Microsoft Has No Clue!
Microsoft has yet to announce the steps it will take in its attempted acquisition of Yahoo! The company has announced its alternate board, but after the ultimatum letter sent to the Yahoo board, as discussed here,one would have expected Microsoft to be more vocal in its takeover.
Now the WSJ reports here that $1.5 billion was to be set aside by Microsoft for employee retention at Yahoo should the acquisition take place. That is quite an additional cost that would most certainly burden the newly merged companies – but it is only about 1/20 of the entire cost of acquisition ($40 billion – give or take depending on Microsoft’s stock price).
Microsoft must merely believe that the shareholder lawsuits are enough pressure to get the Yahoo board to approve a merger and direct Yahoo management to begin talks. Well, that and the greed of shareholders in the expectation they will vote for the Microsoft slate. That’s a mistake. Yahoo had plenty of legal advice entering into its deliberations on the offer made by Microsoft – they have decided they can weather the storm. Yahoo knows its largest shareholders, they have likely had discussions.
With dissension in Microsoft’s own ranks as managers begin to express the obvious – there is no synergy, that the mathematics are 1+1=1.5 – the company seems to be beginning to freeze. This comes at a time when the various Microsoft divisions are making their budget requests and with such a large transaction proposed, its a good bet many divisions are asking for capital now, because it won’t be available later. Ballmer has said that Microsoft can move forward without Yahoo, so why did he propose it in the first place – just to run Yahoo into the ground like MSN? This is desperation in a corporate expression. There is no direction for this company – Vista is not a good product. It is a dog and many are want to replace it, which is why Microsoft is rushing Windows 7 to market. It has business strategies all over the place – Xbox and videogames, OS and software, MSN and the internet, Zune and music – yet only the OS is dominant. Every other market Microsoft gets its clock cleaned by others. In fact, lately, it is only when Microsoft buys a company or bundles the product in its OS does the company succeed. I know there are many hard working people at the company. It is a shame they are led astray by their senior leaders.
Simply, Microsoft has no clue!
UPDATE: 4/30/08 5:30PM EST. Microsoft’s Board is meeting to decide whether to increase the bid or withdraw it. According to the report here if Microsoft withdraws the bid, Yahoo’s share price may drop and permit a lower bid to be offered. Of course, a lower bid may mean other companies willing to bid at that price. Clueless.
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