Yahoo Still Sitting on the Fence
The chatter about what the heck Yahoo is going to do about its future as an
independent company isn't quieting down. In fact, it's growing louder -- although
not necessarily any more articulate -- about what path it might pursue. A number
of rumors have popped up in the aftermath of its outright rejection of Microsoft's
$44.6 billion takeover bid earlier this week, including one that suggests the
on-again, off-again talks between Jerry Yang & Co. and Rupert Murdoch at
News Corp. were
On the table is a deal to spin off News Corp.'s Fox Interactive Media unit
(caretakers of MySpace) and meld it with Yahoo. The proposed deal would also
see News Corp. gaining a 20 percent stake in Yahoo. Besides Murdoch this week
saying flat-out he wasn't going to make a play for Yahoo, this proposed deal
wouldn't put Yahoo on an equal plane with Google -- but it does somewhat improve
its competitive stance against Google.
Next was another rumor that over the last day or two Google has been losing
interest in reaching an accord
with Yahoo that would have Yahoo outsourcing a large chunk of its search-related
advertising to Google, as a way to fend off Microsoft's invasion. Google, according
to unnamed sources in various reports, is growing increasingly wary of regulatory
concerns of such a deal. Perhaps also, Yahoo may not find such a pride-swallowing
deal all that appetizing.
Following this were reports, fully expected, that Microsoft is stepping
up its hostile takeover efforts of Yahoo. Redmond seems fully committed
to this effort, but some are questioning whether it's worth it, given how long
and disruptive this tactic could be. Microsoft could end up damaging Yahoo's
market value of Yahoo by the time it completed the takeover.
So, what's Yahoo to do? Well, for one, all these developments haven't stopped
it from conducting business. The company went out and purchased Maven Networks,
an Internet-based company that has a system for managing ads in online videos,
for $160 million. Seems like the right thing to do, given the company's direction,
and it's something Microsoft wouldn't be against.
It would be nice, in this day and age of large companies swallowing smaller
competitors with good technology whole, to see Yahoo survive as an independent
company. The more vibrant independent companies survive means speedier delivery
of more innovation to users, thereby pushing larger companies like Microsoft
to be as innovative. And it would be nice for a nurturing sugar daddy with Yahoo's
best interests at heart to step forward and rescue the company, allowing it
to be that vibrant and independent competitor. We can always pray for
a miracle. But it doesn't seem like this will be a prayer that's answered.
It's a Family Affair
Microsoft wasn't the only company with the urge to merge this week. A couple
of days ago, Dell announced its intention to continue its recent acquisition
streak by sucking up e-mail
service provider MessageOne.
In November, Dell laid out some $1.4 billion to acquire
EqualLogic, a provider of network storage -- the largest dollar amount the
company has ever spent on an acquisition, by the by. Ever since Michael Dell
took over the top spot over a year ago, the company has been on a buying spree.
What makes this latest buy from Dell a little interesting is that MessageOne
was co-founded by Michael Dell's brother, Adam. I guess Big Brother was watching.
The $155 million acquisition gives Dell a competitor to services -- including
managing e-mail and preventing data loss and outages -- that are similar to
what's being offered by both Google (through its acquisition
of Postini) and Microsoft. It's not clear how Dell will leverage this new
asset to sell more systems against archrival HP, but Dell could whip up a nice
enticement for those users trying to decide between the two.
In the spirit of full disclosure, a Dell spokesman said that Michael Dell and
his family will receive $12 million from the deal with Adam getting about $970,000.
Michael Dell said in a prepared statement that he will donate his share to charity.
Good for you, Michael.
Sun Continues Its Open Source Push
Continuing with our acquisitions theme, Sun Microsystems continued its push
into the open source market by buying
the German-based Innotek, makers of virtualization software. This goes along
with its recent $1
billion acquisition of the Sweden-based MySQL, one of the more prominent
vendors of open source over the past decade.
Innotek has an interesting product by the name of VirtualBox, which allows
both desktops and laptops to run a number of different operating systems side
by side. Smoothly integrating laptops into virtual environments is one of the
next big challenges for virtualization vendors to conquer.
In a recent conversation we had with Peter Levine, former XenSource CEO and
current Citrix senior vice president and general manager of the Citrix Virtualization
and Management Division, the challenges of incorporating laptops into virtualized
environments are more a use case or business issue than a technical one.
"We need to understand what the appropriate use cases are for those types
of environments. We must figure out what the customer absolutely wants,"
Anyway, it seems like action in the open source-based virtualization markets
is heating up, and creeping closer to offering some solutions the proprietary
world is lagging behind.
Mailbag: More on Microsoft-Yahoo, Divorce Courts Get
There's no shortage of reader
reactions to Microsoft's proposed buyout of Yahoo -- and Yahoo's subsequent
rejection. Here are some more:
Having met my wife through Yahoo Personals, I would hate to see the the
organization that led me to the love of my life become just another minion
to the Evil Empire. Free Yahoo now!
Obviously, being an outsider, I have little to back my case, but from
what I know, I think Yahoo really messed up. What I would like to know is,
what makes Yahoo think this was a bad deal? As you and others have mentioned,
Yahoo doesn't really bring anything new to Microsoft except competition within
and/or elimination of competition. But if it really is going after Google,
then additional pressure from other sides could only prove helpful to Microsoft's
The only justification I can imagine is if MS truly believes that Yahoo
and MS Live are competing for the same customers, while Google is competing
for different ones. How it can believe that, though, I can't imagine.
I find it intriguing that Microsoft can't seem to get a focus long enough
to make a smart move. It would seem to me that it could invest the same amount
of money in its own company and simply out-compete Yahoo. And there would
be no open source baggage for them to explain to pundits and customers. It
is as if all Microsoft said about open source being an anti-American attack
on the free enterprise system was just a lot of marketing crap. Even Microsoft
should recognize that buying everyone they can find for sale is not competition;
it's simply wasting money.
If Yahoo doesn't want to be bought by Microsoft and thinks its stock is
undervalued, if I remember my MBA classes correctly, this is the time for
Yahoo to start buying back its own stock -- to defend itself by going private,
if necessary, with the help of some smart VCs.
I think the Yahoo acquisition is a bad idea for the following reasons:
One, the price is way over what Yahoo is worth and the ROI is going to be
very long and drawn-out, if it even does pay enough to get MS it's original
money back. Two, MS has worked on a cash-only basis for a long time, and if
this deal goes through, they will have to borrow money for the first time
in a long time. Going into debt at any time is a bad idea, but going into
debt to pay for an above-premium price for a dying company is totally stupid.
Three, the Yahoo board has run it into the ground by not having any real focus,
and then they turn down a more-than-generous offer. Either they are a greedy
bunch of idiots who obviously cannot make money the old-fashioned way (earn
it) or a bunch of businessmen who have lost their edge and have not any idea
how to run a technology company in today's market. Based on all the poor decisions
they have made in the past (including recent decisions), my vote is for the
If I was a Yahoo shareholder, I would have sold my stock as soon as the
news hit that Yahoo had rejected the offer and get as much for my investment
as possible. In my opinion, Microsoft should just let Yahoo go (let it die
a slow painful death), and focus on acquiring other companies that will cost
less and give them the better ROI while at the same time increasing their
Web presence. Trying to acquire Yahoo is a waste of time and money and MS
really needs take a step back and see that there are better options than buying
Yahoo to increase its Web development presence and SaaS initiative.
On Monday, Doug suggested that Microsoft's monthly patch process of announcing
where its faults lie is pretty
gutsy. One reader disagrees:
Not really. There are so many holes (147 bulletins for 2006/2007) that
they're simply hard to hide.
And in the spirit of Valentine's Day, Lafe
reported on the findings of a recent survey that showed an increase in the
number of divorce cases that use electronic evidence. Readers share their experiences:
I'm going through a divorce and two things have come up. One, she's either
"appropriated" or destroyed any digital evidence I had collected
prior to us trying to reconcile. Including audio tape. Two, she tried to claim
that I would neglect our son if I were granted overnight stays, due to Facebook
and Twitter status updates. My updates talked about me having insomnia, a
problem with not being able to sleep, not a problem of being unable to wake
up. I've since completely restricted my Tweets to work-related-only updates.
You can count me as part of the 5 percent of men who bring electronic
evidence into divorce proceedings. And let's just say it allowed me to keep
the house. I plead the Fifth on the details.
Got something to share or add? Let us know! Leave a comment below or send an
e-mail to firstname.lastname@example.org.