Glenn Alperin

Private Equity Should Take Yahoo Private With a $35B Offer

A deal with Microsoft would have been the end of Yahoo, both as a business and as a culture. I can understand why Yang didn't want that. One can argue whether it was good for shareholders for that deal to fail, but I don't honestly think Yang was thinking about the shareholders as much as he was thinking about Yahoo as a business entity. Going private seems like it would be a good idea and very worthy of consideration under the circumstances as it would preserve Yahoo as a business as well as (probably) pacify activist investors who seem to think that money is always more important than principles.

Doubling Down on Yahoo Stock: Double Smart, or Double Dumb?

User, the real question is this: CAN Microsoft compete with Google? Obviously, independently, Microsoft doesn't think it can. The days of computing as exclusively desktops and laptops built around an operating system technology that is sub-par at best is all but over. Linux is rapidly gaining market share from Microsoft, and Microsoft is obviously nervous about that. Much of this is stuff Bill Gates as much as said when and before he left the head honcho position of Microsoft in different hands.

As of right now, Microsoft is a software company not capable of extending its position into the new world of technology. Yahoo would clearly help it gain that much needed foothold. For Microsoft, this is basically a sink or swim proposition. If they succeed (and I hope they don't as I'm no fan of their "squelch anything not created by us" philosophy) they will be well positioned for the world of the internet and advertising age. If they fail, they will be left behind in the age of the desktop where the desktop is actually losing out to smaller and more precise technological solutions for everyday problems. (Can you say Blackberry or Palm? Windows CE has tried and failed to compete with both products.)

So yeah, I guess I have to say that Microsoft needs this deal to go through for it to survive as a software company. Microsoft can't afford to lose here.

How about Yahoo? Well, they've struggled a lot over the last few years trying (wrongly, I think) to compete with Google. Yahoo was never really a Search company. Sure, they started life that way, but they gradually grew away from that to be more of a "community building" company. Yahoo Groups, Yahoo Calendar, Yahoo Mail, etc. What does Yahoo have to gain from being taken over by Microsoft? Seems to me not much other than a few extra bucks to Yahoo shareholders. Does Yahoo really want to sell out for that?

So Microsoft isn't going to walk, and Yahoo isn't going to sit there and roll over and play dead. The survival of both companies is collectively at stake. The one who wins this battle may be at the forefront of the future of technological advances. The loser will join the dinosaurs in the land of extinction.

As to the investment by Capitol World Investors, they are obviously hoping that Microsoft will up its ante until Yahoo can't help but say yes. How much would that cost? $30 a share? $50? $100? Seems like a safe bet to me. Microsoft, as I said, can't afford to lose, so betting on Yahoo is probably going to be easy money for them. All Yahoo has to do is say "no" and watch as the offer prices increase, or watch as Microsoft falls flat on its face with a much stronger (hopefully) Yahoo still standing.