John

A Compelling Summary Of MicroHoo!

In News on April 19, 2008 at 10:15 am

The continuing saga of the Microsoft-Yahoo debacle is getting so twisted these days, it’s hard to keep up with what’s going on. As more players (like NewsCorp) , more people (like Frank Quattrone), and Bill Gates’s ego enter into the picture, the story gets more tangled up than a David Lynch film.

And frankly, like most of his films, they’re getting real boring, real fast–even worse, there’s no Naomi Watts to shed her clothes like she did on Mulholland Drive.

If you wanna get a ground-down, readable plot summary on the twists and turns so far (“MicroHoo! For Dummies” if you will), John Dvorak does it pretty well in his Market Watch Column last week. Essentially if the deal does happen, there’s gonna be a massive spill from the mess after the bits and pieces of Yahoo! have been divided between Microsoft and NewsCorp. Who benefits? Hard to say.

Excerpt from MarketWatch:

Trying to follow the Microsoft Corp.-Yahoo Inc. deal wrangling is like fighting an ant invasion where the critters are coming from every angle. Let me try to explain the story so far.

First of all, since the proposed deal has descended into bitter bickering, I cannot see how this merger would benefit Microsoft. Yahoo employees will rebel against their new overlords, causing trouble.

Yahoo is a company too big to swallow, and Microsoft may become like that python found in Florida that swallowed a swamp alligator. Once inside, the gator simply clawed its way out of the python, leaving behind a gruesome mess.

In this case, the gruesome mess will be Microsoft. The end result to investors will be two companies decimated. Microsoft shareholders already sense this.

This sticking point stems from the fact that early in the negotiations Bill Gates stupidly made the blanket comment, as chairman, that Microsoft would not raise the price, period. So now, if Microsoft raises the price, Gates will have this “change of heart” thrown in his face whenever he’s in future negotiations: “Yes well, back in 2008 you said you wouldn’t raise the price, but you did. So what you are saying now is bull.”

Enter News Corp. […]

Microsoft is going to cut News Corp. into the deal and raise the offer. But Microsoft’s contribution will not change, thus keeping Bill Gates’ promise not to raise the company’s bid. The added money will come from News Corp. Thus, if the offer goes to $35 it will be a maximum of $31 from Microsoft and $4 from News Corp.

Then they divvy up the parts of Yahoo that fit into their particular corporate schemes. Microsoft doesn’t need all of Yahoo anyway. Thus Yahoo gets sliced and diced and maybe some pieces get sold off to other interested parties.

I don’t think anyone actually believed that Microsoft was going to swallow Yahoo whole anyway.
Whatever the case, the EU, above all, will nix the whole thing no matter how hard Microsoft begs them to reconsider while pointing the finger at Google, decrying it as the evil monopolist.
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