Microsoft + Yahoo = Too Little, Too Late?

Yesterday Microsoft sent a love letter to Yahoo asking the search company to be their Valentine. Over at ZD-Net UK they have posted the letter for you to read signed at the end by Steve Ballmer. It basically states:

I am writing on behalf of the Board of Directors of Microsoft to make a proposal for a business combination of Microsoft and Yahoo!. Under our proposal, Microsoft would acquire all of the outstanding shares of Yahoo! common stock for per share consideration of $31 based on Microsoft’s closing share price on January 31, 2008, payable in the form of $31 in cash or 0.9509 of a share of Microsoft common stock. Microsoft would provide each Yahoo! shareholder with the ability to choose whether to receive the consideration in cash or Microsoft common stock, subject to pro-ration so that in the aggregate one-half of the Yahoo! common shares will be exchanged for shares of Microsoft common stock and one-half of the Yahoo! common shares will be converted into the right to receive cash. Our proposal is not subject to any financing condition. 

There is a lot of other stuff that you can read for yourself if you are interested. But when I read the proposal my first thought was that this may be a move that could end up to be a little late in the search game. I base this on the hamburger – chicken theory.

In the hamburger business there are a bunch of chains, McDonalds, Burger King, Wendys, etc.,  all basically doing the same thing. Yeah you can flame broil it, fry it or whatever but it’s still a burger in the end. But over at the chicken franchise you basically have KFC. They have ruled the roost because of their 11 secret herbs and spices.

Same with Google. They have a secret recipe for ranking searches that have made them the best at what they do. Heck. They even have a patent for it. So does anyone really think that a Microhoo will stand a chance?

Just my 2 cents. What do you think?

Comments welcome.

ZD-Net UK article is here.

[tags]microsoft, yahoo, google, internet, searches, secret sauce,  [/tags]

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I have been writing for Lockergnome for eight years.

  • GlennB

    For the most part, I agree with your comments. To spend 44 billion (with a “B”) to end up still a distant second (in search and ad revenue) doesn’t make sense to me. Unlike many who seem to, I have no ax to grind with Microsoft. Not only will they still be a distant secord, that doesn’t begin to address the differences in the two corporate cultures. I haven’t worked for either, but I imagine they are quite different. I worked for two different software companies that were purchased by larger competitors. Even in the best scenario, there is much dissidence to resolve. In the end, 2 plus 4 probably won’t equal 6, but more likely 4.5 or 4.75.

  • Denny


    That is because when the BIG company is in the process of BUYIN
    the Little company they say DON’T WORRY all your Jobs will be Safe..
    and then as Soon as the Deal Goes Through…

  • zenium tech


    Not only do the employees of the small company loose, so do the consumers. When a big company buys a small company it is not FOR the superior technology; it is to bury the superior technology so the big company’s inferior technology wins.

    Example: Microsoft bought lOOkout – great fast index search for outlook. Does lOOkout survive as a simple application? No. It is lost (ie. buried) in something with more unnecessary bloat and no where near as good as lOOkout.

    Example: SSH Sentinel IPSEC client – small, simple, fast, inexpensive and worked across multiple vendors. Gone and buried by some inferior bloated and expensive competitor.

    Example: Most of the former PowerQuest tools (great defrag tool, disk check tools, registry optimizer, etc). Gone! Bought by Symantec – never to be seen again.

    So Microsoft may buy Yahoo, but will never really use any of the good parts from Yahoo. Just not in the nature of the business.

  • Mike

    Last time I visit Yahoo! then, me thinks…

    I dislike the idea of Google running everything, but not as much as I dislike the idea of Microsoft doing so.