Welcome!

Machine Learning Authors: Zakia Bouachraoui, Liz McMillan, Roger Strukhoff, Pat Romanski, Carmen Gonzalez

Related Topics: Cognitive Computing , Java IoT, ColdFusion, Microsoft Cloud, Adobe Flex, Open Source Cloud, Machine Learning , Log Management

Cognitive Computing : Article

Although Yahoo! Looks Pretty Boxed In by Microsoft, It Could Try For More Money

Microsoft this morning made a $44.6 billion hostile bid for the floundering Yahoo!

Microsoft this morning made a $44.6 billion hostile bid for the floundering Yahoo, striking at a point when it has become evident to all and sundry that Yahoo doesn’t have a pray of turning things around on its own let alone getting competitive.

Yahoo’s first official reaction was basically to say it’ll think about it. It said it would evaluate the offer “carefully and promptly in the context of Yahoo’s strategic plans.” It did not give a timeframe for a response.

Although it looks pretty boxed in, it could of course try for more money.

Microsoft’s move throws open the door to rival bids, but Microsoft thinks Google’s hands are tied. Its market share would raise insuperable antitrust issues, Microsoft said, to a counter-offer.

Yahoo is the most visited site on the Internet, though it has failed to monetize its popularity and has lost share in search, and Microsoft, which has the same problems, wants the consumer traffic.

“Scale matters,” it said.

Projections peg the online advertising market being worth nearly $80 billion by 2010 and Microsoft flat out says it can’t get competitive on its own.

Microsoft has been trying to bring Yahoo to the negotiating table for 18 months in an attempt to level the playing field with the increasing dominant Google.

According to the offer letter Microsoft CEO Steve Ballmer sent Yahoo last night, Yahoo rejected a merger proposal from Microsoft last February saying, “Now is not the right time from the perspective of our shareholders.”

Yahoo, he said, was gambling on the “potential upside if management successfully executed on a reformulated strategy based on certain operational initiatives, such as Project Panama, and a significant organizational realignment.”

As Ballmer observed, “A year has gone by, and the competitive situation has not improved.”

Microsoft is offering $31 dollars a share, a 62% premium to Yahoo’s beaten-down closing price of $19.18 yesterday.

Its opening bid, its first hostile bid ever, is a combination of cash and stock. Microsoft said Yahoo shareholders could pick which they wanted, expecting a 50-50 split.

Microsoft shrugs off any regulatory hurdle for itself and expects the deal, if consummated, to close in the second half.

The price is a monster even for Microsoft, whose largest acquisition to date has been the $6 billion aQuantive deal, and there are of course doubts that Microsoft can get it back. There are also real integration risks.

Microsoft thinks the two companies together offer the advertising market a significant alternative to Google, arguing economies of scale, combined R&D, accelerated innovation and operational efficiencies. It estimates at least a billion dollars a year in annual synergy from the merger.

It brushes aside the integration risks and having had more than a year to think about it, says it has a plan and a process that includes employees of both companies. Among other things, it intends to offer “significant retention packages to Yahoo engineers, key leaders and employees across all disciplines.”

Yahoo Tuesday lowered its 2008 outlook, warning it faced “headwinds” and possible spending cutbacks because of a weakening economy, its only apparent solution being to lay off about a thousand people from its swollen staff.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

Comments (1)

Share your thoughts on this story.

Add your comment
You must be signed in to add a comment. Sign-in | Register

In accordance with our Comment Policy, we encourage comments that are on topic, relevant and to-the-point. We will remove comments that include profanity, personal attacks, racial slurs, threats of violence, or other inappropriate material that violates our Terms and Conditions, and will block users who make repeated violations. We ask all readers to expect diversity of opinion and to treat one another with dignity and respect.


CloudEXPO Stories
The platform combines the strengths of Singtel's extensive, intelligent network capabilities with Microsoft's cloud expertise to create a unique solution that sets new standards for IoT applications," said Mr Diomedes Kastanis, Head of IoT at Singtel. "Our solution provides speed, transparency and flexibility, paving the way for a more pervasive use of IoT to accelerate enterprises' digitalisation efforts. AI-powered intelligent connectivity over Microsoft Azure will be the fastest connected path for IoT innovators to scale globally, and the smartest path to cross-device synergy in an instrumented, connected world.
There are many examples of disruption in consumer space – Uber disrupting the cab industry, Airbnb disrupting the hospitality industry and so on; but have you wondered who is disrupting support and operations? AISERA helps make businesses and customers successful by offering consumer-like user experience for support and operations. We have built the world’s first AI-driven IT / HR / Cloud / Customer Support and Operations solution.
ScaleMP is presenting at CloudEXPO 2019, held June 24-26 in Santa Clara, and we’d love to see you there. At the conference, we’ll demonstrate how ScaleMP is solving one of the most vexing challenges for cloud — memory cost and limit of scale — and how our innovative vSMP MemoryONE solution provides affordable larger server memory for the private and public cloud. Please visit us at Booth No. 519 to connect with our experts and learn more about vSMP MemoryONE and how it is already serving some of the world’s largest data centers. Click here to schedule a meeting with our experts and executives.
Darktrace is the world's leading AI company for cyber security. Created by mathematicians from the University of Cambridge, Darktrace's Enterprise Immune System is the first non-consumer application of machine learning to work at scale, across all network types, from physical, virtualized, and cloud, through to IoT and industrial control systems. Installed as a self-configuring cyber defense platform, Darktrace continuously learns what is ‘normal' for all devices and users, updating its understanding as the environment changes.
Codete accelerates their clients growth through technological expertise and experience. Codite team works with organizations to meet the challenges that digitalization presents. Their clients include digital start-ups as well as established enterprises in the IT industry. To stay competitive in a highly innovative IT industry, strong R&D departments and bold spin-off initiatives is a must. Codete Data Science and Software Architects teams help corporate clients to stay up to date with the modern business digitalization solutions. Achieve up to 50% early-stage technological process development cost cutdown with science and R&D-driven investment strategy with Codete's support.