Yahoo and Microsoft
Wednesday, May 7th, 2008The biggest news in Silicon Valley is the un-news of the Microsoft-Yahoo merger. After three and a half months, Microsoft has finally walked away from the deal in disgust.
No wonder. Yahoo tried everything and talked to everyone they could find to avoid dealing with Microsoft. When that failed, they tried to play hard-to-get with a $37/share price tag. If everyone knows that no one wants to buy Yahoo, it takes a lot of moxie to say that $31 or $33/share is not enough. This strategy depends on the buyer not knowing that they are the only bidder, which obviously was not the situation here.
Jerry Yang, CEO of Yahoo, and the Yahoo board are taking the blame, as they should. When you sit in the big office, you get the lion’s share of the credit and the blame. Maybe Jerry really did not want to sell at any price. According to the New York Times, Jerry and the board exchanged high-fives when they heard that Microsoft was walking away. Yahoo is the most successful company that Jerry is likely to be associated with. I am sure that the programmer/engineer in him did not want to give up his favorite toy or his status as top dog and resident genius.
Poor Jerry. Now he has to prove that his company is really a $37/share company. It does not seem like he has any new ideas about how to make Yahoo more profitable.
Poor Jerry. He should have spent some time in Istanbul negotiating for a carpet or even at a user car dealership trying to buy a car. He would have quickly learned some basics of negotiating. Such as when you have a deal on the table, you work hard to close the deal or you stop wasting everyone’s time.
If Microsoft decides that buying Yahoo makes sense (and there are plenty of reasons why the combo does not make sense), then walking away now is the best plan. They can always come back in a few quarters when Yahoo will still be struggling and the shareholders will have given up hope. Then they can offer $20/share and get essentially the same company and assets. That’s the way to negotiate.
