Should Yahoo accept Microsoft's offer?Wednesday, February 06, 2008 by Dave Winer. Mike Arrington is doing a great job of laying out the options for Yahoo wrt Microsoft's offer to buy them out. He's written two pieces that helped put it together for me. Mike clearly has great sources in the investment banking community and among potential buyers of Yahoo, and is actively talking with them. He's got a business lawyer's mind and, as you know I'm sure, he's spent the last few years immersed in web applications. Bottom-line: Yahoo's three choices are: 1. Tough it out alone. 2. Sell advertising rights to Google. 3. Accept Microsoft's offer. Mike argues that option 1 would result in shareholder lawsuits and in the end would get Yahoo nowhere because they'd end up selling to Microsoft eventually. Option 2 would enable them to pay a major cash dividend to their shareholders, making up for the lost windfall coming from Microsoft's offer. Options 2 and 3 have the risk of being rejected by government regulators.
I've read most of the commentary on the Yahoo deal, and the other piece that made an impression was Mark Cuban's. He says that Yahoo should accept the Microsoft deal because it would give them the breathing room they need re Wall Street. He argues that the market has always allowed Microsoft to sink resources into developing markets, and that's exactly what Yahoo needs to become the organization that it has been trying to be. Instead, the market treats Yahoo as a comp to Google, but Yahoo doesn't have the economics of Google, so that's, long-term, a losing battle. There's one more reason I think Yahoo should sell to Microsoft -- the fatigue of the people. The company has been wobbly too long. If they don't take the Microsoft offer it's going to be a long wobbly decline and the shareholders will be right to be angry. Here's their chance to get out, it's time, so just do it. PS: Open postscript -- Turn Yahoo into The RSS Powerhouse in every way. Build all new systems around RSS. If it isn't RSS it doesn't fly. Update: Henry Blodget spots a glitch in the Microsoft offer. |
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