Yahoo vs. Microsoft

Everybody knows about the drama between Yahoo and Microsoft. I felt compelled to say something about what I thought.

First of all, I wanted to praise Jerry Young, who did a great job under the tremendous pressure to make the best choice for Yahoo!. It requires guts to reject the undervalued offer from Evil Empire (MSFT), it requires courage to face the proxy fight from the notorious speculator (Icahn), it requires wisdom to partner with rival Google and it requires persistence to keep the company goal, mission and employees. Yahoo is like his baby, and he tries to do the best for his baby, including let others raise his baby. However, when others unfairly valued his baby, he didn't just take the money and go. Instead, he stood up, raised his concern and took the responsibility to lead the Yahoos. Lots of people criticized the "Change in Control Employee Severance Plan". However, had no this plan, most of the Yahoo employees will probably stop working, quit their jobs or move to the other rivals. Furthermore, when MSFT withdrew his offer, Steve will not pay a penny for the irresponsible damage he made for Yahoo. It is this "Employee Severance Plan" helps Yahoo to have his talents to refocus on his strategy after the drama finished.

Secondly, I think Steve Ballmer might just be a cheap-aXX. He or MSFT did not have a clear strategy on what to do with Yahoo if the acquisition is successful. He chose to make the offer during the extremely pessimistic stock market down time when Yahoo's stock just reaches 4-year low (Last time, yahoo traded below 20 was in December, 2003.) It was quite obvious to me that Steve was trying to get a deal at the discounted price. When the supermarket is on big sale, we all get allured to buy more stuff which may end up useless. But can you do that for an almost $50,000,000,000 deal? No, you can't! The deal should be based on the future of the two combined company. Mr. Ballmer, Yahoo and MSFT both have problems. Combing two company together is not the cure for any of them. Steve finally realized this problem, so he withdrew his offer. It is not just about price. If he is clear and confident about the success of acquisition, he will do the deal at $37 / share. The value of the success will easily bring all the money back to MSFT in the future. However, Mr. Ballmer and the team have no confidence, but they can't eat their own words and don't want to take the responsibility, so poor Jerry/Yahoo becomes the person to take the responsibility of no deal.

For Yahoo stockholders, it is a very disguised and tempted offer. It can't be resisted for the stock trader to sell their stock when they see their stock drops 50% a day, then suddenly rises another 60% next day. Yahoo Stock holders are scared by the huge downside risk. However, internet is such a huge and fast-growing business. Nobody knows where next big opportunity is and who will be the next winner. Can yahoo catch the next big wave? Taking a look at Apple, once defeated by Microsoft in the PC business, it is growing like crazy now. Can Yahoo can be the next Apple? Let's take a look at Yahoo's strategy of becoming the starting point for the most consumers, establishing yahoo! as the “must buy” for advertisers, and delivering industry-leading platforms. It is not focused on search, but on customer - consumers and advertisers. For any company who can focus on the customer, it will be successful sooner or later. Partnering with Google is just one of the ways to improve the customer experience and doesn't seem to break Yahoo's goal.

As for Icahn, I despise on him. Just a pure speculator who will definitely be a loser in this drama.

I sincerely wish that Jerry and his team can execute the strategy well and increase the shareholder value and let's see a new Yahoo.

PS:
1) All above is just my personal opinion.
2) For the detailed Yahoo-MSFT news, go to
http://news.yahoo.com/fc/Business/Microsoft_Yahoo