biggest buyers of these types of smaller companies, especially ones they can acquire for less than $50 million. But I believe Microsoft will easily pick up the slack in that department, even though they are not accustomed to this type of activity. Microsoft will battle with Google for "start-up supremacy" and online advertising, even if it means buying lower end start-ups they would otherwise leave untouched. Also relative to this argument is the fact that there are over 20 companies who are extremely active in purchasing start-up companies, including Amazon, Disney, and the previously mentioned News Corp. and AOL.
"Microsoft buying Yahoo!-Good or bad?"
Comment:
Throughout my research on this topic, I have come to the conclusion that Microsoft will in fact benefit from this deal if it does take place. They will challenge Google for internet supremacy, and hopefu
lly the deal will get finalized soon. Although I agree with you wholeheartedly in every aspect you touched upon, I do believe you left out a big piece of the puzzle. What about the argument that people (so-called experts) are making about smaller start-up companies and the effect the deal will have on them? I'm not a big "computer guy" and I don't read up too much on advances in technology, but at first glance, I do believe that this sounds like a problem. I've read a few blogs and articles explaining that Yahoo is one of the biggest, if not the biggest, buyers of these start-ups and I really wonder if this deal will have that much of an effect. I believe that even though Yahoo does buy quite a few of these "cheaper" (under $50 million) companies, there are plenty of other companies that can pick up the slack, and entrepreneurs need not worry. There are companies out there such as Amazon, eBay, Disney, and Comcast that are frequent buyers of these start-ups, and with the majority of these companies prospering today, why should there be any worry on who's going to buy who? I was just wondering what your take was on the argument over these start-up companies, and if you have any idea on what Microsoft's plan is for future purchasing of companies under $1 billion. Thanks again for your insight on this proposed deal and I appreciate any feedback that you wish to leave."Do or die time for Yahoo"
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Most "experts" find it hard to believe that this deal is going to go through. I believe it will...eventually. Microsoft's offer is now worth just $40 billion (according to Microsoft's closing share price as of 2/19/08), down from the original offer of $44.6 billion. Yahoo Inc. should have taken the deal when it was first offered, and now they are going to lose out on billions of dollars. The takeover will happen, it's just a matter of time. Microsoft plans on going straight to the Yahoo shareholders, bypassing the board of directors who rejected the first offer, and Microsoft CEO Bill Gates has said Microsoft will not increase its offer. Once Yahoo realizes that, they will have nothing else to do but sell. Microsoft does not need to instigate a hostile takeover. They just need to be patient because the deal will get done. From what I have read, Microsoft shareholders are already astonished at the offer Microsoft originally laid out, and they believe Microsoft will be overpaying for Yahoo. I believe that Microsoft's original offer was more than enough, and Yahoo should not rely on a better offer from another corporation or from Microsoft itself. Also, with Yahoo's board of directors all up for re-election this spring, this makes for the best deal possible for both companies. I believe Yahoo should take the money and run with it, because they are just delaying the inevitable.
1 comment:
As someone who is not thoroughly versed with current marketing issues, I found that your post offered a lot of good information about Microsoft's offers to buy and merge with Yahoo. I appreciate the statistics about the amounts of money involved and the analysis concerning benefits and possible outcomes of the potential acquisition; these are things that I would never have known and also not known where to find. However as an outsider looking into this different field, I am most interested in what the deal means in addition to its dynamics. What interests me most about your post is the potential for Microsoft, with the acquisition of Yahoo, to challenge the highly dominant Google enterprise.
For example, I am very interested to know how realistic it would be for Microsoft to contend with Google if this deal does go through. With all of its applications that dominate internet browsing, such as the Google search engine, Google Maps, Gmail, etc, Google seems to have taken over internet navigation, and for me it is a much more marketed and known product as opposed to Microsoft or Yahoo. Every time I sign on to the internet and use my computer, I am much more aware that I am using Google than Microsoft or Yahoo, perhaps because Google has such a broad scope and is well marketed. Do you think it is realistically possible for Microsoft to reach the recognition that Google maintains and continues to build on or is it simply that with the acquisition of Yahoo, Microsoft will be benefit only so much to stay within reach of Google? I would also be interested on any insight about how Microsoft might do this. Will they invent programs and applications that surpass that of Google so that they can increase the presence of their name?
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