Could Google buy Yahoo?
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In a comment yesterday on Marc Canter's blog, discussing the race to be the default identity system for the Internet.. "I wouldn&#185;t count out Google, they've got a lot of users, and a lot of money. I think they could probably buy Yahoo, but someone else would have to do the math." Ashkan Karbasfrooshan did the math.
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Microsoft Corp  said on Friday  it has offered to buy Yahoo Inc , the popular Web  portal, for $44.6 billion in cash and stock, seeking to join  forces against Google Inc  in what would be the biggest  Internet deal since the Time Warner-AOL merger.
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Microsoft Corp on Friday said it had offered to acquire Yahoo Inc in a proposed cash and stock deal valued at $44.6 billion.
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In a letter to Yahoo&#39;s board, Microsoft CEO Steve Ballmer&#160;offered to acquire the company&#160;for a per-share price of $31 in cash or 0.9509 of a share of Microsoft common stock -- a 62 percent premium above the Jan. 31, closing price of Yahoo -- and cited the broad range of ways in which the companies might work together to create a more effective competitor in the online marketplace. Below is the text of the letter that Microsoft sent to Yahoo&#39;s Board of Directors:January 31, 2008Board of DirectorsYahoo! Inc.701 First AvenueSunnyvale, CA 94089Attention: Roy Bostock, ChairmanAttention: Jerry Yang, Chief Executive OfficerDear Members of the Board:I am writing on behalf of the Board of Directors of Microsoft to make a proposal for a business combination of Microsoft and Yahoo!. Under our proposal, Microsoft would acquire all of the outstanding shares of Yahoo! common stock for per share consideration of $31 based on Microsoft&#39;s closing share price on January 31, 2008, payable in the form of $31 in cash or 0.9509 of a share of Microsoft common stock. Microsoft would provide each Yahoo! shareholder with the ability to choose whether to receive the consideration in cash or Microsoft common stock, subject to pro-ration so that in the aggregate one-half of the Yahoo! common shares will be exchanged for shares of Microsoft common stock and one-half of the Yahoo! common shares will be converted into the right to receive cash. Our proposal is not subject to any financing condition.Our proposal represents a 62% premium above the closing price of Yahoo! common stock of $19.18 on January 31, 2008. The implied premium for the operating assets of the company clearly is considerably greater when adjusted for the minority, non-controlled assets and cash. By whatever financial measure you use - EBITDA, free cash flow, operating cash flow, net income, or analyst target prices - this proposal represents a compelling value realization event for your shareholders.We believe that Microsoft common stock represents a very attractive investment opportunity for Yahoo!&#39;s shareholders. Microsoft has generated revenue growth of 15%, earnings growth of 26%, and a return on equity of 35% on average for the last three years. Microsoft&#39;s share price has generated shareholder returns of 8% during the last one year period and 28% during the last three year period, significantly outperforming the S&amp;P 500. It is our view that Microsoft has significant potential upside given the continued solid growth in our core businesses, the recent launch of Windows Vista, and other strategic initiatives.Microsoft&#39;s consistent belief has been that the combination of Microsoft and Yahoo! clearly represents the best way to deliver maximum value to our respective shareholders, as well as create a more efficient and competitive company that would provide greater value and service to our customers. In late 2006 and early 2007, we jointly explored a broad range of ways in which our two companies might work together. These discussions were based on a vision that the online businesses of Microsoft and Yahoo! should be aligned in some way to create a more effective competitor in the online marketplace. We discussed a number of alternatives ranging from commercial partnerships to a merger proposal, which you rejected. While a commercial partnership may have made sense at one time, Microsoft believes that the only alternative now is the combination of Microsoft and Yahoo! that we are proposing.In February 2007, I received a letter from your Chairman indicating the view of the Yahoo! Board that &quot;now is not the right time from the perspective of our shareholders to enter into discussions regarding an acquisition transaction.&quot; According to that letter, the principal reason for this view was the Yahoo! Board&#39;s confidence in the &quot;potential upside&quot; if management successfully executed on a reformulated strategy based on certain operational initiatives, such as Project Panama, and a significant organizational realignment. A year has gone by, and the competitive situation has not improved.While online advertising growth continues, there are significant benefits of scale in advertising platform economics, in capital costs for search index build-out, and in research and development, making this a time of industry consolidation and convergence. Today, the market is increasingly dominated by one player who is consolidating its dominance through acquisition. Together, Microsoft and Yahoo! can offer a credible alternative for consumers, advertisers, and publishers. Synergies of this combination fall into four areas:Scale economics: This combination enables synergies related to scale economics of the advertising platform where today there is only one competitor at scale. This includes synergies across both search and non-search related advertising that will strengthen the value proposition to both advertisers and publishers. Additionally, the combination allows us to consolidate capital spending.Expanded R&amp;D capacity: The combined talent of our engineering resources can be focused on R&amp;D priorities such as a single search index and single advertising platform. Together we can unleash new levels of innovation, delivering enhanced user experiences, breakthroughs in search, and new advertising platform capabilities. Many of these breakthroughs are a function of an engineering scale that today neither of our companies has on its own.Operational efficiencies: Eliminating redundant infrastructure and duplicative operating costs will improve the financial performance of the combined entity.Emerging user experiences: Our combined ability to focus engineering resources that drive innovation in emerging scenarios such as video, mobile services, online commerce, social media, and social platforms is greatly enhanced.We would value the opportunity to further discuss with you how to optimize the integration of our respective businesses to create a leading global technology company with exceptional display and search advertising capabilities. You should also be aware that we intend to offer significant retention packages to your engineers, key leaders and employees across all disciplines.We have dedicated considerable time and resources to an analysis of a potential transaction and are confident that the combination will receive all necessary regulatory approvals. We look forward to discussing this with you, and both our internal legal team and outside counsel are available to meet with your counsel at their earliest convenience.Our proposal is subject to the negotiation of a definitive merger agreement and our having the opportunity to conduct certain limited and confirmatory due diligence. In addition, because a portion of the aggregate merger consideration would consist of Microsoft common stock, we would provide Yahoo! the opportunity to conduct appropriate limited due diligence with respect to Microsoft. We are prepared to deliver a draft merger agreement to you and begin discussions immediately.In light of the significance of this proposal to your shareholders and ours, as well as the potential for selective disclosures, our intention is to publicly release the text of this letter tomorrow morning.Due to the importance of these discussions and the value represented by our proposal, we expect the Yahoo! Board to engage in a full review of our proposal. My leadership team and I would be happy to make ourselves available to meet with you and your Board at your earliest convenience. Depending on the nature of your response, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!&#39;s shareholders are provided with the opportunity to realize the value inherent in our proposal.We believe this proposal represents a unique opportunity to create significant value for Yahoo!&#39;s shareholders and employees, and the combined company will be better positioned to provide an enhanced value proposition to users and advertisers. We hope that you and your Board share our enthusiasm, and we look forward to a prompt and favorable reply.Sincerely yours,/s/ Steven A. BallmerSteven A. BallmerChief Executive OfficerMicrosoft Corporation
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More competition courtesy of the proposed Microsoft-Yahoo! combo?
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InfoWorld - Microsoft has offered to buy Yahoo for $44.6 billion -- but how did a company that started so small come to be worth so much? That's a story that began in the early days of the World Wide Web, when people were struggling to keep track of the new world of multimedia it offered them.
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Microsoft has offered to buy Yahoo for $44.6 billion -- but how did a company that started so small come to be worth so much? That's a story that began in the early days of the World Wide Web, when people were struggling to keep track of the new world of multimedia it offered them.In those days people viewed the Web through NCSA Mosaic, a browser that helped popularize the Web; they could check the level of coffee in the Trojan Room coffee machine at Cambridge University using the first Web cam on the Internet, and they could read the headlines on the NandO Times, one of the first "new media" operations.Yahoo first appeared on the Internet in 1994 when Jerry Yang and David Filo were still at Stanford University -- something that was immediately obvious from the site's first address: http://akebono.stanford.edu/yahoo/. It wasn't until later in 1994 that the easier-to-type http://www.yahoo.com came along, but even then it redirected to the Stanford server.But back in 1994 people weren't that concerned about clunky addresses. They'd been living with the text-based Internet for years and the Web with all of its richness had people hooked. Yahoo stepped in to solve an early problem: how could users keep track of the fast expanding World Wide Web.What Yang and Filo built was revolutionary for the time: a hierarchical index of the Web divided into subjects like "computers," "government" and "society and culture." (The service lives on today as the Yahoo Directory)Love at first sightFrom the early days it was clear that users loved Yahoo."David Filo and Jerry Yang should be given a Medal of Honor, then locked in a room and never allowed to get lives: they are already doing an excellent job of categorizing the Web with Yahoo's Hostlist," wrote one user in response to a Sept. 1994 Usenet posting asking for a directory of Web sites.Word of the service spread through the Internet, often from enthusiastic users passing on details of the resource, but sometimes with a little promotion by Yang and Filo themselves."We have a pretty comprehensive listing at the Yahoo Database," wrote Yang on Usenet in Sept. 1994. "It's an attempt to be organized by subject (although not very well) -- but we are working on it. Searchable too," he wrote.All the time Yang and Filo continued to live everyday lives, unaware they would become billionaires in less than a decade. A look at old Usenet postings reveals Yang campaigning for fair funding for college students while Filo was trying to trade World Cup tickets online.As 1995 began, Yahoo was serving up 200,000 pages per day from its index of about 25,000 Web sites, and was about to hit the big time. During that year Yang published a book about Yahoo and earned an interview on National Public Radio's Fresh Air. Both cofounders appeared on a PBS Frontline TV documentary about the Internet called "High Stakes in Cyberspace.""What Yahoo does is make your wasting your time easier. It wants you to get where you want to go to waste time faster so you don't have to waste time wasting time," is how Yang explained Yahoo in the documentary, according to a transcript of the show.The publicity came just as thousands of people started piling onto the Web and new sites were popping up faster and faster. As a result by the middle of June 1996 Yahoo had jumped to 9 million pages per day and in the third quarter of that year traffic for the three-month period hit 1 billion page views.Investment in the popular and fast growing site wasn't far behind its rising popularity. In April 1995 Sequoia Capital provided Yahoo with two rounds of venture funding just as Yang and Filo decided to put their studies on hold and start running Yahoo full time."We [hadn't] done anything on our research in the last few months," Filo told CIO magazine in a June 1995 interview. "We had to decide which thing to pursue, and we're not really interested in what our PhDs were in."An initial public offering and international expansion was next on the cards, and by the end of 1996 Yahoo had sites in the U.K., Germany, France, and Japan, and had launched the Yahooligans service for kids.Early competitionYahoo wasn't without competition back in those days. WebCrawler was getting popular and Lycos was also making a name for itself, but none of the search engines at the time fully satisfied people. So it was common to switch allegiances whenever a better service came along. In 1996 many Internet users did just that when sites like Inktomi and Digital Equipment's Altavista launched.But Yahoo managed to endure the competition, possibly because its directory often was a better place to find links that the early search engines.Microsoft was making a late start on the Internet, launching MSN as a dial-up Internet access service in the U.S. in 1995. It wasn't until a few years later that MSN was relaunched as a portal and still more years until Microsoft put its full weight behind developing Internet-based products and services.Like Yahoo, Google also grew out of Stanford University but didn't start to achieve recognition until the end of the decade. Within a few years, however, it had grown to become the leader in online search.Today Yahoo is one of the most powerful online media brands in the world. It has more than 500 million users in numerous countries and its name is recognizable to billions of people.
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Yahoo Inc. appeared to move a step closer to challenging Google Inc. in searchable Web mail, acquiring the startup behind the powerful e-mail application Bloomba.
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Believe it or not, Microsoft isn't really serious in its bid to buy Yahoo, according to one financial analyst, who says the proposal is really just a ploy to fend off a potential deal between Yahoo and Amazon. Could he possibly be right? Probably not.
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Microsoft said Friday it had offered to buy struggling Internet firm Yahoo for 44.6 billion dollars (30.0 billion euros) in a bid to take on Google in the crucial battle for online revenues.
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Microsoft Corp  on Friday said  it had offered to acquire Yahoo Inc  in a proposed cash  and stock deal valued at $44.6 billion.
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AT&T makes a deal with the NY Times for their mobile site on their "operator portal." Curious speculation that Google could buy the NY Times.  They could, easily. Google's market cap is $185 billion. The Times is worth about $2 billion.
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The key to Microsoft's proposed $44.6 billion acquisition of Yahoo is both companies' desire to build an advertising platform that can compete with Google's AdWords.
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Could the search-engine giant actually be cheap?
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Yahoo's fiercest competitor, Google, has raised concerns about the possibility of Microsoft's takeover. Google's motives, of course, are hardly pure.
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The chance that Yahoo Inc. will put itself up for sale has increased since the most-visited US website lowered its revenue forecast, according to Stanford Group. Microsoft Corp. is a candidate to buy the company, analyst Clayton Moran said.
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SAN FRANCISCO/NEW YORK  - Yahoo Inc would consider  a business alliance with Google Inc as one way to rebuff a  $44.6 billion takeover proposal by Microsoft, a source familiar  with Yahoo's strategy said on Sunday.