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http://www.thestar.com/Business/article/210495
Microsoft pursues Yahoo buyout
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May 04, 2007 10:01 AM
NEW YORK (AP) – Microsoft Corp. is resuming its pursuit of search engine operator Yahoo Inc. that could help it better compete with Web search leader Google Inc., published reports said Friday.
Yahoo shares surged more than 17 per cent in pre-market trading.
The New York Post reported Friday that Microsoft has asked Yahoo to enter formal negotiations for an acquisition that could be worth US$50 billion. Yahoo's market capitalization was about $38 billion on Thursday.
The Wall Street Journal said executives of the two companies are looking at a merger or some other kind of matchup and said the talks appear to be early-stage discussions. It said the companies explored the idea of combining last year but the talks led nowhere.
The newspaper reports each cited unidentified people familiar with the situation.
Microsoft is feeling increasing pressure to compete with Google, which plans to beef up its portfolio with a $3.1-billion purchase of online advertising company DoubleClick Inc.
Microsoft currently trails both Yahoo and Google in the lucrative and growing business of Web search.
Google won a search advertising deal with AOL in 2005 that the Post said Microsoft wanted. In addition, Google is developing Web-based software that directly competes with Microsoft Office.
The Post story said Microsoft and Yahoo have held informal talks over the years and said Microsoft's latest approach to Yahoo signals increased urgency.
Earlier this week, Yahoo said it would buy 80 per cent of advertising exchange Right Media for $680 million, increasing its stake in that company to full control.
Yahoo shares surged $5, or 17.7 per cent, to $33.18 in pre-market trading, while shares of Microsoft fell 28 cents to $30.69.
Interesting...
LordShiva
May 4, 2007, 10:51
If this happens, I'll make partner in no time :b:
LordShiva
May 4, 2007, 10:58
My main client would be sending out a ton of RFPs for consulting work.
the best part of LS is that he spams so often but does so well.
Kuciwalker
May 4, 2007, 11:35
This could actually dip into MS's cash reserves.
Originally posted by Kuciwalker
This could actually dip into MS's cash reserves.
by what %?
LordShiva
May 4, 2007, 12:49
MS seriously needs to do something about its cash reserves.
They have slightly less than $30bil.
LordShiva
May 4, 2007, 12:53
Exactly. Way too much.
Are you kidding me? They have ~$30bil in cash, not tied to anything? That would be weird. I mean, even if you're doing obscenely great, I'd think you'd want to invest it or do something other than keep it laying around.
Originally posted by Pekka
Are you kidding me? They have ~$30bil in cash, not tied to anything? That would be weird. I mean, even if you're doing obscenely great, I'd think you'd want to invest it or do something other than keep it laying around.
They have been doing that. The problem is they make money faster than they can sell it.
The Xbox still loses money.
I guess so. Well, it's one of them positive problems. But it still a problem ;). I could help them spend it.
Originally posted by LordShiva
Exactly. Way too much.
:b: theres a saying about a company with cash reserves either knows the road ahead is rough or isnt trying to make enough.
Kontiki
May 4, 2007, 13:30
They could just offer better dividends. Their investors have been pestering them about that for years.
but they are a bunch of tightwads... they even complain about google not being such
snoopy369
May 4, 2007, 14:05
I wonder if regulation bodies would have any issues with this? Admittedly this would be #1 buying out #3, not #2, but still there would be an interesting discussion in the FCC or whomever has regulatory approval right over this' board room...
Perhaps mostly involving how to get the most bribe money out of MS ;)
Kuciwalker
May 4, 2007, 14:10
Originally posted by LordShiva
MS seriously needs to do something about its cash reserves.
QFT.
Kuciwalker
May 4, 2007, 14:10
Originally posted by snoopy369
I wonder if regulation bodies would have any issues with this? Admittedly this would be #1 buying out #3, not #2, but still there would be an interesting discussion in the FCC or whomever has regulatory approval right over this' board room...
Perhaps mostly involving how to get the most bribe money out of MS ;)
Um, this would be #3 buying out #2, IIRC.
snoopy369
May 4, 2007, 14:16
MS is still #1.
Market Cap:
MSFT: 291.33B
GOOG: 146.80B
YHOO: 44.93B
Although market cap is an imperfect tool for this measurement, it's reasonable, and better than most (especially when you have this dramatic of a difference). Yahoo in particular is probably undervalued here as it's been a long time since it was a 'hit' stock, and it has a lot of power on the internet; certainly more than 1/3 of Google's (I'd say between 1/2 and 2/3).
Kuciwalker
May 4, 2007, 14:16
MS is #3 in search. MS doesn't compete with Google or Yahoo in any other area. Market cap is an absurd metric...
snoopy369
May 4, 2007, 14:25
MS is buying out Yahoo. Therefore market cap is a quite reasonable metric for this.
Microsoft competes with Google for your attention and use. Both would like to be the primary, or only, company's services you use to navigate the internet and your home computing needs. MS currently does the latter more than the former, and Google currently does the former more than the latter, but they both are interested in both fields.
In this case, it's not a matter of controlling one area of the market, as more of a vertical monopoly. MS has had more actual complaints, IIRC, in that field - leading them to not be able to build an actual computer of their own, and requiring them to not package IE as mandatory software - and I'm interested to see how far they're able to go in dominating software and internet technology until regulatory bodies intervene. If anything, Google's surging power gives MS a bit of a break in that field - three or four years ago, if MS had offered to buy Yahoo, would anyone have imagined it would pass regulatory snuff?
Originally posted by snoopy369
I wonder if regulation bodies would have any issues with this? Admittedly this would be #1 buying out #3, not #2, but still there would be an interesting discussion in the FCC or whomever has regulatory approval right over this' board room...
Perhaps mostly involving how to get the most bribe money out of MS ;)
Cingular did it with ATT
Kuciwalker
May 4, 2007, 14:47
Originally posted by snoopy369
MS is buying out Yahoo. Therefore market cap is a quite reasonable metric for this.
Only to see if it's possible. Not for antitrust.
Microsoft competes with Google for your attention and use. Both would like to be the primary, or only, company's services you use to navigate the internet and your home computing needs. MS currently does the latter more than the former, and Google currently does the former more than the latter, but they both are interested in both fields.
Their only area of competition is search. Period. Google does not compete with Windows, does not compete with Office, does not compete with Xbox, does not compete with SQL Server, does not compete with Zune... MS has only ~12% marketshare in search, versus Google's 43% and Yahoo's 28%. They're the underdog in this market.
In this case, it's not a matter of controlling one area of the market, as more of a vertical monopoly.
There's no vertical monopoly apart from the fact that IE7 defaults to Live search, but offers Google as an option too.
Kuciwalker
May 4, 2007, 14:48
If MS made cars (;)) the size of their car business wouldn't be relevant to an acquisition of a software company.
snoopy369
May 4, 2007, 15:37
Do you know what a vertical monopoly is? I don't think you do... A vertical monopoly is one in which a monopolist controls not only the primary business, but other aspects of business related to the distribution and sale of the primary business.
MS has an effective monopoly on operating systems. They also are the market leader in Internet Web Browsers. The conclusion to that vertical monopoly would be an Internet Portal... which is what Yahoo! provides. Not only a strong presence in search, but video, and other 'internet solutions'. Regulators would be interested if the concern was that MSFT would have the power to muscle Google out simply through its operating system and web browser control [e.g., using IE to favor Yahoo over Google in terms of website construction; integrating Yahoo elements into Windows; etc.]
OS and browser are linked to internet portal [which is Google's role, by the way, by no means is search even its primary business application any more] in a way strikingly similar to Standard Oil's monopoly at the turn of the century. The fact that MS hasn't recently behaved in this way is nearly irrelevant to me - they did behave in a monopolistic manner in the past, and were successful in it even if they were eventually slapped on the wrist by the courts. Who exactly uses Netscape nowadays... ;)
Kuciwalker
May 4, 2007, 16:16
Originally posted by snoopy369
Do you know what a vertical monopoly is? I don't think you do...
That's because you're clueless.
A vertical monopoly is one in which a monopolist controls not only the primary business, but other aspects of business related to the distribution and sale of the primary business.
And they don't. Their OS and office software monopoly doesn't give them significantly leverage over the search market, especially given that their products are search-engine agnostic.
OS and browser are linked to internet portal [which is Google's role, by the way, by no means is search even its primary business application any more]
Portal isn't either, it's contextual web advertising (where Google is also winning by a large margin). Tangent. And MS's desktop offerings are mostly browser and portal and search-engine agnostic.
KrazyHorse
May 4, 2007, 16:20
snoop, you need to stop digging yourself deeper
This purchase makes no sense to me. Google's going to be kicking ass as Microsoft is distracted in its attempts to integrate Yahoo. Meanwhile, nobody at Yahoo wants to work at Microsoft. Microsoft isn't a cool company.
This strikes me as making a small fortune by starting with a large fortune and wasting it away.
Yahoo isn't a cool company either.
It's a lot cooler than Microsoft.
Yahoo was popular in the 1999 time and no one has used it since. Asher I am still clueless about wtf your avatar is supposed to mean.
Originally posted by DanS
It's a lot cooler than Microsoft.
No, it really is not.
MS has some really cool stuff from a geek perspective, Yahoo...not so much.
Kuciwalker
May 4, 2007, 16:59
Originally posted by DanS
This purchase makes no sense to me. Google's going to be kicking ass as Microsoft is distracted in its attempts to integrate Yahoo. Meanwhile, nobody at Yahoo wants to work at Microsoft. Microsoft isn't a cool company.
Microsoft is an awesome company. No one cares about Yahoo.
There are measurables for this.
Every year or two there's an exodus of employees from Microsoft's search and web outfit. Everybody from low-level folks to top executives.
Yahoo has been bleeding employees too, but not nearly at the rate of Microsoft.
what are the incentives for leaving? is it coolness or better incentives from competitors to leech? Dig up the figures on the pay increases of someone leaving microsoft vs someone leaving google.
also dig up the % of search and web leaving.
Lord Avalon
May 4, 2007, 17:11
Originally posted by Kuciwalker
MS is #3 in search. MS doesn't compete with Google or Yahoo in any other area. Market cap is an absurd metric...
The article says
In addition, Google is developing Web-based software that directly competes with Microsoft Office.
DanS is talking out of his ass.
Kuciwalker
May 4, 2007, 17:11
The article is wrong.
xpost
Originally posted by Asher
DanS is talking out of his ass.
well he's identifying coolness as the motivating factor for people that leave companies for others companies where coolness is not related to monetary compensation at all.
Lord Avalon
May 4, 2007, 17:16
Originally posted by Kuciwalker
The article is wrong.
xpost
OK, then what's this?
Google Docs & Spreadsheets Beta (https://www.google.com/accounts/ServiceLogin?service=writely&passive=true&continue=http%3A%2F%2Fdocs.google.com%2F<mpl=WR_tmp_2_lfty&nui=1&utm_campaign=en&utm_source=en-et-more&utm_medium=more)
Kuciwalker
May 4, 2007, 17:18
Web-based software that doesn't compete with Microsoft Office.
Imran Siddiqui
May 4, 2007, 17:29
I can't believe I missed it but did someone seriously say that Microsoft's OS business is competing in the same market as Google and Yahoo search engine businesses?
Really?
Kuciwalker
May 4, 2007, 17:33
Yes.
Oncle Boris
May 4, 2007, 17:48
Still, this might award them some restrictions on the exposure they can give to MSN search through IE.
Oncle Boris
May 4, 2007, 17:48
douple benetration
Kuciwalker
May 4, 2007, 17:49
As I said, it gets basically nothing preferred. Live search is the default in IE7, but to switch to google you just click the drop-down box next to the search bar and select "Google".
snoopy369
May 4, 2007, 19:09
Originally posted by Imran Siddiqui
I can't believe I missed it but did someone seriously say that Microsoft's OS business is competing in the same market as Google and Yahoo search engine businesses?
Really?
No. Kuci apparently got into college without learning how to read.
I suggested that MS's OS and web browser gives them the possibility of having a vertical monopoly when combined with a major web portal.
Kuci has apparently read OS as "office software" and web portal as "search engine".
Google's search engine is (as I said above) no longer the major portion of Google's business; and my suggestion is not that MS *currently* competes with Google (although Google is working on that...) but that its acquisition of Yahoo! would put them in competition, and a competition that they would have an advantage in. (BTW, I'm not suggesting that this WOULD be prohibited, just that the regulating bodies would undoubtedly look at it, and COULD be objected to. I don't know the legal background to antitrust law so I don't claim to know.)
Let me give you an example. If MS were to begin building computer systems, would any non-libertarians not see the monopoly there?
This is just the other direction ... just like you run an OS on a computer, you also run internet software 'on' an OS.
Kuciwalker
May 4, 2007, 19:15
No. Kuci apparently got into college without learning how to read.
I suggested that MS's OS and web browser gives them the possibility of having a vertical monopoly when combined with a major web portal.
Kuci has apparently read OS as "office software" and web portal as "search engine".
You're obviously the one with no ****ing clue how to read.
snoopy369
May 4, 2007, 19:15
Originally posted by Kuciwalker
As I said, it gets basically nothing preferred. Live search is the default in IE7, but to switch to google you just click the drop-down box next to the search bar and select "Google".
1. The default option has substantial power. Even if it's easy to change, more people will use the default than not. The same as with the default browser - more people use IE because it comes with the computer than firefox, even as easy as it is to install.
2. The fact that they don't now, doesn't mean they couldn't make it harder to limit it.
youre nuts though if you think you can claim and prove it.
just saying verticle monopoly doesnt make it so.
Kuciwalker
May 4, 2007, 19:17
This is just the other direction ... just like you run an OS on a computer, you also run internet software 'on' an OS.
You run internet software on a browser. Yes, MS has a browser with their OS. It is as easy as it could possibly be to switch from that browser, and it doesn't even have to ship as the default. STFU until you get a clue.
snoopy369
May 4, 2007, 19:17
Kuci, you haven't ever addressed my core proposition. You keep throwing up strawmen about office software and Zunes, and ignoring the relevant element of the argument, that MS' control over OS gives them an advantage in the web portal business. You haven't even mentioned web portals once, regardless of the fact that that is what this entire thread is about.
Kuciwalker
May 4, 2007, 19:18
Originally posted by snoopy369
2. The fact that they don't now, doesn't mean they couldn't make it harder to limit it.
MS could also pay Iran to nuke Google's campus.
Kuciwalker
May 4, 2007, 19:19
Originally posted by snoopy369
Kuci, you haven't ever addressed my core proposition. You keep throwing up strawmen about office software and Zunes, and ignoring the relevant element of the argument, that MS' control over OS gives them an advantage in the web portal business.
I've addressed it plenty. It's inane.
You haven't even mentioned web portals once, regardless of the fact that that is what this entire thread is about.
1) Yes I have.
2) No it's not. It's about a search/contextual ad/portal company being bought by a much larger company that's the underdog in that particular market.
Kuciwalker
May 4, 2007, 19:21
Originally posted by snoopy369
Google's search engine is (as I said above) no longer the major portion of Google's business; and my suggestion is not that MS *currently* competes with Google (although Google is working on that...) but that its acquisition of Yahoo! would put them in competition, and a competition that they would have an advantage in.
Do you have any clue what Google's main business is? Do you know that they are, in fact, major competitors in the markets where they overlap?
snoopy369
May 4, 2007, 19:33
Originally posted by Kuciwalker
This is just the other direction ... just like you run an OS on a computer, you also run internet software 'on' an OS.
You run internet software on a browser. Yes, MS has a browser with their OS. It is as easy as it could possibly be to switch from that browser, and it doesn't even have to ship as the default. STFU until you get a clue.
MS has the dominant browser, and as I mentioned above, the power of the default is a strong one. It takes time and knowledge to switch browsers; the average Joe doesn't bother. IE comes with Windows, requires no advertising or effort to distribute. It doesn't have to ship as default, but why wouldn't it?
Firefox, on the other hand, has to be advertised, has to be downloaded, and thus despite being the 'popular' favorite of computer folks and probably the better browser, has about half the marketshare of IE (IE5/6/7 have about 58% to 32% for FF/Mozilla). Impressive statistics, but IE still has the lion's share of browsers, and FF/Mozilla isn't gaining much anymore.
Harovan
May 4, 2007, 19:38
Looks like the deal is off.
snoopy369
May 4, 2007, 19:42
Google's business monetarily is advertising. Their search engine provides plenty of money from that - but there's not a lot of growth in that market (the search engine itself). Most of their money comes from ads placed on other sites; and the biggest growth areas are in this, and in Google's web services (ads in gmail messages, around videos, etc.)
MS wants in on that money, but more importantly they want to be the place you go for everything. I doubt the money in and of itself is that important to them - they make more on their OS and productivity software anyway. They want you to see the MS logo on everything you use on your computer. Games, productivity software, internet browser, and web pages.
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