Microsoft/Yahoo…What if it's even Worse than I have Postulated so Far?

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  • on February 4th, 2008

Forget the fact that I think this is the dumbest deal of all time next to Time Warner/AOL, but so far only Microsoft shareholders have voted (and they are bolting). Any lunatic who was holding Yahoo into the abyss is absolutely lucky and should have sold Friday or today.

If Microsoft has cash it feels it must burn, why not buy a tobacco company? As Umair Haque would have to agree, at least the could use their corporate DNA to help grow sales. Bully, bully, bully. Anyways, nerds should smoke…it’s cool.

I am not picking on Microsoft the people or even the company or the stock, just the weak effort the leadership is making to stay relevant. They have built this amazing cash hoard and instead of giving it back to shareholders or better yet, giving it away to feed the world, $44 billion (all if not most of their cash) will get wired out to an old media company disguised as a new media company.

The only winner is STILL Google which is why I bought some today for my kids. In this environment though Google stock is an extra risky investment as well even down 30 percent. This Microsoft/Yahoo noisy announcement is shit on a stinky market.

This is a time when you can’t read everything. You need to reduce the noise to an extra minimum as it relates to market and stock news. It has been a bull market and that is over. Seriously…OVER. It’s not like I am a bear. That’s a waste of time. It’s just that easy money is not so easy to make anymore and you just need to do less of EVERYTHING right now. I mean what’s the rush. An easy market will return again somewhere. You need to have cash. You can’t throw your cash away at investments impatiently while you wait…like…Ballmer.

Only Steve Ballmer is rushing. As I have said for two years while the bull rages, Microsoft is dead. I have said he should have been fired $100 billion ago as well. They almost got me interested based on their stock price hitting 5 year highs, and stock price only, but thank goodness I never bit.

Read these posts by Umair at BubbleGeneration if you want to get an amazing take on the real long-term issues at play. He just thinks. I love this:

I hate to be so blunt, but I’m short of time today, so let me offer a guess: Yahoo + Microsoft isn’t just a mistake – it’s a double suicide; a fatal error. Why? Neither company has the DNA to take on Google (let alone the massive number of startups waiting in the wings). Sure, they might collectively have the resources.

But DNA will always constrain YahooSoft from utilizing those resources in ways that create value.

Think Hotmail –> Yahoo Mail writ large. Think delicious –> nowhere. Think Microsoft hardball vs Google softball. Think of the near-total paralysis and groupthink in a YahooSoft boardroom.

The Street is thinking about this nascent industry in terms of “market share”. That’s shorthand for: “we have no real insight into competitive dynamics”.

Competition in this space is – and has been – about edge competencies, redefining brands, and reshaping consumption.

Now look a bit further out. Microsoft is gonna blow it’s entire cash pile on this deal.

That’s not just a strategic error: it’s going to be a fatal error.

Why? Combining bad DNA with bad doesn’t yield good. It yields worse.

The challenge facing the media industry – the reason Google blew it’s quarter – is to reinvent branding.

Do you think YahooSoft – a combined entity with even less empathy for connected consumption than each alone – really has any hope of doing so?

Not a chance.

I think – for what it’s worth – that this is the end of Yahoo as we know it. Fine – the real Yahoo, sadly, suffocated a long time ago.

The real point is: this is the end of Microsoft as we know it. Yes, I know, finally, isn’t it nice, etc – more to the point: the endgame will be to leave Google more firmly in the driver’s seat than ever before.

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