I spoke too soon. Last night I posted about the plight of big tech stocks in 2008. I left off Microsoft from the Tech stocks and also from the video games sites - not expecting that they would potentially change the tech landscape in a matter of hours.
After a long night in the office (4am), I awoke late to news that Yahoo's stock surged 50% on an unsolicited buy-out offer from Microsoft. Fascinating considering:
* Microsoft has been publicly rumored to court Yahoo and eBay for months (or longer) * Yahoo was set to announce a $150mm video acquisition of Maven Networks - just yesterday * Yahoo has had a tumultuous year... would this have happened if Semel were still at the helm? Will it happen now?
Microsoft is clearly attracted to Yahoo's traffic, community, and platforms. Together, the two companies have two of the three biggest start pages on the web: Live.com and Yahoo.com. They have three of the biggest social networks: Live, Yahoo and Facebook. Combined, that's more users than anyone can boast (or get even close to) and more pageviews that are potentially monetizable (of course, Y! and MS can't monetize as effectively as Google...)
Ultimately, the potential success of an acquisition here depends on the ability to create an effective organization that leverages and integrates the several platforms and properties these two massive companies share. After all, we haven't seen either Yahoo or Microsoft effectively leverage their *own* platforms or traffic.
More good reading:
- Microsoft: Official announcement - Fred Wilson part 1: The price offered is an ~70% premium to the closing price last night. This deal will happen unless another strategic wants it (News Corp?). Because at that price, no financial buyer can make the deal work, particularly in this financing environment. - Fred Wilson part 2: A combined Microsoft/Yahoo will have 30% market share in search and maybe they can do something with that. Clearly there are big synergies in merging Yahoo! and Microsoft's online businesses. The merged entity will be dominant in email which is an important category that isn't going away. - TechCrunch: What the combination looks like