Microsoft!
The last time Microsoft spoke publicly about its annoyance with Google and plans to wage war against Big G was back in September 2007.
Eager to challenge Google`s internet advertising and search empire, they hired Brian McAndrews from aQuantive as MSN general manager to draw up battle plans. “We are hell-bent and determined to allocate the talent, resources, money and innovation, to absolutely become a powerhouse in the ad (and search) business,” said Steve Ballmer, Microsoft’s chief executive, at the company’s financial analyst meeting back in July. Rest assured since then, they've been very, very busy.
So it came as not a shocker 10 days ago when Microsoft announced its intention to purchase Yahoo! for $44.6 billion in a decisive bid that, if effective, accelerates its marketing efforts tenfold growing web based services and advertising share.
Well timed overtures.
The bid is well timed to take Yahoo! under its wing. Even after recent management shakeups, the company is still lethargic with slow growth, a poor quarter and weak share price. So the 62% premium over the $13 stock price is a sweet deal indeed.
According to a letter sent to the Yahoo! board of directors, "while online advertising growth continues, there are significant benefits of scale in advertising platform economics, in capital costs for search index build-out, and in research and development, making this a time of industry consolidation and convergence. Today, the market is increasingly dominated by one player who is consolidating its dominance through acquisition. Together, Microsoft and Yahoo! can offer a credible alternative for consumers, advertisers, and publishers."
Faster PCs mean less software CDs.
While Microsoft has a lock on computer software, including Windows on 90%+ of the world’s computers, the reality is people are changing how they interact with PCs as they spend more time on the web downloading free applications and services to run. Services that also include Google`s free web based word processor and spreadsheet programs, Google Docs.
Further proof of online migration can be seen at any Future Shop too. The software CD section is now a tiny footprint of its former self.
Armchair quarterbacking the play.
In Canada, although way too early to tell what impacts will be (even if passes the US Justice’s competitive smell test), the deal could affect Rogers Communications and their customers the most. That’s because they have a deep partnership with Yahoo! for content, advertising and web services. Will that partnership end? Will they align with someone else? It’s pure speculation of course, but wondering about the possibilities is way more fun than wondering what’s next for Britney.
If I were Google, I would subscribe to a MSFT newsfeed and keep both eyes focused on this new, combined competitor. In short order Microsoft could own the most popular website on the planet. And with a track record of dogged determination and winning at all costs, nothing says ‘IT'S ON’ like an exclamation point at the end of their name.
Update: The latest news from the Yahoo! camp is they plan to rebuff MSFT's advances, citing the offer as too low and are holding out for a $40 price per share - a whopping 109% premium on the current share price. The last time their stock traded at this level was more than two years ago. Most industry analysts call the Microsoft bid "reasonable and fair."
This is getting more interesting by the minute.
