Microsoft and Yahoo: Ballmer's 'failure' now a 'dodged bullet'

Microsoft and Yahoo: Ballmer's 'failure' now a 'dodged bullet'

Summary: Remember that eleventh-hour decision -- when Microsoft opted not to buy Yahoo? Remember how so many pundits portrayed CEO Steve Ballmer's walking away as a fireable offense? What a difference a few months make.

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Remember that eleventh-hour decision -- when Microsoft opted not to buy Yahoo? Remember how so many pundits portrayed CEO Steve Ballmer's walking away as a fireable offense?

What a difference a few months make.

Now Ballmer is being called prescient and smart to have "dodged the (Yahoo) bullet."

Financial madmoneyman Jim Cramer on October 13:

"Microsoft (stock) shouldn't be that cheap, given the fact that it's got a powerful franchise and how they dodged the bullet with Yahoo!"

A quote in a Bloomberg story from today also paints Ballmer's decision to walk away as a positive:

"Ballmer 'might be the luckiest guy in the software industry,' said analyst Charles Di Bona at Sanford C. Bernstein & Co. in New York. 'One of the guys here just looked at Yahoo's share price and said to me, "Nice miss by Microsoft."'

It will be interesting to see how Ballmer is judged (again) if Microsoft ends up rebidding for all or part of Yahoo (which, as I post this, is trading now around $13.50) ....

I have to say (as I did at the start of this year) that  I still don't see why Microsoft would buy all of Yahoo -- even at firesale prices. And I also still don't see why Yahoo would sell off its search business....

Do you think there are enough assets left at Yahoo -- on the search side of the house or otherwise -- for Ballmer & Co. to reconsider?

Topics: Enterprise Software, Browser, CXO, Microsoft, Social Enterprise

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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28 comments
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  • Microsoft and Yahoo: Ballmer's 'failure' now a 'dodged bullet'

    Ballmer was very lucky indeed. Now they can purchase Yahoo at a much cheaper price. Yes I'm still for the purchase.
    Loverock Davidson
    • ROI would be too short

      ... to justify the purchase giving the massive talent exodus going on there at Yahoo.
      LBiege
    • I am still for being a Stock holder

      Give me a few thousand dollars in stock so I can make my voice heard.
      nucrash
    • Not a "dodged bullet."

      To call this "dodging a bullet" implies that Balmer tried to avoid it. It was really quite the opposite and he desperately wanted to buy the company. Just because Yahoo! wouldn't sell doesn't mean Balmer "dodged" anything.

      It's more like the shot went wide and just missed him by chance. ;)
      daengbo
  • I said so at the time

    Walking away from Yahoo was a good decision and it did take some courage, because it made Ballmer look foolish (something that nearly all CEOs try to avoid). The mistakes Ballmer made were to pursue the Yahoo buyout in the first place, and then to conduct negotiations through open letters and press releases, instead of in private.

    I'll give Ballmer credit for putting the company's interests ahead of his ego once it became clear that Yahoo wasn't going to take the offer, but this is still something that should never have hit the news. I'm fairly certain that it will be a long time before MS tries something like this again.
    John L. Ries
  • Nope...not anymore

    Not with this positive feedback from the press. Microsoft and Ballmer better take this positive energy, strengthen their own services, and pull of a "see, by not getting dumped with Yahoo!, we were able to get this done as well."
    mario.albertico
  • RE: Microsoft and Yahoo: Ballmer's 'failure' now a 'dodged bullet'

    Yes, totally agree. Here's our post from Saturday when
    we came to the same conclusions:
    http://www.microsoftconfidential.com/2008/10/11/micros
    oft-and-yahoo/
    Microsoft Confidential
  • Proves once and for all: SteveB IS A GENIUS

    My rep and I knew SteveB was a genius. We knew that when he walked away, he had envisioned a future where the stock market would crash and Yahoo would be worthless. It was with sound mind and body that SteveB pulled the plug on Yahoo. Yahoo is now dead and Microsoft's search ambitions are thriving full force. I just visited our satellite office in New Zealand and was thrilled to see everyone MSN'ing and Hotmailing one another.
    Mike Cox
    • Sorry. Dull and repetitive.

      I think we can all agree that while Balmer probably dint have any kind of "enlightening catharsis" about the value of Yahoo to MS, he clearly had a very sensible idea of what a company like Yahoo was worth to MS, and when Yahoo said we think we are worth more, Balmer said well, good for you, we don't feel that way, bye bye.

      So Balmers decision had some very appropriate results in relation to his stance. Give him credit for not being even the smallest percentage of stupid that the "We Hate Windows" Gang loves to attribute to him.
      Cayble
      • You don't know who Mike is, do you? :)

        n/t
        markbn
        • His "real world" ID?? No. Ha!

          On the other hand I have been reading Mikey's silly stuff for a few years now it seems. It was funny for a while but too often these days he lets his real feelings about MS shine through. To make a long story short his real feelings about MS is generally disgust, and that MS itself is a joke.

          Good for Mikey, he is clearly free to feel how he likes, it certainly doesn't bother me.

          On the other hand, if he really has any aspirations of keeping up the "Mike Cox" facade and keeping up the humor he should avoid simple shots at making himself look like a blatant moron and actually deal with some of the real facts about MS and Windows in a humorous way the way he used to.

          Many of his more recent posts reflect a frustration that MS is still carrying on as normal and suffering relatively little due to the complaints of the "We Hate Windows" Gang, and as such he is getting a little sarcastic, as well as bluntly foolish so it ruins the very facade he needs to employ as "Mike Cox" to reel in a fish or two so that the whole Mike Cox joke can be experienced by all.

          More and more often Mikey just sounds like a ridiculous sarcastic "sore feelings" kind of guy who actually doesn't like MS, Bill Gates, Windows or his own legendary 'rep' in any real way. Hence the facade is destroyed and the joke becomes very old very quick and Mikey is reduced to some old sarcastic sour puss.

          Do us all a favour Mike, either get back to your original more inventive style or call it a day. You did your best but MS still exists and sometimes the same old joke becomes nothing more then the same old joke, and its not funny any more.
          Cayble
          • I haven't been reading long here..

            But i like Mike Cox parody posts tbh.

            But if he was better.. i would like to see that too :)
            TedKraan
      • Not stupid

        Seems to be an egomaniac (many CEOs are), quick to anger (a bad trait for any CEO), undignified (ditto), unscrupulous (par for the course at MS), and doesn't seem to either understand or care much about the software he sells (only about market position and what he can sell it for), and to have an unhealthy fixation on Google, but he's definitely not stupid.
        John L. Ries
        • Agreed. Completely.

          And all generally good points.
          Cayble
    • Definitely a genius

      You made me laugh, but I do wonder what those folks in New Zealand are actually paid to do. 9.0
      John L. Ries
  • RE: Microsoft and Yahoo: Ballmer's 'failure' now a 'dodged bullet'

    We are in the final writhings of the long tail of the 2001 dot com bubble failure.

    The obvious weaklings disappeared first and now we are seeing the final death throes of the "too small to survive, too big to die quietly" enterprises.

    Forget AOL, Yahoo, Lycos; it will come down to a knock-down, drag out match up between MS and Google. Unless they find a way to co-exist...

    The $64 big question for Google is "Can the money from advertising model be sustained?" and for Microsoft, "Is licence and services income better than ad money?"

    Or is there a way to have both? We'll have to wait and see.
    brian.smith9
    • Yes, few survivors.

      And Google has a single source of income which varies with the economy, while Microsoft is able to obtain revenue almost at will.

      Maybe now is the time for Microsoft to buy Google? Or should the company wait until Google's price sinks further? Worked with Yahoo.
      Anton Philidor
  • Microsoft still needs help with content...

    ... and the increase in the search business that would come with Yahoo. The content business can still be sold once successful enough, while Microsoft concentrates on making money from the software.

    Now the question is, can Yahoo be obtained for half the price previously offered?
    Anton Philidor
    • The other question is

      whether there will be more interested parties now that the price is down.
      Michael Kelly
  • deal blocker is in yahoo

    I have seen a lots of great posts here. Agreed, but there was no deal at any time in the past. Just say this, even MSFT raised offer to $37 per share, would there be a deal? NO. MSFT clearly saw that. Now let me list what is in the way:

    1. Jerry Young
    2. Election

    If Jerry initiate it at any time, there is a deal. people fail to realize, price is the last last thing in this deal.

    no body want to do things like that before new president is elected.
    jk_10