My take on MSFT bid for YHOO

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Ballmer has been chasing Jerry Yang for a year, and today he ran out of patience. Interestingly enough, I learned it from CNBC first time (around 5:30 AM central time). Note, last time I watched early CNBC, it was Jan 22 global crash…so the lesson for me don’t get up too early 🙂

The desperation of Microsoft
After all these efforts, MSN search, MSN live space, blog, MSFT is still playing catch up with GOOG. Since it can not afford to buy GOOG, it is determined to get the No. 2 guy in web search, by paying more than 50% premium over yesterday’s YHOO closing price.

How Yahoo got here

Well, first was two Stanford EE Ph.D students, started this web directory thing, VC, IPO, all the good stuff. Then comes dot com crash, luckily they got an seasoned executive (reminds me of eBay’s Meg) named Terry Semel from entertainment industry. Terry led the company through rough times and also made some mistakes on the way. One mistake, is it try to be everything on the Internet, it does not have a strong point (besides email users). This is not the biggest mistake, which I think is the loss of focus on web search. In Google’s early days, Yahoo used Google search engine and shared revenue with Google. When they found out the lucrative market opportunity in search space, and scrambled to buy Overtune, it’s a bit late.

Yahoo is still a superior brand. Couple years ago I saw Yahoo put ad on TV, which is a bit odd. I can understand Apple put up TV ads. Why Yahoo? I never saw Google does TV ad.

The Verdict
Of course, the ultimate vertict, is the stock price. Because Yahoo only grows its revenue about one fourth/fifth of Google’s rate, Wall Street has been dumping YHOO shares for a while. It closed at $19.18 as of yesterday Jan 31 2008.

What’s the next step
The YHOO shareholders will probablly go with the buy out. The US regulatory should OK this deal. But MSFT could face chanllenges in EU.

The Yahoo employees will probablly work on their resumes, try to jump to Google or Facebook?

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