So much has already been said and speculated about Yahoo!’s rejection of Microsoft’s $44.6 billion offer that it would be screaming in the echo chamber to add my analysis and prognostications about the offer and its rebuff. Except I can’t help making one (hopefully) original observation: This episode may be the best thing to happen to Yahoo! and its employees in a very long time.
When the proposed deal was announced 11 days ago, I wrote – assuming Yahoo! to be a willing recipient of the offer – that getting the deal past regulators would be a challenge and one that could demoralize an already struggling Yahoo!
Now, Yahoo!’s decision to reject the offer could have the opposite affect on the company and it’s employees.
From the press release issued by Yahoo this morning:
After careful evaluation, the Board believes that Microsoft’s proposal substantially undervalues Yahoo! including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as our substantial unconsolidated investments.
Roughly translated: “Microsoft is out of its friggin’ mind if it thinks for a minute we’re some kind of cheap date.”
And therein lies the motivation. Nothing energizes an organization and galvanizes employees quite like righteous indignation. Now, Yahoo! has something to prove, damn it!
Sure, Yahoo! left the door ajar for counter offers and other “strategic options,” but the Microsoft bid – and its rejection – might be the best thing to happen to Yahoo! in a very long time.
Even as Yahoo! rebuffed Microsoft’s proposal this morning, Microsoft announced this morning that it would acquire mobile software and services provider
Danger Inc. (and in the process nix
Danger’s plans to go public).
In the
press release, Microsoft said the “acquisition will align Danger’s nearly 10 years of expertise in the mobile consumer space with Microsoft’s vision to provide innovative andcompelling mobile experiences to a growing base of customers.”
We first met Danger in early 2000 when my colleague
Jim Forbes and I were putting together the DEMOmobile events. Danger introduced the Sidekick at DEMOmobile 2001. Meeting the company in their scrappy offices on University Ave., in Palo Alto, it was clear
to us that the future value of Danger wasn’t the Sidekick device or even the operating environment; it’s the applications and services that the device connects to that matter most. Microsoft seems to get that, too.
So concerns voiced in a
c|net post about how Microsoft will reconcile the incompatible operating systems seem moot to us. Microsoft Windows Mobile has focused on the device, to the neglect of the services the device connects with. Danger provides an end-to-end infrastructure to deliver data and Internet services to consumers. Whether Microsoft adopts Danger’s OS or kills it is of little consequence. It’s the service infrastructure that matters and in acquiring Danger, Microsoft is acquiring the architecture, IP, and experienced engineers to extend Windows Mobile – or for that matter the Xbox and other device-centric operating platforms — from the device to the service layer.
We hope Microsoft also recognizes the value of Danger’s consumer-smart marketing organization. Danger has been successful in creating a hip brand that appeals to the iPod generation, a substantial market segment that Microsoft can’t seem to crack.
I woke this morning to the news that Microsoft has tendered a $44.6 billion ($31/share) offer to buy Yahoo in a cash and stock deal. (And here I thought I was getting up early to pack for vacation!).
The acquisition has been rumored and speculated on for a year or more, and even in the dawns early light there’s plenty of commentary on whether the deal should or should not happen, whether it makes sense, what the combined company might look like, what Microsoft ought to do with the Yahoo asset.
When rumors of a possible merger circulated last May, Om Malik called a Microsoft-Yahoo merger a “bad idea.” He wrote:
Marrying a company with Internet DNA (Yahoo) with another who can’t take a step forward without turning its neck twice (looking back at the PC) is not that easy. Will this deal become the 21st century version of AOL-Time Warner merger, and a high-water mark for the current boom?
One-time Wall Street wonder-analyst Henry Blodget called a potential merger a “smart strategic move” but advised Microsoft to create a new company Internet company in the process.
Would it be a smart strategic move for Microsoft and Yahoo to combine forces? Absolutely. Is the best way to do this to have Microsoft suck Yahoo into the massive Windows/Office empire? Absolutely not. If Microsoft buys Yahoo, Microsoft should immediately spin the Yahoo-MSN business out as a separate company. If it doesn’t, both Yahoo and MSN will die
Now that the deal has gone from rumor to announcement, there’ll be plenty of jockeying around these two, and a myriad of other, opinions. I’ll leave that speculation to folks who are far better arm-chair quarterbacks than I. But what I will say is this:
Not so fast. Read the rest of this entry »
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