Every major publication tonight has been reporting on the fact that Microsoft has backed off their bid for Yahoo! I interpret this not as the start of Yahoo’s downfall, because they have been going down essentially since the company started, but this is a pivotal point in their decline. While the quasi-popular and unnecessary internet company was previously just making a gradual downhill decline, they have now taken a leap and will continue rolling down the hill until they eventually fall off the cliff into darkness forever. They will be long forgotten.
Ok, perhaps I am over-reacting a little; and, yes, maybe I am being a little melodramatic with the whole thing, but come on, this is ridiculous.
Let’s get something straight – I am no big fan of Microsoft … especially since I wasn’t able to sell the stock fast enough last week after it declined significantly from a semi-negative earnings performance. But, I don’t think they are some great company and I could care less that Gates was a college drop-out who went on to become the world’s richest man for a short time. I don’t think their products are the best either, but then again, I like them much more than the uber-trendy Apple and Google folks, who make me feel a hundred times less of a d*&$%!bag when I see the guys that started those companies.
The point here is that from a strategic perspective, Yahoo! could have taken the best option that they will ever be given with Microsoft. Instead, they didn’t want to give in to Ballmer, Gates et al, as if screwing over their shareholders for stupid reasoning would make them less of sell-outs or something.
Yahoo! is an example of a company that has literally hit a brick wall in their business model. They cannot sustain growth and they are not positioned well enough to be competitive in this volatile market for much longer. Further, they don’t have the financial strength to make any strategic moves, such as an acquisition, which could deliver market share, because there is only one real chunk of market share left in this space, which belongs to Google, and that is … well, unavailable. Yahoo! is a dead stick.
They had an amazing opportunity here, though, to be a company that lived on. Sure, perhaps they would have had to live on answering to guys in Washington or with a Microsoft brand accompying their products, but at least they would have been able to live on. More importantly, they could have made a move that would bring value to shareholders. Instead, they have decided against benefiting shareholders, and instead succombed to the egos of their senior managers. It’s sad. Personally, I hope the hit at the bottom is hard for them. I am sorry for the current shareholders who have had to put up with a company like this, but I, for one, would like to ride their stock shorted all the way down.
Ok, so again, perhaps I am being overly dramatic here. Maybe I’m even being a little harsh. But, seriously guys, we’re in the middle of a serious credit crunch and I don’t know if these guys have looked at the markets lately, but tech isn’t exactly the poster-child for market strength. Further, the firms that do represent strength in these markets (and “strength” here is very much a loose term) … well, aren’t Yahoo!
So, Yahoo! has turned down a pretty enticing deal … better than they should have been offered. Yet, they turned it down. Maybe I will be wrong. Maybe they will live on by themselves and even find some new way to deliver value to shareholders. I doubt it.
Reiboldt.com 