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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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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.

quote:
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.


quote:
Here's a direct quote from a Washington Post article:
(www.washingtonpost.com/wp-dyn/content/article/20 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.


"This week I got an iPhone. This weekend I got four chargers so I can keep it charged everywhere I go and a land line so I can actually make phone calls." -- Facebook CEO Mark Zuckerberg

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