Filed under: Deals, Competitive strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), News Corp’B’ (NWS)
It looks like we’ve now entered the when, not if, stage of Microsoft Corp. (NASDAQ: MSFT) acquiring Yahoo Inc. (NASDAQ: YHOO) and we’ll soon be saying good-bye to the Yahoo we know for something else.
You’ll find this splattered across the web today: Microsoft presents its vision of a combined company to Yahoo executives in what appears to be the first meeting since Microsoft made its unsolicited offer for Yahoo, reports The Wall Street Journal [subscription required].
On January 31, 2008, a buyout offer of $44.6 billion was made by the software giant to combine forces with Yahoo!, against the supposedly next evil empire, Google Inc. (NASDAQ: GOOG).
Google has stolen Yahoo’s thunder, and try as it might, Yahoo has not been able to get it back. Its stock has stagnated. Even as GOOG shareholders have watched their stock plummet some 40% this year, Google is still the current web star when it comes to search and advertising revenue. Microsoft hopes to steal this mantle by combining MSN with Yahoo.
For two months, Yahoo leadership has been struggling to find a White Knight to rescue it from the clutches of MSFT’s CEO Steve Ballmer. But its alternatives have been dwindling as Rupert Murdoch’s News Corp (NYSE: NWS) turned away.
It looks like this meeting around the watering hole is just Yahoo saying to Microsft, “So what do you boys have in mind?,” which will probably progress into, “I believe we have the ability to hang around with you fellas for a while.”
From my perspective, any deal that ties MSN and Yahoo together will add some value to the web combination, but it is not certain that Yahoo under the wing of Microsoft won’t lose some valuable freedom and much of its charm.
I would be much more in favor of Microsoft spinning off its world wide web assets into a separate company and combining that with Yahoo to create a new web powerhouse. That would pass regulators hurdles more easily and the unit would be free to add still more web properties — perhaps even a MySpace, or dare I state it, perhaps even AOL.
It is hard to know what the end result of Monday’s meeting in terms of deal structure, price, management and timing will bring in the end, but we have the ability to be sure Yahoo! and the internet landscape continues to morph anew.
Sheldon Liber is the CEO of a small private investment company and the design and research principal for an architecture & planning firm. He writes Chasing Value and Serious Money columns. Disclosure: I own shares of AOL parent company TWX.
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