CyberTech Rambler

April 28, 2008

Yahoo/Microsoft Relationship

Filed under: Uncategorized — ctrambler @ 12:26 pm

The deadline for Yahoo to respond to Microsoft offer had now passed with Yahoo giving Microsoft the cold shoulder. The internet is slowly starting to buzz about what will happen next, speculation on what Microsoft will or will not do, and unsolicited advice on what Microsoft should do.

There is no point for me to contribute my two cents on these issues. What I am interested is relationship between Yahoo and Microsoft. When there is a takeover bid, even with consenting parties, we will have employees on both side that is not happy with it. With Yahoo and Microsoft, the philosophy of the companies are so different that we are expecting a larger than usual chunk of unhappy employee even if the takeover bid is not hostile. If the takeover happens, Yahoo and Microsoft will have to work to reconcile these unhappiness and it is part of the business of take over.

With a hostile takeover bid, if Microsoft choose to do so, the bitterness will be even profound. Bad blood will be created during the bid process and make it even more difficult to bridge the difference. This means it will be a bigger problem to overcome if the takeover is successful.

Unfortunately, that is the rosier picture. It might come to the point where it wipes out the value created by the takeover. If Microsoft walk away as a result. Those who advocate Yahoo’s independence, while feeling vindicated,  will find themselves needing time to recuperate and recover from the fight. The world does not stand still while the two fight out and Yahoo might not survive this distraction. While Microsoft is better position to overcome this distraction, there is no doubt that Microsoft behaviour during this bid will be scrutinized by all, especially other industrial players that might be on its crosshair. If Microsoft mismanage it, it will have repercussions on the company’s reputation.

Both companies are unlikely to walk out of a hostile bid without a scar. Still, business is business. If Microsoft feels that it should launch a hostile bid. Let it be. All we can hope is the fight does not go too bitter. We need a credible competitor to Google. At present, neither companies can deliver that. While I doubt a combined Microhoo is capable of doing so, they are free to try.

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