Savings Experiment: Snow Removal
Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerMicrosoft (NASDAQ: MSFT) has issued an ultimatum to Yahoo! (NASDAQ: YHOO)'s board of directors and senior management that they have until April 26 to approve Microsoft's $41+ billion price tag or Microsoft will take it to the shareholders directly. This would amount to an unmitigated disaster. Tell me the last time a nasty takeover went well in the technology world. You can't because these things don't happen or work. I'd better explain.
In the world of takeovers, the sweetest scenario is to have the acquired happily march the employees right into the new firm. With industrial takeovers, the acquiring company is buying the physical assets and any intellectual property that exists within the acquired firm. With those assets and intellectual property comes an even more valuable list -- the customer list and relationships. In the tech world, however, a takeover operates quite differently.
The technology world fosters an environment of independence and delicate egos abound. Key personnel from Yahoo! are not going to sit idly by while Microsoft tenders directly to the shareholders in an aggressive fashion. These key people will have retained recruiters, if they haven't already, and will be on to the next opportunities. By the way, Google (NASDAQ: GOOG) is hiring!
Technology is an intellectual property- and marketing-dominated business. If Microsoft were to be successful with Yahoo! shareholders, I would venture to say that at least 60-70% of the "key employees" will be long gone or soon to depart after immediately exercising vested stock options. The cultural chasms between Seattle and Sunnyvale just doesn't cut it.
Yahoo! knows that Microsoft is desperate to effectively compete versus Google. In the tech world the old adage holds true -- if you can't build it, you must buy it. Microsoft has shown it's not capable of competing with Google straight up. With an enthusiastic Yahoo! group in the door, it stands a fighting chance. With a fractured Yahoo! group half-way in the door, half-way out, Microsoft will spend the first 18 months after the close trying to figure out who is staying and who is leaving; who needs to be placated and who needs to be sent packing. All the while, Google will distance itself even further away from the pack.
Nasty proxy fights may win out in the industrial world, but in tech land -- no way.
Georges Yared writes about great growth stocks in Game On Investing.
Goldman Earnings Sink After Buffett Dividend
Johnson & Johnson's Income Falls 23%
Burberry Shares Leap on Sales Update
Reader Comments (Page 1 of 1)
4-08-2008 @ 2:14PM
Andy said...
If I'm Microsoft I say to Yahoo "accept offer or it goes to 20 billion". Watch how fast Yahoo stock drops to pre offer level. (AOL or someone else might then enter picture to out-bid but they hadn't at the time of Microsoft's offer and things haven't gotten any rosier in the tech world since). Let's see how many "higher ups" really want to cash out at 18 bucks a share on a hostile takeover...or maybe hang on and hope Yahoo climbs back out of the tank in the next couple years.
4-08-2008 @ 8:14PM
P.McNamee said...
Great points! (I only hope msft & y! are listening)
This could be a wonderful marriage with outstand-
ing outcome but only if Y!'s key personnel & mar-
ket identity remain. Then we'd have a win-win
situation.
8-11-2008 @ 7:02PM
Adam Immanuel Orre said...
Yahoo is doing the only right thing!
Microsoft is a doomed company. Their business model dysfunctional.
Microsoft's wild business model only works when you can eat or harm other companies.
Google said no, all companies should say no to Microsoft!
To compete with Google you need to be innovative, Microsoft is not, the problem is that Microsoft believes it has the power, it has not.
Only desperation now.
Innovative companies over the world, say no!
Don't be fooled by their money. They are nothing worth.
Don't let a dying beast catch you!
A.I.O