Microsoft offered EUR 30 billion (appr. USD 45 billion) to acquire Yahoo. The offer was awaited and the timing seems to be good. The investors started to lose their faith to the company. Just a few days ago Yahoo’s market capitalization of the company was EUR 17 billion (USD 25 billion). Investment bank Oppenheimer just downgraded the target value for company with the following statement:
With margins in free-fall, and no clear revenue implication of the investment spending, we believe investors are likely to view the stock as a value trap. (See MarketWatch)
Some comments welcomed the offer, that seems to balance the advertising market. Here is a comment by Sir Martin Sorrell, Chief executive of WPP in ft.com.
“Clients would like to see more balance in the marketplace, whether in display [advertising] or text,” he said. “Before, it was in danger of becoming unbalanced.” (Full article here)
This is Microsoft’s second investment in a row to search related markets. It recently acquired Norwegian enteprise search technology company Fast. It is good to notice that Overture acquired a few years ago Fast’s web search division and Yahoo acquired Overture. And now, Microsoft puts all the parts together again. In addition the software giant acquired last year aQuantive Inc. which is now in the core of Microsoft’s advertising market strategy. It starts to sound something more than just a software company.
Few years ago in Copenhagen I had a pleasure to hear professor Josep Valor’s presentation titled The online value chain (pdf). He was very sure that Microsoft needs to operate also in the content business. Not because media business is sexy and profitable, but because it is a part of their present value chain and they need to control wider parts of it in order to secure their software license business.
Steve Ballmer has just created a media company. And I think he just forgot to ask what we, the traditional media people, would think about that.
3 responses so far ↓
Bluebeetle(one) // February 3, 2008 at 1:48 pm |
I’m convinced no one but shareholders have something to win from Micro$soft-Yahoo! merge.
This is really a bad news for the web & for Yahoo! employees (many of them will be “sacrified” in the name of
“eliminating redundant infrastructure and duplicative operating costs”)
;o(
Yahoo! is/was a brand a lot of people love.
Yahoo! has been (like Google) a success story started from scratch by students bringing something really new, innovative & fun.
Money can’t buy everything (in this case Love & Admiration of Internet users).
Eero // February 4, 2008 at 7:56 am |
That’s true, Yahoo shareholders have to be quite happy at the moment. I understand your worry of “big money” taking over good player. However, if I’ve understood right, Yahoo’s future wasn’t so clear, plans to cut personnel has been planned before the acquisition and the sharevalue was in a bad trend, which made the shareholders unhappy.
I was thinking that is it better to have only Google controlling the online advertising markets or is it better that there is at least two gigantic operators fighting head to head, even though you wouldn’t like either one of them? I prefer latter at the moment, because Google has been moving towards monopoly at least in search advertising, and competition is always better.
Slowdown for Microsoft’s plans « Enduragement // February 10, 2008 at 7:32 pm |
[...] for Microsoft’s plans A more than a week ago I wrote about Microsoft becoming a media giant after acquiring Yahoo. I admit, I forgot one very important [...]