Microsoft bids $44.6 billion for Yahoo!

Question

It's not a "B-School Application" topic, but it may very well be the most interesting topic of the day. So I thought of posting it here.

Microsoft went public today with a $44.6 billion cash-and-stock bid to acquire Yahoo. Microsoft's offer amounts to $31 a share and represents a 62 percent premium over Yahoo's closing price on Thursday. News article:

https://www.news.com/Microsoft-bids-44.6 ... =nefd.lede

And an interesting discussion on the same:

https://slashdot.org/article.pl?sid=08/0 ... 1&from=rss

riverripper · Answer

Totally unrelated but more big news in the business world. Exxon once again breaks profit records. Does anyone else find this troubling...I know I do when I pay $650 to fill up the oil tank in my basement or $45 to fill my car.

https://money.cnn.com/2008/02/01/news/companies/exxon_earnings/index.htm?cnn=yes

https://money.cnn.com/2008/02/01/news/companies/exxon_earnings/index.htm?cnn=yes

dosa_don · Answer

MOO - as the new company should be called, is still going to struggle against GOOG. MSFT's core business is still office and windows, while yahoo could not do anything right against GOOG. So, dont see them making much of a dent in GOOG's market share.

But this move was expected and this has been speculated for SSSOOOO long. MSFT with huge cash reserves, had to buy someone. Well, MSFT should have bought GOOG 5 yrs back, would have gotten it for so cheap :D

Again- I am no expert and my assessment could very well be wrong. But shall be interested in learning more about what the experts think.

bherronp · Answer

Can't buy what isn't for sale - I think that was the issue.

Praetorian · Answer

talk about timing and risk.

market not doing so good, google coming out with less than spectacular growth, yahoo not doing so good and microsoft having a great time selling their products.

yahoo would have to be very desperate to accept the offer. it is certainly not their peak.

What does msft know that the market doesn't?

kryzak · Answer

yeah, since Yahoo was at $31 just a few months ago, unless they have no faith in their company anymore, they probably won't accept the offer.

Now the problem is, do I sell my stocks (which I bought years ago at $34) and minimize my loss, or do I take the chance that Yahoo will reject the offer and go back to its old form? Decisions decisions...

dabots · Answer

sell it and buy it back if the deal falls through?

kryzak · Answer

that only works if the price crashes if the deal falls through...

dabots · Answer

but whats the alternative? if you hold on, you will at most see a 10% bump from the current price to the price msft is offering. if the deal falls im willing to bet there will be a big drop.

kryzak · Answer

the alternative is to hold on for that 10-12% increase if the deal goes through.

though it's true that the prices will drop if the deal doesn't go through, at least for a short time.

Praetorian · Answer

msft down 6% , goog down 8% , yhoo up 92%!

I think this is a great time to take some profits and sell some yhoo. tech and banking does not look good so far this year.

sam77sam7 · Answer

Anybody agree with the rumor that with this merge, it may lend a little more credence to a Google buys eBay deal?

togafoot · Answer

I think this is all positioning for the future internet market. Or the 'Mobile Internet'. The big players in this big battle?

Microsoft, Google and Nokia. They are all converging onto the same space. Just look at all the acquistions thay have made recently and analyse where they are all headed....

https://en.wikipedia.org/wiki/List_of_Go ... quisitions
https://en.wikipedia.org/wiki/List_of_co ... orporation
https://www.nokia.com/A4305162 - https://en.wikipedia.org/wiki/NAVTEQ - https://trolltech.com/company/newsroom/a ... 4605718236

RoboMan · Answer

Any thoughts of how apple iPhone will do among all this competition.

Praetorian · Answer

Nokia/RIM are two companies to watch. Nokia has the low end consumer space locked up and RIM has a similar hold on the enterprise space. Apple will have to target the consumer/professional(prosumer they call it :roll:

). Competition in the mobile internet space looks like a software applications problem. The iPhone is years ahead of anyone in the mobile software aspect, much like the Air is with its hardware (or lack of it). Jobs has finally realized that partnerships are the way to go. This is a huge deal. We see this with Boot camp, Parallels and finally the SDK for iphone - apple is expected to release this month.

togafoot · Answer

Have to completley disagree. Nokia are world dominate except in S.Korea, USA and Japan. In all categories. They completley dominate the high-end market with their N-Series devices. RIM are the market leaders in the enterprise segment due to being first in the game based on their push-email service (first to market). However their strategy needs to push into the internet space for them to keep up their momentum. I see them falling by the wayside unless their strategy changes significantly. Much the way Palm had the US market sewn up until they failed to capitalise on the changing market space Apple are new into the game. They revolutionised the UI aspect of mobile devices. However the rest of the package has a lot of catching up to do. The sales figures in Europe are extremely disappointing. This is because the feature rich devices are already available in Europe. In the USA, the operators had tight grip on the available devices and iPhone has opened up the market for all the other manufacturers in the USA. A key market they have failed to capture is China where they have failed to form an agreement with China Mobile. They have more subscribers than the population of the USA!!!! https://www.appleinsider.com/articles/08 ... _down.html The market has really become a 3 way fight with Apple on the outside -> Nokia -> Expanding their internet business and launching their Ovi portal with gaming, music, multimedia sharing and location based services all focused on web2.0, running devices on Symbian OS which they are the major shareholders of, and the most dominate OS in the smnartphone market with over 60% of the smartphone OS market. The suffer in the USA. (Apple only has 27% of the smartphone OS market in the USA). The capture of Trolltech, has basically killed off Motorola. Motorola sold their shares in Symbian a few years ago because they did not want to be part of what Nokia was doing. A lot of their applications moved over to Qt, which was based on TrollTechs platform. With this acquisition by Nokia, Motorola are running into relying on their competitors to help them with their platform. Nokias main weakness is their lack of presence in the USA and failing to be able to understand US operator and consumer requirements Google -> The announcement of Android, their Linux based OS, in itself is not that much, The fact that it comes free and bundled with lots of google applications is the key to the story. If implemented correctly and manufacturers play out the roll out correctly they could grab a nice pie of market share and captialise on revenue based on the use of google services. However, the biggest problem is the hardware integration and the potential for manufaturers to put in their own APIs into their devices. This can cause compatibility issues between devices based on the same OS 'Android'. Along with their internet strategy, Android is a key player for driving mobile services. https://blogs.pcworld.com/staffblog/archives/006416.html Microsoft -> Their smartphone OS strategy has not really worked out well. HTC are the biggest manufacturer producing MS devices. Outside of the USA, Microsoft have such a small market space. They have also failed to capitalise ont he converging internet use in devices and have generally focused on the enterprise space, competing directly with RIM in the USA. The attempted acquisition of yahoo is important. It helps them to compete with google on 2 fronts, web 2.0 (flickr et al) and mobile applications. Yahoo have a big presence in mobile services. Apple -> Strong entry into the USA. UI is amazing, all the manufacturers will come out with their repsonses later this year or next year. By this time Apple needs to have strengthened their weaknesses in the multimedia capture market. A key difference between the USA market and the rest of the world is the importance of the camera. Sony Ericssons cybershot branded mobile devices are not feature rich but thier 5MP camera with xenon flash and autofocus are key drivers in selling the device. Nokia also have many devices with this capability. This is where Apple needs to compete. Their main wekaness? It's a closed system. They need to open up the OS to 3rd party developers without the need to hack it open. Apple did their job in the USA. But they need to move up a few gears to be competitive with the rest of the world https://blog.wired.com/business/2008/01/ ... hes-i.html Now i haven't even started talking about Japan who have even more advanced services available on their mobile devices. -> Mobile TV -> check, biometric security -> Check, e-Wallet capabilities -> Check (people swipe their phones over the sensors in the trains, buses, shops to automatically pay for things. You can even buy things from vending machines using your phone) The most common operating systems (OS) used in smartphones are: Symbian OS from Symbian Ltd. (72.4% Market Share) Linux operating system (13.3% Market Share) Windows Mobile from Microsoft (6.1% Market Share) RIM BlackBerry operating system (5.3% Market Share) Palm OS developed by PalmSource (now a subsidiary of ACCESS). (1.6% Market Share) OS X from Apple Inc. (1.3% Market Share) At the end of the day, what Praetorian mentions is an atypical USA view of the mobile market without understanding hwo the mobile market developed in the rest of the world. The USA has never been ahead in the mobile stakes. This is die to the history of competition in the States. Most other countries converged on common technologies and worked together to create a joint movement which allowed people to switch between operatorsd and phones, the USA tech companies created their own patents and tried to lock in customers into their own niche technology area. This caused innovation to slowdown in the USA whilst Japan and Europe forged ahead! Now your in a position where all Japan users are used to high-tec features in their phones. Europeans are quickly adopting to high tech features (since 2002) and the USA.. only really started to adopt high tech features after the iPhone was introduced.

Praetorian · Answer

togafoot,

Good information. You are right - My comments were completely focused on the US market and I was looking across the spectrum from low end mobile phones to high end devices for professionals - i just don't think Nokia can touch RIM in the enterprise space.

This was great perspective.

togafoot · Answer

This will be a battle for the branders and marketers. Technically, Nokia have functionally superior phones. Brand-wise, RIM are miles ahead in the enterprise space, particularly in the USA. In Europe, devices like the E61 are quite popular but the popularity of blackberries is growing. However, it must be stated, that in Europe, which is a mature market, many people have 2 mobile phones. A work one (usually a device with full QWERTY) and a personal one usually one with camera/music/gaming capabilities.

From what I've seen when i've been in the USA (and Canada), most people, if they have a phone, only have the one device.

Also, the key factor in the device industry is making phones fashion items. The typical European or Japanese phone consumer change theirs every 18-24 months. That's a short lifespan for a device. For business, its a different game. The device needs to be secure and expandable to support changing enterprise infrastructure. You don't need to impress the end-user as much as you need to impress the CTO or whoever makes the decisions for which device is used as the corporate device.

solaris1 · Answer

Just revisiting the point riverripper made about Exxon earlier on this thread, apparently Exxon making record profits is good for the economy and the deficit.

In other words, just one corporation (Exxon Mobil) pays as much in taxes ($27 billion) annually as the entire bottom 50% of individual taxpayers, which is 65,000,000 people! Further, the tax rate for the bottom 50% is only 3% of adjusted gross income ($27.4 billion / $922 billion), and the tax rate for Exxon was 41% in 2006 ($67.4 billion in taxable income, $27.9 billion in taxes).

https://seekingalpha.com/article/63131-exxon-s-2007-tax-bill-30-billion?source=side_bar_editors_picks

Microsoft bids $44.6 billion for Yahoo!

Prep Toolkit

Top 5 GMAT Debrief Videos

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards