No Microsoft/Yahoo Deal: It Wasn't Rocket Science to Figure That Out

Eddy Elfenbein submits: Reuters reports:

Microsoft said Wednesday that it did not need to buy Yahoo to gain scale in online advertising, because it had "all the pieces" to build a successful ad business.

Speaking at the Goldman Sachs Internet Conference in Las Vegas, Microsoft's chief advertising strategist, Yusuf Mehdi, said that the company was already bigger than Yahoo in terms of users of its Web services like e-mail and instant messaging.

Three weeks ago, I calculated the odds of a MSFT/YHOO deal:

No. No way. Never.

I was able to see where this story was going due to my detailed knowledge of the tech industry, my comprehensive understanding of corporate finance and not being totally retarded.

Comments

[jbs:]

How much $$$ did you make off it?

2007 May 25 11:00 AM

[Sr. Pessimist:]

Microsoft said Wednesday that it did not need to buy Yahoo to gain scale in online advertising, because it had "all the pieces" to build a successful ad business.- We don't need Yahoo is a bluff. Having the pieces versus putting them together is the difference between knowing in doing, between having and applying. Microsoft cannot produce software. All those guys can do is buy, steal, and exercise legal action. Just because they own other companies doesn't mean they're anything more than a semi-dissociated aggregate of income streams for one group of shareholders.

Speaking at the Goldman Sachs Internet Conference in Las Vegas, Microsoft's chief advertising strategist, Yusuf Mehdi, said that the company was already bigger than Yahoo in terms of users of its Web services like e-mail and instant messaging.- Bigger in terms of users of email and instant messaging doesn't imply their ability to get the right paying customers. Instant messaging is a commodity and almost impossible to monetize. Email is a commodity with the same financial drawback. Just because they serve a lot of users doesn't mean they can make competitive money from it.

And Microsoft would LOVE to buy Yahoo, because Yahoo is doing what Microsoft can't do on their own. Putting a qualified investment banker at CFO ensures the right knowledge is applied at the Yahoo side. If they can't buy Yahoo, Microsoft is out of online luck. There's really not a whole lot of ad companies to buy. From here on, either you innovate or you stagnate (pronounced "die" in tech). So Microsoft is attempting to appear non-desperate by stating half the truth, but the other half is they don't have enough programming horsepower on payroll.

So a software rocket scientist is here telling you something, Eddie. You have to be in utter envy of others' intelligence whist in utter shame of your own to consider one to be "totally retarded" if they think Yahoo put an experienced investment banker on officer staff because they were feeling the heat from the Microsoft acquisition squad. I still think Yahoo is preparing for a sale. But I'll strongly agree with you if your words mean to instead imply "Microsoft would be totally retarded to make a buy like that." It's way overpriced, not that Microsoft isn't desperate enough to want it.

ps- If you ever paraphrase me directly, and I have no reason to say you have yet, then don't mistake my message. If Microsoft can't succeed in buying, it doesn't make me wrong. Yahoo is preparing to NOT sell if the price isn't right by putting that guy in CFO. One way or another, Microsoft's survival online hinges on their ability to buy out would-be competitors such as Yahoo.

2007 May 25 01:37 PM