Monday, June 16, 2008

The Yahoo! Dilemna

The last poll I posted on this site was regarding our thoughts on whether Microsoft and Yahoo! were going to do a deal. As we all know (or as we all should know), a deal between the two companies did not happen. What did happen is a deal between Google and Yahoo!. I want to give some insight into this deal by posting from Fred Wilson's blog [http://avc.blogs.com/], a venture capitalist in NYC. This is a great blog to follow on a regular basis as he discuss' some on the new and upcoming issues facing companies. You may or may not recognize, that these companies and issues are the up and coming deals that bankers are looking at in preparation for their next 'crop' of deals, whether they be M&A, IPO's, Secondary Offerings, etc... It's also a different perspective than that of what an investment banker might see, but just as fitting. For a banking interview tip, this could be an interesting conversation topic in your conversations as you network with bankers this summer in preparation for your Fall interviews. Read carefully and develop these ideas for yourself so you can speak to them freely.

My Thinking on YHOO


Mike Arrington calls Yahoo!'s decision to partner with Google and finally walk from Microsoft a "Massive Destruction Of Shareholder Value, Employee Morale and Internet Balance Of Power" I don't agree with that view and have stated my opinion about this deal on this blog since the day Microsoft started it's hostile attempt to buy Yahoo! [YHOO]

Here's my comment to Mike's post:

Mike add me to that list of Jerry, Sue, and Tim [O'Reilly]

I’ve been rooting for this outcome since Microsoft first started their effort to acquire Yahoo! It’s worth noting that at today’s closing price, Yahoo! stock is trading about where it was a year ago and above where it was at the start of the year.

The Microsoft hostile move backfired on Microsoft and pushed Yahoo! closer to Google. Yahoo! finally woke up and did what they should have done years ago, cede search monetization to Google who simply does it better and will always do this era of search better than anyone else.

Now Yahoo! will do what it needs to do. Clean house, get lean, get out of businesses it shouldn’t be in. Focus on what it’s good at. And start making money and growing again.

They may need new leadership to do that. But selling this asset to Microsoft just because they had the wrong leadership and probably still have the wrong leadership is a mistake.

Imagine what the right CEO could do with Yahoo!

To get another perspective on this story, visit the New York Times: Deal Book to gain a historical view on how this deal played out. All bankers should know and understand what happened here in this deal and have an opinion about what was done correctly and incorrectly. Remember, investment bankers are hired to provide strategic advice, so understanding a deal as large as this should be something you know.

6 comments:

albina N muro said...

that these companies and issues are the up and coming deals that bankers are looking at in preparation for their next 'crop' of deals, whether they be M&A, GetSomeDosh

Elizabeth J. Neal said...

I want to give some insight into this deal by posting from Fred Wilson's blog. online loan

Elizabeth J. Neal said...

I think a simple example may be useful. Let us consider a market with a BB with the following balance sheet: money

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Richard C. Lambert said...

Lesson learned: send a better explanation of the post/series next time... a one liner doesn't get much visibilityIllinois payroll companies

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