Yahoo was too greedy
Posted by Frugal on May 5th, 2008
Microsoft is walking away from buying Yahoo. And I just don’t think there will be anyone buying up Yahoo except Microsoft. Next time Microsoft buys Yahoo, the offer may be at $20 instead for a $14 stock price.
There are two big problems with Yahoo.
1. The best employees are deflecting to Google, which is a more successful company.
2. Yahoo’s assets and momentum seem to be declining versus its rivals. There is not enough focus. And the returns on their internet presences are poorer than Google.
At $37 for Yahoo, it would be too expensive for Microsoft. Microsoft, although being a company not very innovative, has always been very good in investing in the right key areas. The shareholders of Microsoft will obviously benefit from that.
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May 6th, 2008 at 1:49 am
I think you overestimate the attractiveness of Google to “the best employees”
Valleywag is a good site for following what goes on, with occasional too much puerile detail.
You may consider Yahoo stagnant, but it is significantly harder for a company that is already very large and near the top of league tables to have large changes in market share and revenues. And it is still way ahead of Microsoft’s position. On the technical side Microsoft and Yahoo have totally different values. Yahoo is very Unix (freebsd) centric. Microsoft had enough trouble with Hotmail and that was just one piece of functionality. Yahoo also has video, commerce, search, portal, personals, maps and a long list of other stuff in addition to email.
Basically being bought by Microsoft could only result in removal of what made Yahoo Yahoo.
May 6th, 2008 at 11:20 pm
This is a classic problem of anchoring. The CEO of yahoo failed to realize that his company was only worth what someone was willing to pay for it. I honestly think that Yang’s actions in this regard are indicative of the quality of the management he brings to YHOO shareholders.
Now, Yahoo does a lot of things right - for example yahoo finance is very useful, however its not clear to me that the rest of the company works as well as their finance applications. This is just the latest symptom. If I were into shorting stocks, I’d short YHOO.