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Yahoo Chairman Terry Semel resigns, Gates looks to solidify his online empire with the acquisition of Yahoo

Only days ago, the news broke that Yahoo was in troubled waters and sinking fast.  The Internet giant, which ranks number 2 in terms of search engine traffic and number 1 in terms of total traffic to properties, posted a declining net profit for the fourth straight quarter.  Worse yet, it announced that it would be cutting 1,000 jobs, or almost 7 percent of its workforce.  CEO Jerry Yang stated that the company was facing "strong headwinds" and had to be prepared to make big changes.

Now, an opportunity has come knocking on Yahoo's door, which holds the promise of transforming the online business world.  Microsoft Corp. made an unsolicited $44.6 billion bid for Yahoo and its holdings this morning.  The offer is one half in Microsoft common stock, and the other half in cash.

The move promises a sweet payoff for share holders, who would see their stocks soar 62% from Thursday levels, up to a $31 per share payout.

Microsoft Chief Executive Steve Ballmer was among Microsoft's big guns to be pushing the move.  He enthused that the move is the "next major milestone" for Microsoft.  He continued, "We are very, very confident this is the right path for Microsoft and for Yahoo."

Ballmer informed the media that Microsoft has been in talks with Yahoo, preparing the offer, for nearly 18 months now.  He gave Yahoo CEO Jerry Yang a personal call on Thursday night to announce the bid in person.

A Microsoft-Yahoo team would shake up the online community by creating a legitimate competitor to Google, which current stands far above the competition in terms of search engine Traffic.  Traffic research site comScore indicates that Yahoo has 22.9% of the search engine market and Microsoft owns a 9.8% share.  Together, their 32.7% share, would pose a challenge to Google's 58.4% share of the U.S. search engine market.

Microsoft revealed that it had first had broached the possibility to Yahoo executives a year ago, but was rebuffed by Yahoo's board of directors and CEO. With today's resignation of Semel, the balance of Yahoo's board could lead to a different outcome.  Semel was strongly opposed to the merger last year.

A year after Microsoft's offering, Yahoo is much worse for wear and promises to evaluate Microsoft's proposal "carefully and promptly."  As UBS analyst Benjamin Schachte puts it, "Last year, Yahoo told investors it needed more time to get on the right track.  But you only get a certain amount of time to turn things around."

Steve Ballmer stated, "We have great respect for Yahoo, and together we can offer an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market."

Google spokesman Matt Furman declined to comment, stating, "It would be premature to comment at this point."

However, its safe to say that Google is not blind to the impact a Microsoft acquisition of Yahoo would make on its competitive prospects.  It looks like Google may have a real fight on its hands for the first time in years, and Microsoft may soon add a new piece to its ever-growing empire.

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By Tamale on 2/1/2008 3:27:12 PM , Rating: 3
A Google-Yahoo team would majorly shake up the online community by creating a legitimate competitor to Google,

RE: typo?
By Anonymous Freak on 2/1/2008 3:41:15 PM , Rating: 2
Already fixed.

RE: typo?
By AlphaVirus on 2/1/2008 3:44:18 PM , Rating: 2
A Google-Yahoo team

That actually sounds better than "A Microsoft-Yahoo team".

I dont know if Microsoft is the best company to take over yahoo. Microsoft is already a big enough company in the software and hardware industry, now they are trying to push the envolope on the search engine market.

I understand they have MSN but I think thats just a light weight in the ocean against the heavy weight of Google.

My relation to Yahoo, I have it set as my homepage.
My relation to Google, I use it to search everything.
My relation to MS, well I am a Windows user.

RE: typo?
By Hydrofirex on 2/1/2008 6:48:54 PM , Rating: 2
I agree, it seems like a little much. Once you've got Yahoo merged with Windows and Microsoft products come with Yahoo standard (for instance yahoo search) you've really changed the entire equation. It's one thing for it to come with a basic net search functionality, it's another when the search will be comparable with the competition and has the lazy factor behind it.

Isn't this the Anti-trust kind of stuff that we would actually want to stop? Does Microsoft need to own the browser, search engine, online applications, and desktop market?! I think it's too much.


(Love Vista, Love my Zune, Love my Media Center PC, and can't wait to get a Windows Home Server)

RE: typo?
By Oregonian2 on 2/1/2008 7:27:45 PM , Rating: 3
Anti-trust? With the numbers given together MicroYahoo would still be in distant second place. Having secondary players join together is standard fare when markets mature.

RE: typo?
By Belard on 2/3/08, Rating: 0
RE: typo?
By Hydrofirex on 2/11/2008 6:46:10 PM , Rating: 2
Foolish; a Oligopoly is factually better for the consumer that a Duopoly.


RE: typo?
By qwertyz on 2/2/08, Rating: 0
RE: typo?
By PrezWeezy on 2/5/2008 5:13:28 PM , Rating: 2
You're right, Microsoft is just HUGE in the hardware market...

I remember when there was no Google...
By cyriene on 2/1/2008 6:16:02 PM , Rating: 2
These articles all talk about MS and Yahoo needing help to compete with Google. Well, I remember a day when there was no Google and I had to use MSN, Yahoo, Alta Vista, Infoseek or even Web Crawler way back. Then Google came along and kicked butt with a good sinple search engine.
I think if MSN and Yahoo had paid more atention to making a good search engine instead of seeing how much crap they could stuff on a page at one time they might not be in this position right now.

RE: I remember when there was no Google...
By HackSacken on 2/5/2008 12:45:09 PM , Rating: 2
I agree. Lycos in the day was my search engine of choice. Google took over because of its simplicity and the obvious excellent search capabilities. It's light-weight webpage was so helpful in the day of 56k of not taking 1 minute to load my homepage (exaggerated of course) and still helps to this day of not over-loading me and my pc with extra content that isn't needed.

But that is neither here nor there.

By Axbattler on 2/5/2008 1:56:53 PM , Rating: 2
For me, it was always about Meta-Search Engines. Frankly speaking, I never had much trouble with the Yahoo Search Engine. But when it came to something really difficult to find, there was no single search engine that did it all in my view. I do use Google these days for no real reason other than it being the default search engine in Firefox, and I see no need to switch back to Yahoo.

I don't remember much about the Lycos search engine other than I found it useful a couple of times. But I absolutely despise their webmail. The interface hasn't changed for as long as I remember, and it is not like there was no room for improvement (for a start, it would be nice to be able to view more mails on one page - the screen looks optimised for 640x480 - and only that resolution). And every now and then, you are completely locked out of your account while they advertised for Jubii (not everyone encounter this problem, but Googling around, I am not the only one).

Check your facts / lies about Yahoo
By anandtechuser07 on 2/1/2008 10:50:08 PM , Rating: 4
Mick Jason, you need to read what you wrote. "[Yahoo] posted large losses for a fourth straight quarter."

Where the hell are you getting that information? In the last quarter (info released a few days ago), Yahoo said they had a net profit of over $200 million. That's NET PROFIT OF $200 MILLION. They have posted $200+ million in net profit for the last several quarters. Can you get your facts straight?

By Mozee on 2/1/2008 11:41:35 PM , Rating: 2
Just more typical Jason Mick editorializing.

From this article:
The Internet giant, which ranks number 2 in terms of search engine traffic and number 1 in terms of total traffic to properties, posted large losses for a fourth straight quarter.

Here's a direct quote from a Washington Post article:
( 08/01/29/AR2008012902282.html?nav=hcmodule)

Yahoo, whose profit has been declining over several quarters, said its fourth-quarter profit fell to $206 million from $269 million in the comparable period a year earlier. Revenue increased to $1.83 billion from $1.7 billion.

Profit for the year was $660 million, down from $751 million in 2006. Revenue for the year was $6.97 billion, up from $6.43 billion in 2006.

I'm not quite sure how a company that still made $206 million in profits for the quarter, and saw an increase in revenue, can be said to be posting large losses. Declining profits, maybe.

The Official release
By crystal clear on 2/3/2008 8:02:18 AM , Rating: 2
Here is the full offer in detail-

Microsoft Proposes Acquisition of Yahoo! for $31 per Share
Transaction valued at approximately $44.6 billion in cash and stock; provides 62 percent premium to current trading price for Yahoo! shareholders; combined entity to create a more competitive company, providing superior value to shareholders, better choice and innovation for customers and partners

RE: The Official release
By crystal clear on 2/3/2008 8:12:08 AM , Rating: 2
Microsoft Proposes Acquisition of Yahoo! Conference Call
Transcript of remarks during the Conference Call made by:

By Oregonian2 on 2/1/2008 7:29:53 PM , Rating: 2
Gates is doing this? I though he's nearly out of Microsoft and will be 100% out (other than someone who attends annual stockholder meetings) very soon.

yahoo does things right
By Zensen on 2/3/2008 1:28:53 AM , Rating: 2
I love yahoo and continue to use it as my homepage since 98. Yahoo mail is great and continues to improve, Yahoo messenger is great and pretty much got copied by msn (not that theres anythign wrong with that) and the yahoo page has a lot of good stuff to view. I'm indifferent with this microsoft bid. but as long as they don't go ruining my email, messenger and portal I'm fine with that. ie leave hotmail and msn relevant content off my homepage :P

Google will always be a great search tool but its not a great homepage! my browser has a search bar for that bollocks!

Google may have a name but that name doesn't concern me and more so to advertisers as it got bugger all to do with me.

By MADAOO7 on 2/4/2008 12:10:20 AM , Rating: 2
Let's face it, Microsoft is simply not the company that would be able to make Yahoo competitive with Google. Microsoft figures it can solve any problem if you throw enough money at it. Google's success is driven in part to their unique way of addressing current problems. Sites are more complicated and more unorganized than ever before (ex. What's Google's solution? Clean homepage, few links to change the search and nothing else. iGoogle is great because it's as simple or as cluttered as you want. Yahoo needs to simplify their homepage, and integrate its search into more 3rd party sites. Also, they need to quit bundling their f-ing toolbar into every piece of shareware. Yahoo can compete with Google, but you need to leave it up to Yahoo to figure out. Bring Microsoft in and you're going to a lot of "in the box" type thinking. In all likelihood, however, Microsoft will own Yahoo shortly. Hopefully, despite their history, they will learn a few lessons from google and we'll see a more competitive search marketplace in the coming years.

what about.....
By HighWing on 2/4/2008 12:50:15 PM , Rating: 2
But you only get a certain amount of time to turn things around."

So what about apple? Am I the only one that remembers that Steve Jobs was actually pushed out from his own company in the mid 1980's due to poor performance? Yet now he's back as the head and doing well.

Not that I like apple or anything (can't stand them really) but that is still some proof that things can be turned around even years later.

By noonie on 2/4/2008 6:32:05 PM , Rating: 2
A Microsoft controlled Yahoo! would be a weaker Yahoo that would simply be a small part of a big company that is making (or buying out) weaker and less innovative products than is was 5 years ago. This combination would be bad for the consumer, and although in the short haul good for the investor ultimately what is bad for the consumer is bad for the investor.

I like and use Yahoo!. I don’t like and don’t use MSN because they have a bad search capability and horrible customer service as an ISP. It would be a shame to see Yahoo! become anything like MSN. I would hate to see the takeover happen.

You can't stop the googlebot.
By Tamale on 2/1/08, Rating: -1
RE: You can't stop the googlebot.
By retrospooty on 2/1/2008 3:34:34 PM , Rating: 2
Not to sound like a gaping fanboy or anything, but MS makes a series of OS's and office productivity software that 90% of the world runs on, and Yahoo is a decent search engine.

What exactly is so great about Google?

RE: You can't stop the googlebot.
By Vanilla Thunder on 2/1/2008 3:46:12 PM , Rating: 5
What exactly is so great about Google?

The sad thing is, that's almost irrelevant. It's about everyone knowing your name. Much like alot of "uninformed" consumers refer to any mp3 player as an iPod, your average Joe knows that when he needs to search, he can just "google" it.


RE: You can't stop the googlebot.
By retrospooty on 2/1/2008 3:59:14 PM , Rating: 2
Agreed, I use google too, a great brand name at this point... But the above poster (Tamale) stated "(Piece of crap A + Piece of crap B) < Google".

Other than being a good search engine that came along at a good time and has a great brand name, what is so great about Google, and how is is so much better than an MS/Yahoo combo?

RE: You can't stop the googlebot.
By Vanilla Thunder on 2/1/2008 4:29:22 PM , Rating: 2
I'm not sure about that. However, I do know that regardless if this buyout happens or not, I'll still use Google, and I bet you will too. Maybe that's what's so great about Google.

Manilla Thunder

RE: You can't stop the googlebot.
By Tamale on 2/1/2008 5:46:53 PM , Rating: 2
Manilla Thunder? That a Freudian Slip hinting that you're interested in getting a macbook pro? hehe

RE: You can't stop the googlebot.
By Tamale on 2/1/2008 5:43:39 PM , Rating: 1
heh.. hilarious how my initial post got modded down but your post is up although we're arguing the same thing ;)

all i was trying to say is that google's name in search and online applications won't be slowed down at all by teaming up two lesser-known entities...

i've actually used all of the 'live' online applications by microsoft, and they're all quite nice in their own way, but the simple fact is that doesn't matter because the brand isn't as strong.

RE: You can't stop the googlebot.
By borowki on 2/1/08, Rating: 0
RE: You can't stop the googlebot.
By michael2k on 2/1/2008 5:19:34 PM , Rating: 2
What is so great about Google?

They make money (with Search). Yahoo is losing money and Microsoft has been for years.

Specifically, Google can data mine their search results and email to create advertising targets that they sell to advertisers. Yahoo is okay at this while Microsoft sucks at this.

RE: You can't stop the googlebot.
By retrospooty on 2/1/2008 5:26:29 PM , Rating: 2
"They make money (with Search). Yahoo is losing money and Microsoft has been for years."
sure, thats great if you are an investor.

" Google can data mine their search results and email to create advertising targets that they sell to advertisers. "
Reason #1 to go with MS/Yahoo.

RE: You can't stop the googlebot.
By animedude on 2/1/2008 10:49:52 PM , Rating: 2
If MS/Yahoo becomes #1, then we will be MS's bitch for another decade. I rather be Google's bitch than MS's. Atless Google supports open source.

By retrospooty on 2/2/2008 2:04:04 PM , Rating: 1
Or you could just do what I do and use what works best for you, since in reality you aren't any companies "bitch" unless you let yourself be. They are all just companies trying to make money... Use them, or dont use them, all up to you.

RE: You can't stop the googlebot.
By Jack Ripoff on 2/2/2008 9:27:49 PM , Rating: 2
RE: You can't stop the googlebot.
By Froboy7391 on 2/2/2008 10:43:25 PM , Rating: 2
Ah but they are losing money, revenue went up while their profit went down. That means they lost more money than before when their revunue was lower but their profit was higher.

RE: You can't stop the googlebot.
By TomZ on 2/2/2008 11:08:12 PM , Rating: 1
Huh? What language are you speaking?

Yes, profits are down at Yahoo - but that is not the same as "losing money" which means that the company was not profitable. They are still making money not losing" money. It's really not that complicated.

Boycott Microsoft the Evil Empire
By Serafina on 2/2/08, Rating: -1
"We shipped it on Saturday. Then on Sunday, we rested." -- Steve Jobs on the iPad launch
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