The article reads easily enough. Pressure corporate giant Yahoo! to succumb to the mounting investor pressures for them to ante up and go back to the table with Microsoft, but with a twist. Microsoft wants to come in and buy parts or the whole Internet giant on the premise that Yahoo! capitulates to Microsoft’s demand that they fire their entire board and elect the board pushed by corporate raider and Microsoft ally Carl Icahn (Rob Hof). So what gives?
The thing smells of a bully trying to impose his will on the seeming victim and get them to kowtow to the proposition. But would the deal be to the advantage of Yahoo? Not according to some Yahoo! shareholders who think that the deal would just benefit the big IT giant, Microsoft (Hof). But again, not all of the shareholders are of the same page. Some want Yahoo to buckle down to work on getting a deal with Microsoft (Hof). In the aftermath of the rejection of the company of that offer, some of the company’s investors and shareholders have sued the company in order to force it to give Microsoft a sceond chance (Solomon).
Microsoft has already invested heavily in the online advertisng industry, but with the $ 44.6 billion offer to Yahoo (Smith et al), Microsoft has admitted that it needs this deal to catch with leader Google (Smith et al). Also, this deal affirms the importance that Microsft places on the online advertising industry and to focus on competing with industry rival Google (Smith, Macdonald, Cain, Frank, Weiner).This could also allow the merged company to have greater access to the Asian market, since Google is not that popular in the region (Solomon). According to Claus Mortensen, IDC’s chief of new media, digital market and advsiory services, the addition of Yahoo into the Microsoft group would give the software company a greater chunk of the Internet search engine market (Solomon).
Mortensen avers that for Google to catch up, Google will push on with its full-Web anchored services to challenge Microsoft’s portfolio (Solomon). But will the two inherently different companies mix and make sweet economic music together or just end up clanging? If the deal proceeds, it is vague who will end following who (Smith et al). As it stands, Yahoo will benefit most from the deal and is expected to stand out, relegating the MSN brand to a lower rung in terms of the branding of the products (Smith et al). But are the two giants the only ones ruuning the gamble here?
More common occurences in mergers in any industry is the tally of laid-off workers from the acquired business entity. But whose employees have more to fear? As Microsoft has nary an idea of the market that it wants to enter, it might not want to take much from Yahoo, as this might affect the intended outcome of the deal (All). IDC analyst Karsten Weide (2008) explains that Microsoft, primarily an engineering company by orientation, doesn’t know the advertising industry, that’s why it offered to take over struggling Internet company Yahoo (All).
So does Yahoo employees have more to fear? More likely it is the MSN employess who have to be fearful about (All). But the “harvesting” might not stop with Yahoo’s acquisition (Solomon). Accroding to Mortensen (2008), the company might ante up with familiarizing itself with online advertsing mechanisms and system in Asia, benefiting even Asian-based search engines (Solomon).
So Microsoft wants the entire board fired and get a new one in the deal. But Microsoft, especially Icahn, must be able to persuade the investors that it does want to get the Internet giant on the right track, and not just walk away with a fistful or raider money in the process (Hof).
All, Ann. “ Rank-and-file workers could impact Microsoft/Yahoo deal”. IT Business Edge 18 April 2008.
Hof, Rob. “Microsoft: We might but Yahoo if shareholders fire board”. Business Week 7 July 2008.
/icahn_microsoft.html?chan=top+news_top+news+index_news+%2B+analysisSmith, Smith, David Mitchell, Macdonald, Neil, Cain, Matthew W., Frank, Andrew, Weiner, Allen. “ Microsoft/ Yahoo deal will first impact online advertsing”. 1 February 2008.
Solomon, Sol E. “ Yahoo Deal Would Boost Microsoft in Asia”. Business Week 15 February 2008.