Microsoft Bides Its Time While Yahoo! Panics

This week, Microsoft (MSFT) hinted that it would not be bidding any higher for Yahoo! (YHOO), arguing that no one else has submitted any bids and the economy does not merit a higher price. Fair enough. I sold a boatload of my shares, part of the reason for that was thinking that the window for a higher price was shrinking.

Let’s face it: Yahoo! has messed up the handling of this offer almost as badly as it’s messed up operationally. I’ve been harsh on Yahoo!, but not as harsh as investors have been.

Alas, I think a major issue for companies large and small is the difference between having a sense of urgency and being in panic mode.

In life, sports, etc., being in panic mode is a sure fire recipe for disaster. You see it in sports all the time: Company is sitting on a 3-0 lead, they give up a goal… then next thing you know, they start to worry and in goes a second goal. Before they know it, the game is tied 3-3… they go on to lose 5-3 with the fifth goal going in the empty net.

By game’s end, the players ask: what happened?

Yahoo! is in the same predicament.

While being in panic mode is never healthy, I think every organization, every department, every manager and every employee should operate with a sense of urgency.

It’s an extremely competitive space. It’s an extremely fast world. Startups have to operate with a sense of urgency to:

• get to market,
• to become relevant,
• to iron out kinks,
• to remain relevant,
• to start to add points on the board,
• to remain on top when others gun for you.

Yahoo!’s demise - and really, as much as the company does have some fantastic assets - is a testament to Yahoo!’s most senior management and Board’s lack of a sense of urgency.

It’s thus ironic and fitting that it is now Microsoft that can bide its time. When Q1’s results are announced… I sure do wonder what the market will think. I’ve kept 12.5% of my holdings because I want to keep some chips on the table, but when it comes to Yahoo!’s top brass, lord knows I’ve lost all hope.

The market has too.

Comments

[just for fun]

I don't think Jerry Yang can grasp the what the panic button is. He is in his own tunnel vision. To come out now is really going to take an added dose of humility. For example, the bonuses he gave the top execs were a slap in the face to his investers. In addition, the safety net severence / compensation package he has put into place for any employee that leaves for ANY reason under new leadership is from the shareholder's money. Is Jerry aware of the economical downfall that is going on in our country? I think that I would describe Jerry like a turtle that keeps his head inside and only peeks out when it feels safe. Well Jerry, watch your back.

[oceandude]

Employees don't get severance if they leave for any reason. There are specific criteria that must be met, mainly around a change in job function or location.

[Tom B]

Jerry is trying to save his company from being destroyed, like HotMail was what the inept Redmond beast snatched it up. Why all the hate? Does ANYBODY believe "MicroHOO" would suck less than MSN? MSFT has NO content expertise.

[My Idea]

Leave yahoo along, come back next year and you will all know if Yahoo is right or wrong about the Microsoft bid.

[John Capozzi]

JUST OPEN TALKS BUT ALL TALKS MUST INCLUDE ALLIBBA AND SOFTBANK

If they all ust sat down a mot ago you would have had a deal close or above 40 already. Let Microsoft play hard ball. They have the most to lose. Yahoo USA will not get crushed they have Allibba and Softbank which is Yahoo Japan plus they will have loads of funding by the Chinese government. Most of search and Add will be coming out of India China and the rest of Asia going into 2010. Plus the culyutr problem. Allibba and Softbank will not be bullird by Microsoft. Whether you want to beleif it or not Allibba and Softbank have a lot to say in this merger and it will not happen without them
So now you ask yourself: WHO DOES MICROSOFT HAVE????? Hmmmm Mr Balmer will finally find that out when he wont even be able to nip at Yahoo at 60. Somrthing to think about . Oh it looks like Google might be selling Double clicks search engine. Who can do better in China? Your answer:: YAHOO Why? Answer:: ALLIBBA & SOFTBANK. Too bad Mr. Balmer hasnt icked up o this yet. Google surely has and they are laughing behind Microsofts back right now as they just dig in deeper as Balmer turns reder and reder. Microsoft will blow this again and Google will be there to pick up the pieces. Microsoft needs to raise the bid to 40 and call Yahoo, Allibba and Softbank to the table as a whole. End of story!!

[Bugs]

Yahoo will be a be a vital part of Microsoft before the fall snow falls. Bill Gates has made an offer that can't be refused. It's a shame Mr. Gates is retiring this summer from his company ; But he's leaving Yahoo as a present for all his shareholders.