Saturday, March 21, 2009

Microsoft and Yahoo

Microsoft CEO Mr. Ballmer recently announced there is still interest to create a deal with Yahoo concerning its search business. Refer to

Last year Microsoft through Mr. Ballmer's leadership pursued a 65% premium bid for Yahoo valued $45 billion. Despite Carl Icahn of the hedge fund Icahn Partners numerous converstations with Mr. Ballmer to finalize the deal it eventually collapsed. Yahoo founder and then CEO Jerry Yang rejected the deal. This rejection lead to his eventual demise at Yahoo.

Numerous analysts had stated that the actual acquisition of the company was not necassary. Microsoft could have acheived the same results as a full acquisition through a "search" only deal.

What is of interest is an article at

According to a recent report through PC world Microsoft U.S search has fallen to a level of a all time low. However, Google commands 63% of all search queries compared to Microsoft's 8% of all queries. Refer to

This campaign has indicated the necessity for Microsoft to pursue a "search" deal with Yahoo. Based on the numbers released through the PC World article, it appears evident the reason Mr. Ballmer announced intentions to pursue a deal with Yahoo. However, the combined assests will still only command approximately 30% of all "search" compared to Google's 63%. Although it makes Microsoft more competitive there is still a 30% share margin.

During the high of the tech boom AOL CEO Steven Case orchestrated a merger with media giant Time Warner. This deal eventually evaporated. Refer to

In 2003, according to a New York Times article Microsoft was pursuing a deal with Google. Refer to

Analysts and even Microsoft employees indicate the Microsoft is required to initiate a game changing move. However, this reality still presents a couple of questions.

First, after losing the original Yahoo bid will Mr. Ballmer finally succeed the second time around?

Perhaps this comment extracted from the CBS Marketwatch article best captures the potential of Ballmer succeeding:

"Can someone shut Ballmer's mouth? He needs to resign! The worst CEO"

This leads to the next question. If Jerry Yang was forced to resign for the Microsoft and Yahoo blunder why is Mr. Ballmer still at the helm of Microsoft and why was he not forced to resign for his part in the blunder?

Lastly, were would Microsoft stock price be if in 2003 Google and Microsoft made a deal.

Microsoft is required to make a game changing move to compete in the "search" sector. This campaign is advocating a acquisition of Yahoo's search business. However, with Mr. Ballmer as the CEO will Microsoft ever get it right?

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1 comment:

Anonymous said...

"However, with Mr. Ballmer as the CEO will Microsoft ever get it right?"

If he did it would be the first thing he has gotten right.