Yahoo Walks Away Leaving $47.5 Billion On the Table
May 6th, 2008 Posted in ManagementLike many business people I have been watching the Microsoft / Yahoo saga with interest.
On May 5th, 2008, Jerry Yang, CEO of Yahoo, and his band of accountants, negotiators and consultants walked away from Microsoft’s $47.5 billion offer to acquire the second most popular search engine/portal site in the world.
Interestingly, despite prognosticators dire predictions of a 30% drop in Yahoo share price, May 6th revealed investors had pumped up Yahoo’s share price by 6%. Indeed, there are Yahoo shareholders still holding out hope for some sort of buy-out on the part of Microsoft, and though the software giant is known to play hardball in negotiations, Yang knows a thing or two about search engines. He knows even more about content – and plenty of it.
The Marriage Between Google and YouTube
In ’07, Google bought fledgling YouTube (founded in 2005) for $1.65 billion, making instant millionaires out of the two college roommates who thought it would be fun to post funny videos. This corporate alliance changed the way people use the web.
Google quickly integrated the thousands of video clips from its acquisition into Google’s SERPs. Now, to watch a video clip, you Google the subject, Google generates the SERPs and links to the video are provided right there on the SERPs. You, the searcher, never leave Google. Google comes to you. With content. Stupid content, poignant content, political content, how-tos – it’s endless.
This marriage between search engine and content developer showed the synergies that can be created between SEs and good stuff to watch or read.
That’s Why Bill Gates Wants Yahoo
Microsoft owns the OS market. Certainly in the home and small business worlds. However, Microsoft doesn’t have a search engine (MSN employs Inktomi) and it doesn’t have much good content. The company’s online presence, MSN is a perpetual also-ran with a short life expectancy.
Microsoft, to maintain its pre-eminent position at the apex of computing and information dissemination, needs content and a means of accessing that content.
Today, Yahoo closed up on the NASDAQ. Let’s see if Microsoft comes back to the bargaining table. From my perspective, Gates and company don’t have much choice and Yahoo knows it. Yang wants more, and don’t be surprised if this hard-headed negotiator gets what he wants – a bigger payout for Yahoo shareholders.
