Microsoft's Ballmer Starting Own Yahoo-Buying Rumor?

Steve Ballmer apparently wants people to think his Microsoft (MSFT) is buying Yahoo (YHOO). Here he is from an interview yesterday in New York with Charlie Rose:

Rose: Are you in talks to acquire Yahoo?
Ballmer: If I were, i wouldn’t say anything, and if I weren’t, I wouldn’t say anything.

Comments

[George R:]

Hi Paul,

Ever given any thought to the possiblity that Yahoo will eventually become the pursuer rather than the pursued?

I have watched this industry very closely for the past 15-20 years and I see a few disburbing trends in today's market. On the other hand, I like the positioning that Yahoo now has.

I would like to see them remain independent or combine with someone closer to their size. They already lead the race in Intenet mindshare ... or are very close to it anyway. I'm not sure I see what Microsoft does for them ... other than a possible "uptick" in share value with the purchase.

Heres' my view of the tech sector these days:

Has anyone noticed the tech industry sell-off recently? I mean the tech "insiders". Folks like Eric Schmidt, John Doerr, and Bill Gates ... as well as a slew of other investment bankers, Chairmen, directors, CEO's, and VPs within some our supposedly strongest technology companies?

I have, especially in and around Google.

But Yahoo seems to be a bit different ... wonder why? Their CEO and others seem to be buying shares and exercising options without dumping the underlying shares right into the market.

I am not a financial analyst. Far from it. But I do know a thing or two about the stock market and advertising. I have been in or around the advertising business for over fifty years now. I've also watched a lot of tech companies rise and fall. I have a vested interest in the technology industries in that I own several companies who participate in the domain name branding and graphic arts content development sectors, both of which are affected by changes in the public perception of, and confidence in, some of the larger companies in our industry. I'm usually the eternal optimist, but I'm worried.

I've watched a handful of publicly traded Internet, software, entertainment, and telecom companies over the past 120 days very closely. Here's a list in descending market cap order as of Monday, August 6, 2007:

- GE/NBC Universal ($399.40B)
- Microsoft ($277.09B)
- Google ($158.59B)
- IBM ($154.82B)
- Apple ($117.48)
- Comcast ($80.29B)
- Time Warner ($72.30B)
- Disney ($68.43B)
- eBay ($45.83B)
- Yahoo ($31.19B)
- Amazon ($32.49B)
- Adobe ($23.24B)
- WPP Group ($17.82B)
- IAC/Ask.com ($8.08B)
- Baidu ($6.93B)
- Getty Images ($2.07B)
- CNET Networks ($1.11B)
- Jupitermedia ($242.00M)

Of these, only GE, Apple, eBay, Amazon, and Baidu had an increase in value over the last three months. Amazon gained the most market value (roughly $4.5 billion) compared to second place Apple at just under $3 billion, while Google leads the losers with a drop in market value of just over $10 billion, with Microsoft a close second at around $9 billion. Any wonder why one of Google's lead investors, its CEO, and other key executives are selling off shares?

In all, the six major U.S. search engine companies in our analysis (Google, Yahoo, Microsoft, IAC/Ask, Time Warner/AOL, and CNET) lost a whopping $34+ billion in just 90 days. I thought profitable search advertising was growing like wildfire? On the other side of the world, China's leading search engine company, Baidu, gained almost a billion dollars in value in that same time period, among the strongest we've studied on a percentage basis.

I must be wrong. I also thought we had been in a strong bull market until the adjustments several weeks back. Wasn't the 14,000 breakthrough this summer a sign of good news for all industries, including "tech"? Better think again.

The money these tech companies are now paying for relatively small online advertising companies is astronomical. Is it possible that all these online advertising companies, and some of their major clients, have been able to "hype" these tech oriented companies and their tech-centric executives? Now wouldn't that be the ultimate "spin"? Don't you just love the ingenuity of these Madison Avenue types ... especially the newer generation that lives on Main Street and focuses on the online world.

With all of these players (technology, communications, entertainment and advertising) now singing from the same song book, and working together on development, effectiveness, measurements, promotions, PR and content delivery, do any us lay people really stand a chance? Open your checkbooks.

"Vaporware meets its advertising match"... don't you just love it?

**********************...
Back to Yahoo

Is it possible Yahoo has had this right all along? Although their market value has slipped substantially, their executives seem to be buying Yahoo shares, not selling. They are able to test new graphic advertising techniques without making a multi-billion dollar outside investment, like Google and Microsoft have chosen to do. Wouldn't that be a "kick" if Yahoo has indeed spent this time of industry turmoil and chaos to strengthen its relationships with its advertisers, business partners, content providers, and customers while Microsoft and Google concentrate on destroying each other at all costs.

I am a little biased because I've stuck with Yahoo for the past ten years through thick and thin. But this does make for a compelling alternative to all the negatives I've read about the company from investment bankers, select journalists, and others over the past six months.

What do you think?

George P. Riddick, III
Chairman/CEO
Imageline, Inc.

[e-mail]...

2007 Aug 21 11:34 AM

[maz:]

I honestly think that using the market value reduction as an argument is specious

1. The time period of 3 months is too short to have any meaning other than market sentiment & has nothing to do with franchise value (as opposed to current price)
2. The last 5 weeks includes a huge general market sell-of and without comparing your company losses to the market loss they are in a vacuum
3. Using absolute values (ie $9b loss for MSFT vs. $10b for Google) - using % losses makes far more sense (-3.15% for MSFT and -5.9% for Google)

Also apart from Susan Deckers recent purchase most of Yahoo insiders seem to be selling (apart from acquisitions at $0 cost which I assume are restricted stock grants) both shares and recently exercised options finance.yahoo.com/q/it...

2007 Aug 21 03:17 PM

[Hbot12345:]

Who knows what is happening. Microsoft bought Hotmail way back when to buy eyeballs. Yahoo might be another move to buy eyeballs, and to take marketshare from Google.

There might be other underlying reasons behind the story. I found a site that shows connections between Yahoo! and Microsoft at the Executive and Board levels.

www.newsvisual.com/new...

2007 Aug 21 07:08 PM