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Microsoft bids $45 billion for Yahoo!

http://money.cnn.com/2008/02/01/tec...sion=2008020109

Microsoft bids $45 billion for Yahoo

Software giant makes cash and stock offer of $31 a share, a 62% premium from Yahoo's closing price on Thursday.

By Chris Isidore of CNNMoney.com and Michal Lev-Ram of Fortune
February 1 2008: 10:16 AM EST

NEW YORK (CNNMoney.com) -- Microsoft Corp. made an unsolicited $44.6 billion cash and stock bid for Yahoo on Friday, a deal that could shake up the competitive and lucrative market for Internet search.

The deal would pay Yahoo shareholders $31 a share, which represents a 62% premium from where Yahoo stock closed on Thursday.

Steve Ballmer, Microsoft's chief executive, called the move the "next major milestone" for the software giant.

"We are very, very confident this is the right path for Microsoft and for Yahoo," he said.

Microsoft hopes to close the deal by the end of the year. Ballmer said that Microsoft has been in "off and on" talks with Yahoo for 18 months and said he called Yahoo CEO Jerry Yang Thursday night to tell him the bid was coming.

Microsoft made the bid early Friday. In a statement, the company said the offer allows Yahoo shareholders to elect to receive cash or a fixed number of shares of Microsoft common stock, with the software giant's offer consisting of one-half cash and one-half Microsoft common stock.

Shares of Yahoo (YHOO, Fortune 500) shot up 50% at the start of trading Friday, while shares of Dow component Microsoft (MSFT, Fortune 500) tumbled 4.5%.

In a statement, Yahoo acknowledged receipt of the offer and said its board would evaluate the proposal "carefully and promptly."

Both Microsoft and Yahoo have fallen far behind rival Google (GOOG, Fortune 500) in the lucrative field of Internet search. Yahoo's earnings and share of the online search market have badly trailed Google.

In a letter it sent to Yahoo's board of directors, Microsoft disclosed it had explored a Microsoft-Yahoo deal a year earlier, only to be rebuffed by Yahoo, which said at that time it was confident of the "potential upside" for Yahoo from operational changes it planned.

"A year has gone by, and the competitive situation has not improved," Ballmer.

On Thursday, former Yahoo CEO and current Chairman Terry Semel, who opposed an earlier approach Microsoft made last year, resigned from the Yahoo board.

Yahoo announced Tuesday it would lay off 1,000 employees by mid-February, citing what CEO Yang described as "headwinds" facing the company. It also reported lower fourth-quarter earnings that still beat Wall Street's now modest expectations for the firm, but it gave a 2008 revenue forecast that disappointed analysts.

But even Google has run into recent problems. After the bell Thursday it reported earnings that fell a penny a share short of forecasts. The company reported a slowdown in its fourth-quarter revenue growth, attributed partly to difficulty selling ads on social networking sites.

Google shares have fallen 24% since hitting a record high $747.24 in early November. But Yahoo shares have lost more than a third of their value over the same period.

Still, online advertising, particularly ads tied to Internet search, is by far the fastest growing part of ad spending. That's caused problems for traditional media, which have seen ad spending fall.

Microsoft said it projects the online advertising market to grow from over $40 billion in 2007 to nearly $80 billion by 2010.

In the letter to Yahoo's board, Microsoft said a tie-up would achieve economics of scale while allowing combined research and development efforts to achieve breakthrough products, particularly in the growing areas of online video and mobile Internet connections.

Microsoft said it intends to offer significant retention packages to Yahoo engineers, key leaders and employees across the firm. It said it believes the proposed combination would receive all necessary regulatory approvals and expects that the proposed transaction would be completed in the second half of calendar year 2008.

"We have great respect for Yahoo, and together we can offer an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market," Ballmer said in the company's statement.

http://money.cnn.com/2008/02/01/tec...sion=2008020109

Just heard abt this release last hour on the news.

Crazytown

not good, less search options is less search options

ps. this is crazytown indeed

I'm not exactly sure what MS hopes to accomplish by going a head with this. Granted Yahoo's web development team is more capable than MS', they are just going to be buying so many redundant systems.

Sure they would be buying the most popular search engine on the planet, but I just see so much waste being created.

..... i wish i had yahoo! stocks, thats a huge increase.

quote:

Originally posted by Orko I'm not exactly sure what MS hopes to accomplish by going a head with this. Granted Yahoo's web development team is more capable than MS', they are just going to be buying so many redundant systems. Sure they would be buying the most popular search engine on the planet, but I just see so much waste being created.

they are not buying them for their servers! they are buying them for they advertising base, Intellectual property, R&D, etc

if they are spending 40billion, you bet they are getting something for it. I think its a good thing for yahoo as they are having troubles.

I dont think yahoo will approve at that price, it will go up!

quote:

Originally posted by Dave Akermanis ..... i wish i had yahoo! stocks, thats a huge increase.

true, and you wish you dont have google stocks!!! they are down $40 today.

That news and Q3 earnings missing marks does hurt!!

quote:

Originally posted by Orko Granted Yahoo's web development team is more capable than MS'

Granted? I don't think that's granted at all. What makes you say that?

quote:

Originally posted by devnull they are not buying them for their servers! they are buying them for they advertising base, Intellectual property, R&D, etc

I'm not talking about servers, you can never have too many servers. I am specifically talking about development teams, and research facilities. They are both working on a lot of similar products, so i think there will be redundant systems.

quote:

Originally posted by Cosmic Fur Granted? I don't think that's granted at all. What makes you say that?

Just from what I have used on both sides of the fence. From the services I've used from Yahoo, they seem to work better than the services I have used from MS. So much so, that I do not use any more of MS's online products.

MS's entire MSN network, and Live networks have been a disaster. So much so that the lead architecht left the Live project weeks before it was set to launch (went to Google).

It could also be he left 'cause Google too has deep pockets and really liked when that dude can do.

Wow. This certainly changes things.

quote:

Originally posted by Orko Just from what I have used on both sides of the fence. From the services I've used from Yahoo, they seem to work better than the services I have used from MS. So much so, that I do not use any more of MS's online products. MS's entire MSN network, and Live networks have been a disaster. So much so that the lead architecht left the Live project weeks before it was set to launch (went to Google).

I'm not arguing, but I'm actually curious - which of Yahoo's services are better than Microsoft's?

Besides MSN Messenger, I don't really use any web Live services. The only "Live" thing I have installed is Live Photo Gallery, which is actually pretty nice.

quote:

Originally posted by Prometheus Xex It could also be he left 'cause Google too has deep pockets and really liked when that dude can do.

Certainly that was a contributing factor. I honestly think he was a bit embarrassed by the whole thing, saw a good offer and jumped ship. If I was leading that project when it debuted, i would have been embarrassed myself.

quote:

Originally posted by Cosmic Fur I'm not arguing, but I'm actually curious - which of Yahoo's services are better than Microsoft's?

I liked their email and portal much more. MSN's portal was just too cluttered and clunky, to the point where I found it unusable. I used to use Yahoo's maps before google maps came out, and never really liked MS's maps. I continue to use their tv guide.

Most of my usage was from about a year or two ago. Ive switched most of my web services to Google.



IMO MS needs to get away from the web crap and focus on their core business, which is desktops and servers. If they pulled support, the world would stop working and they need to play off that. Google has the web wrapped up, and their products are just too slick for MS's old way of thinking. MS is constantly playing catch up when it comes to 'inovative' products.

I have always believed in MS, because they do have a vital role to play in the computer world.

They're backing Google into a corner is what they're doing.

62% premium offered for Yahoo. It's a good day to be a Yahoo shareholder.

Microhoo!

quote:

Originally posted by slingshot They're backing Google into a corner is what they're doing. 62% premium offered for Yahoo. It's a good day to be a Yahoo shareholder.

You think it will work? I see the user base doubling, but I also see the same bad leadership continuing to steer the helm.

quote:

Originally posted by Orko I liked their email and portal much more. MSN's portal was just too cluttered and clunky, to the point where I found it unusable. I used to use Yahoo's maps before google maps came out, and never really liked MS's maps. I continue to use their tv guide. Most of my usage was from about a year or two ago. Ive switched most of my web services to Google. IMO MS needs to get away from the web crap and focus on their core business, which is desktops and servers. If they pulled support, the world would stop working and they need to play off that. Google has the web wrapped up, and their products are just too slick for MS's old way of thinking. MS is constantly playing catch up when it comes to 'inovative' products. I have always believed in MS, because they do have a vital role to play in the computer world.

Hmm yeah, haven't used any of those. Live Mail is all I use, and that's because of MSN also.

And I agree. Vista, is a failed release. It's only getting so much market penetration because it comes bundled with new PCs. If you look at how many businesses are switching from XP to Vista, then it becomes evident what an EPIC FAIL that OS is. They need to shift more focus on that. If MS tries to steal Google's main market, then I hope someone comes in to steal MS's main market.

quote:

Originally posted by devnull true, and you wish you dont have google stocks!!! they are down $40 today

my thoughts exactly

Hmmm...I wonder if I know anyone who works for Microsoft...

ps. Microhoo ftw.

quote:

Originally posted by Orko Sure they would be buying the most popular search engine on the planet

What about Google?

quote:

Google May Try To Stop Microsoft From 'Taking Over The Internet' With Yahoo Bid Monday February 4, 2008 The soap opera that was the biggest big business deal of last week continued over the weekend, with a new cast of characters. But who you think is the hero or the villain depends a lot of which channel you're watching. Search engine giant Google is warning the business and computer worlds that a Microsoft takeover of Yahoo, proposed by the software giant on Friday, would be an attempt to get "illegal control" of the worldwide web. The statement came from the Google's top lawyer, in the company's first response to the ground breaking move. "Microsoft's hostile bid for Yahoo raises troubling questions," writes David Drummond, Google's chief legal officer, on the company's blog. "This is about more than simply a financial transaction, one company taking over another. It's about preserving the underlying principles of the Internet: openness and innovation." The dynamic duo has tried to work together in the past, but nothing could be finalized. So in a sudden change of tactics, Microsoft offered $44.6 billion for its would-be-partner on Friday, far above what the search engine portal's stock was worth. Google, which has been unstoppable in its rampage on gaining market and ad share in the online world, sees the combination as a real danger to its own bottom line, although it's presenting that challenge as a perilous one to you. It claims a Microsoft-owned Yahoo would stifle innovation and force Windows-oriented programs and interfaces on everyone with its tremendous clout, most notably in the area of email and instant messaging (IM). And it points to the infamous anti-trust suit the Redmond, Washington giant is still trying to deal with as a result of pushing its Internet Explorer browser on computer owners. "Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC?" Drummond wonders. Bill Gates' behemoth counters that the two firms make a perfect fit and it's the only solution to stop the Google juggernaut. And it denies it would have too much clout. "Microsoft is committed to openness, innovation, and the protection of privacy on the Internet," assures company lawyer Brad Smith. "We believe that the combination of Microsoft and Yahoo will advance these goals." A combined entity will still only give both a 16 percent share of the world Internet search market. Google remains king of the virtual hill with 62 per cent, according to comScore Media Metrix, which measures usage. But both the former pair remain far ahead in email and IM, both lucrative areas, and would likely be able to crush Google's plans to move ahead with its own version of those cash cows. So what do experts think will happen? Many feel that with Yahoo's stock already depressed, Microsoft will win the fight to acquire it, while Google tries to delay it as long as possible by playing the anti-trust card again. Another scenario? Google could make a play for Yahoo itself to keep it out of Microsoft's clutches. But that might not work either, raising anti-trust implications of its own. For now, Yahoo remains non-committal. "We want to emphasize that absolutely no decisions have been made," execs wrote in an internal memo to worried employees on Friday. "And, despite what some people have tried to suggest, there's certainly no integration process underway." Looks like this soap opera may need a name. How about "Search" For Tomorrow?

SOURCE

Am I the only one who finds it somewhat comical that Google is touting the virtues of a free and open internet, and inciting the fear that Microsoft is "taking over the internet" when Google itself is buying up every sort of company from server storage to marketing companies.

quote:

Originally posted by Candeeman What about Google?

Google has more money, and a larger market cap, but Yahoo has a larger user base.

quote:

Originally posted by The Highroller Am I the only one who finds it somewhat comical that Google is touting the virtues of a free and open internet, and inciting the fear that Microsoft is "taking over the internet" when Google itself is buying up every sort of company from server storage to marketing companies.

Yes. All three of those companies are constantly buying and integrating smaller companies to complement their services. Yes Google is a monster, but they would be nothing if Yahoo and MS became one. Both Google and MS have publicly stated that they are making billions available to buy start ups. They want you to know that, and they want you to pursue that money.

Google has done a great job of being the new poster boy for search engines. The fact remains that Yahoo is bigger, based on user base, and combined with MSN, they would become that much more powerful, and harder to defeat.

Well I think it's good. Can't just let Google own the internets now can we?

Go MS go go go !

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