What's Microsoft's Plan B?

What's Microsoft's Plan B?

Summary: My ZDNet blogging colleague Larry Dignan asks what Yahoo's Plan B will be, now that it reportedly is turning down Microsoft's $44 billion bid because it is too low. But I'm wondering about the flip-side of this equation: What is Microsoft's Plan B if it fails to snag Yahoo?

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My ZDNet blogging colleague Larry Dignan asks what Yahoo's Plan B will be, now that it reportedly is turning down Microsoft's $44 acquisition billion bid because it is too low.

(Update: The leakers were right. Yahoo did reject Microsoft's offer, claiming it was too low. And now Yahoo is supposedly talking merger with AOL.  AOL??? Like that is supposed to scare Microsoft enough to up its offer?)

Meanwhile I am wondering about the flip-side of this equation: What is Microsoft's Plan B if it fails to snag Yahoo?

For my part, I think being thwarted in its bid to buy Yahoo might end up being the best thing that could happen to Microsoft. Does Microsoft really need 14,000 more employees and a number of properties that are redundant with what it already offers? CEO Steve Ballmer & Co. seem to believe so. But couldn't Microsoft just buy a bunch of point products, instead of a big, flailing Web 2.0 company? It would be a lot easier to digest a bunch of smaller companies and independent, standalone services than a big honking entity like Yahoo....

I'm sure Microsoft was expecting Yahoo to try to up the asking price. But given that Yahoo seems to have few alternatives to accepting Microsoft's offer, I wonder how much higher the Softies will be willing to go...

What do you think Microsoft should do, now that the Yahoo ball is back in its own court? Should Microsoft raise its offer? Call Yahoo's bluff? Let Google come charging in as the "hero" -- as well as the canary in the antitrust coal mine? Or start snapping up a bunch of point products that would give Microsoft the inventory it needs to attract more online publishers who are interested in ABG (Anything But Google)?

Topics: Browser, Enterprise Software, Microsoft, Security, 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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20 comments
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  • Change the leadership

    I think MS needs to forget this Yahoo nonsense and put some of it's A level talent in charge of the division.Right now it has C and D level talent running things.
    mac504
    • Ya, record profits

      new releases of most major wares (Server 08, SQL Server, VS....), 100 million copies of a "failure" called Vista sold...
      My God, what a bunch of nit wits! Can't believe they run a company.
      mdemuth
      • The key word he used was "division"

        There are clearly some divisions at MS that are doing good stuff, those that aren't. I think the OP was attributing that to the respective division leaders.
        TheTruthisOutThere@...
  • RE: What's Microsoft's Plan B?

    Microsoft should up the offer, take over Yahoo and be left with little cash and losing businesses. This will allow smaller inovative companies to thrive with less of a threat to MS trying to crush or buy them when they beome successful. Everybody wins except Balmer and MS stock holders. The stock holders then revolt and finally get rid of the idiot Balmer.
    xxxyyy@...
    • Yeah, but....

      Small innovative companies do thrive whether or not there are big companies on the web. Nothing stops someone from creating a website, offering services, giving free tools, good content, etc. It's up to those small companies on how they want to run things.

      And how's Microsoft going to crush them on the first place? And what's wrong with buying them when they're successful?

      What you're describing sounds more like Google than Microsoft. Reliance on Google via the web, is more of a threat than Microsoft. Google has bought several successful web start-ups. Any difference here?

      Though I agree that we can all say Ballmer should be kicked off.
      quikboy
  • Simple: hostility

    MS could just drop their offer to about 20% above the close on the day before they made the first public move and offer it direct to YHOO shareholders, stiffing the BOD.

    Those shareholders would have the choice between:
    * More than they could have gotten on the market, or
    * Holding onto stock in a declining company.

    My guess is that MS would get control in a 30-day offering period.
    Yagotta B. Kidding
  • They should borrow 12B from Google and up the offer.

    Google would love to help them complete this offer.
    DonnieBoy
  • If MS is smart, run away from the deal.

    Synergies are not there, why spend so very very much to leap into a distant second place. With this news, they can rescind the deal, Yahoo will be strong or stronger (the publicity), the market will LOVE MSs decision to drop the deal, and MS could look to buy a company or technology to do something radical, you know, like LEAD in a technological niche.

    Still say Amazon makes 10x more sense for MS than Yahoo, they get advertising opportunities and hey, they would be a solid #1 and well ahead of google checkout.

    Of course, if Balmer lets his ego get in the way, Yahoo it is.

    TripleII
    TripleII-21189418044173169409978279405827
  • AddsBad Karma

    As a geek I tend to hate everything marketing/publicity related, as much of Microsoft???s own geeks. Convincing people to buy crap they don???t need and getting into debt because of it? No, hanks.
    After reading ???why Software Sucks??? I am convinced there are lots of things to improve on the desktop environment before diving into the dubious ???add-based economy??? that could only attract bad karma.
    msandrade
  • RE: What's Microsoft's Plan B?

    In the absence of any other suitors, this is clearly both a negotiating strategy to get moer for their shareholders and/or making time to seek any other option.

    I think, if the report is true, that Microsoft will make one counter-offer. If unsuccessful, they do have a firm retained to handle things more aggressively, to the best of my knowledge.

    Yahoo's Company Meeting should be some time mid-year, say June-July. If this is unresolved by then we can expect a lesson in corporate big business.

    Geeks like me like me love Bill Gates, but make no mistake Steve Ballmer keeps Wall Street happy with the long-range financial planning and RESULTS!!!
    ckelly@...
  • Real Answer

    The question at stake with MSFT, Yahoo and Google is the question of why there
    has been no innovation in search for 10 years. Yahoo has gone from the main
    player on the entire internet to an acquisition target for MSFT. It's unclear why no
    one is addressing this head on.

    The only real innovation I have come across is the Palo Alto startup <a
    href="http://www.managedq.com/">ManagedQ</a>. They have transformed
    search results and exploration. I look for them to make a huge splash this year. The caveat here for Yahoo then is that they need to innovate to the level of ManagedQ
    to stay alive.
    sophialovestheusa@...
  • Yahoo's stock is now worth $29 for one reason...

    ... becuase Microsoft just said they'd pay $31 for a $19 stock. People have bought into it to make a short term gain.

    Microsoft in a reasonable position to just not entertain any negotiations from Yahoo, and those short-term investors will be out of there even faster than they moved in, and where do you think Yahoo's stock will be then?
    TheTruthisOutThere@...
    • And, that is the way buyouts work. Yahoo is in the drivers seat here. They

      can wait for the price to go up.
      DonnieBoy
      • Yahoo in the driving seat?

        Microsoft announce an unsolicited bid, Yahoo's directors are forced to react to that. It was Microsofts action that took Yahoo stock from $19 to $29, it will be Microsoft's action that determine where that stock goes next.

        But you say Yahoo is in the driving seat!?
        TheTruthisOutThere@...
        • Do not be surprised

          DonnieBoy [i]hates[/i] Microsoft, loves Google to death, so.
          he will never see the truth of the issues when it involves either of them, just post what he wants to believe, but you are correct, Microsofts action that took Yahoo stock up, and it will drive them down.
          GuidingLight
      • Sadly, MS is the one in the driver's seat. . .

        and once the news of the rejection circulates with the day traders, Yahoo's stock price is going to plummet as they bail-out. With a new lower stock price, MS can bypass the board of directors and approach the stock-holders directly with a market+10% sort of offer.

        You see ... Yahoo doesn't really have much to sell here, and MS is holding all the big cards. They can just wait as Yahoo's share price drops and the inevitable share-holder revolt takes place when they realize what a great deal of money the board threw away.

        Business is cut-throat, day traders are worse, and share-holders demand profits *or else*. It's just my opinion, but I think Yahoo overplayed their hand here.

        Regards,
        Jon
        JonathonDoe
        • Here's a great place to track YHOO

          http://finance.yahoo.com/q?s=YHOO

          Could well be the most popular page on their intranet toda ;-)
          TheTruthisOutThere@...
  • Yahoo has few alternatives??

    Apparently M$ must see something valuable. I don't think YHOO is in any way without alternatives! It has some great technologies, and a great, large footprint on the web. The *only* thing it needs to do is learn to capitalize that in ways that does not alienate users!
    Techboy_z
  • YahMic! for $ 60 billion is Microsoft's Plan B

    Well Microsoft will just pay $60 billion dollars for YahMic! to come true.
    billy yang
  • RE: What's Microsoft's Plan B?

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