Monday, April 07, 2008

Microhoo !

Imagine this..

You build this powerful Internet company from the scratch and make it one of the popular brands in tech domain. Within few years, it becomes a house-hold name through its e-mail,messenger,search,auto,photo & other services.

There comes another superior search company which captures the market and pushes this company to number two spot in Internet Ad business. You are still fighting with that company for the market share.

On the same tech planet lies a big bad monarch whose eyes falls on the company you built. The big company announce that it wants to acquire your company.

How would you feel?

Irritated ? Pissed off? Cautious? Defensive? Ward-off?

That is exactly what Larry Yang & his team is feeling now. If you didn't get the clues, the company in trouble is Yahoo and the company trying to acquire is Microsoft.

The drama unfolded almost 2 months ago sometime in January when Microsoft offered to take over Yahoo at an unprecedented $44 billion, almost $31 per Yahoo share. Yahoo rebuffed the offer. Microsoft wanted to acquire Yahoo so that it can form a strong force against search giant Google.

Yahoo's board rejected the offer saying it is too less. Then Microsoft openly threatened to stage a coup in share holders in next Yahoo share holder's meeting. Yahoo postponed the meeting.

Meanwhile Yahoo was trying to form alliance with other players such as AOL, News group & even its rival Google. Looks like it didn't work out.

Microsoft had given deadline to Yahoo till Apr 24, which passed on.

Now we need to see what strategy does Microsoft follow? Will it go for a hostile take-over by staging a proxy board of directors? Will it try to increase the bid and win over share holders?

With recent Yahoo results out, still Yahoo is in tender position. Share holders may side with Microsoft bid unless Yahoo shows some dramatic improvements. As far as Microsoft, they make walk-away from the bid to create a feeling in shareholders that they are loosing a chance.Once dust is settled, they may come back & acquire Yahoo!

Even if Microsoft gets successful in acquiring Yahoo, the real question is how do they merge? They have competing products in domains and in some cases, each of their products are high profit earners. What will be happen to products such as MSN, Yahoo Messenger, MSN Auto,Yahoo Auto?

Technically also, they differ hugely. Microsoft uses proprietary stuff & Yahoo uses open sources.This will definitely create issues in merging & sharing the services.

More than anything, the two companies differ in culture. Microsoft is this huge corporate organisation, while Yahoo is still youngster company.

Lots of challenges ahead for Microsoft acquisition team..

As of now, all eyes on Redmond..

2 comments:

Anonymous said...

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