It's been about a day since I first started reading and talking about Microsoft's $44 billion buyout offer for Yahoo (my current employer). And I have to say, it's been quite fascinating so far.
In all the reading I've done and discussions I've had, numerous scenarios have emerged. I don't claim (beyond a gut feel) to know how likely any of them are, but I figured I'd list them here for the sake of discussion. Bear in mind that, while I work at Yahoo, I have no inside info on this and am only posting my thoughts and ideas that I've heard from friends and others on-line. Jerry is probably too busy to answer my email anyway. :-)
Oh, and if you're one of the reporters who has called or emailed, you'll understand that I really can't go on record or talk to you about what's going on at work.
Anyway, here's the list...
- Microsoft actually does buy Yahoo for $31/share (or something in that ballpark). This is the default case in the minds of many people.
- Another large company (or group of companies, possibly including private equity funds) makes a counter offer. This will ultimately only serve to drive the price up. Microsoft will outbid.
- The Yahoo Board of Directors decides to outsource Yahoo's search advertising (and possibly search) business to rival Google. This entails a long-term partnership for a number of years and is sufficient to send Microsoft back to Redmond to continue working on its own search and search advertising business. I imagine this would be a very tough call to make.
- As a variation of #3, Yahoo may look to strengthen its display advertising (graphical ads) business and take some significant share of the DoubeClick acquisition as part of the deal. That makes Google the dominant contextual text advertising company and Yahoo the dominant display/banner and behavioral advertising company.
- The board simply rejects the offer and decides to continue as is. This seems quite unlikely to me. Shareholders will insist that something big happen.
No matter what happens, it's clear that this will likely be going on for quite some time. Corporate events of this magnitude take quite a bit of time to execute. I suspect that the Yahoo board of directors is considering several options that may or may not be included in the list above. Time will tell.
As an amusing side note, yesterday was one of the few days that page views to my blog home page were dramatically higher than to any of my individual posts. Apparently a lot of folks came over here to see if I had anything to say about the news. I didn't quite expect that.
Posted by jzawodn at February 02, 2008 08:24 AM
Good list. #3 sounds like a strong possibility to me.
I Honestly don't see where Yahoo benefits from #3. I've seen it stated a couple times, but it doesn't make much sense in my gut. Now your #4 option seems like a much better or more Yahoo-like strategy.
Sadly, all the options except #5 seem to be for short-term gains. I don't know what's wrong, but Yahoo has so much potential. Even after having left it a little over 3 years ago, I still think there are great things that can happen there.
I understand it's hard to organize such a diverse company, but from when I started in 2000 to when I left in 2004, through two rounds of lay offs, and four or five re-orgs I don't think there was a situation that functioned well.
I expected that you would say something. I almost asked you somthing but with the goon list down I didn't bother. This is very to watch from the outside. I am sure it is even more interesting from the the inside. I kinda think of this like the TeleAtlas deal that went down a couple months ago. Big companies are very hard to run. Publicly traded ones even more so. I think this is the start of a very interesting year both for Yahoo! and the rest of the corporate landscape.
Jeremy,
There is a typo in #4.
"That makes Google the dominant contextual *tetx* (text) advertising company"
People say that I have eagle eyes ;)
for situation #4 to stand a chance, Yahoo! - and not Google! - should have bought Doubleclick.
the way I see it - the way I'd do it - display ads are very much tied to how much a certain page can make with Adsense which acts as a 'benchmark' for that page's value. Google has Adsense and Doubleclick. What does Yahoo! have?
Jeremy - You can tell us what's going on inside the company. We're not journalists and we'll keep it hush hush. Honest!
FYI - The last link in your comment titled "my blog home page" is broken (404).
Your comment about hits to your front page was right on the mark, you were one of the first people I thought of when I heard the news :-)
I read about another scenario (after I had thought of it myself independently but didn't get to publish it myself in time it seems!) that Microsoft buys Yahoo, merges MSN and Yahoo, then spins off MSN-Yahoo as a separate company. They do have a lot of conflicting services (email, portal pages), but a few that would complement each other (photo sharing, spaces, del.icio.us).
Personally I'm completely against the merger because I love Flickr and del.icio.us and know I'll have to move off them the instant Microsoft gets involved. They've given me no reason to trust them in the past, and every reason to think they'll be up to something. Or maybe it's because I'm a Mac and FreeBSD guy!
What would make sense is the following:
MS buys Yahoo; hands over their search and advertising business to Yahoo; and lets Yahoo run it while concentrating on their core businesses (OS and Office).
They were the 3rd mover in this whole contextual advertising and search monetization field; and yet their offering is worse than what's out there. If they can't even copy someone else's work effectively, how can they ever become better?
Check out what all of the "Yahoo-ligans" will be wearing when/if the Microsoft buyout goes through!!!
2 things:
1 - it's funny your scenario did not even mention the yahoo/aol merger scenario?
2 - YDN i am pretty sure that MS will kill YDN and all the exceptional open source work it has done so far, so is it possible that YDN people could go on as a foundation like the mozilla foundation as independant entities that will continue the formidable work it has done on php, javascript, ajax, flex, ruby etc...
