Microsoft Chairman Bill Gates told the press in Tokyo yesterday that the company “isn’t pursuing other deals following the withdrawal of its $47.5 billion takeover bid for Yahoo.” Their experience dealing with Yahoo, apparently, has put them off acquisitions altogether.
But wait. Just Monday Gates said “I wouldn’t rule out some partnerships but we don’t have anything imminent there” following a meeting and dinner with South Korean President Lee Myung-bak. In corporate-speak, that’s a pretty strong statement that Microsoft wants to buy some companies.
Did Microsoft change corporate development strategies from one day to the next? It appears they did. On Monday he says he wouldn’t rule out partnerships. Tuesday, no partnerships and a go it alone strategy.
What’s the real strategy? I can’t help but wonder if their key goal is to convince the market that they really don’t want Yahoo in order to drive their stock price down as far as possible. It’s clear that the markets still anticipate a deal with Microsoft, or possibly Google. It is currently trading at just under $26; analysts think its share price should be closer to $22.
If Gates is out telling the world, as he did on Monday, that they need to acquire other companies to fix their Internet strategy, it doesn’t take very long to figure out that there isn’t another Yahoo out there on the market. Microsoft has a long term problem on its hands, and Yahoo may be the only remedy. So when Gates says Microsoft isn’t pursuing deals, what I translate that to is “We really, really want to buy Yahoo.”
Update: There may be a translation issue here. The exact quote from the Tokyo conference is below, doesn’t seem to be a statement by Gates that they aren’t pursuing deals:
Q6. (Noriaki Tomisaka, ANB): We heard in your speech that Microsoft will go individually regarding the Yahoo!. Since this merger didn’t work out, your goal is to chase the Google by your own accord. Does that affect your strategy from now?
A6. (BillG): Well, Google in many countries has a very high share of search market. We think that there are innovations that will take place in search. We are company with the commitment to breakthrough software technology that can provide some competition. We really make sure that state of the art does get advanced and advertisers have good choices in terms of what they are doing with their interactive advertising. We will have a conference coming up, I think, in next month in Seattle called the “Advance”. We will start to show you the next version of the search. Some of the things are very excited about with that. In courses, we make these advances when we invest in marketing to get word out there so that people try out our product. Fortunately, the search is very easy to type-in new your keywords and try out different product, we will give people that opportunity as we make the advances that will give people great choice there.
Bobby Fischer vs Kasparov vs The World
The “go it alone” stance seems to be on acquisitions, not partnerships.
I think that this is just business as usual, Microsoft doesn’t like to show its hand.
I wouldn’t read to much into this, they could be talking to AOL or news corp right now.
maybe he meant they weren’t pursuing other deals with yahoo?
If not, that is a pretty clear contradiction, good catch.
“isn’t pursuing” - to strive to gain, seek to attain or accomplish. In this context actively
“nothing imminent” - (likely to occur at any moment, present participle) - There clearly isn’t
Sounds the same to me. Whats more none of those 2 discount MS looking to see whats available in terms of targets.
Bill Gates told the press in Tokyo yesterday [..]
Just yesterday Gates said [..]
Did Microsoft change [..] from one day to the next?
Not from one day to the next but the same day..?
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http://crunchlabz.com
Elbert and the other typo police - i had to change the dates since he made these statements across the date line. technically, i believe the first statement was on tuesday in korea and wednesday in tokyo, but i pulled them back a day to get them in sync with US and Europe dates.
Joe - if you don’t see the 180 degree difference in the two statements, then you obviously have never been media trained. Good for you.
partnerships are not acquisitions.
ex-stockbroker here.
There is practically no correlation between a company’s public announcements and their corporate actions. Private conservations with their major stockholders (ie. big mutual or pension funds) are always much more revealing, but, unfortunately, the brokers are generally asked to leave the room before the real juice flows.
whatever is going to be, potential partnership or acquisitions, what is still unclear is what’s MS strategy to grow their online business (ad search) beyond organic growth. They need to come up pronto with a very solid strategy to catch up Google in that space.
Davey - true. but still, you don’t usually see an exec contradict himself within 24 hours.
MS are going to have to think hard about how to resurrect their online strategy; I’d love to see how the Live division reacts in this case, they’ve been made to look inadequate, and now they look like MS’s best hope.
As for Yahoo, shareholders will burn Yang on a stick. He’s got a good strategy for sorting out the company, but I give him 6 months before the shareholders decide to prove their point.
But the most weird thing about this Microsoft -Yahoo episode was the strange behavior of Microsoft. They first offered Yahoo for take over, but when they were unsuccessful they said Yahoo demands are too much to satisfy..
First MS wanted to dominate, but once they were unsuccessful they blamed Yahoo itself.. Strange that such a big company with Gates as CEO behaving like kids..
I read these two statements 5 times each to try and find the contradiction but couldn’t.
The first statement said MSFT isn’t pursuing other deals; the second said that nothing is ruled out for the future.
Perhaps this would be easier to see if you put them right next to each other as if one was said immediately after the other.
Not only isn’t there a contradiction, it’s actually a perfectly reasonable thing to day. Summary “nothing being pursued, but not forever”.
Actually, this seems more like the media making up a story that isn’t there.
Micheal you have typo…..tranlate should be translate!
Microsoft “isn’t pursuing other deals following the withdrawal of its $47.5 billion takeover bid for Yahoo.”…Because they are still pursuing Yahoo.
Whether explicitly or not, Microsoft has stated that in order to compete with Google they need Yahoo. So now what are they going to do, walk away from the Internet advertising space? Go it alone when they’ve already said they can’t? The Yahoo deal will get done, just as Oracle/BEA called off discussions based on price differences and then a while later announced that the deal was actually completed.
Michael-
Here’s the deal. They have until 5/15 to nominate a slate of replacement board members. They will either wait until the last hour, or have a small shareholder nominate the MS slate without their direct involvement, or pass entirely (my guess).
In any of those scenarios, 5/15 will be an UGLY day for Yahoo stock. REAL bad. 5/15 to 7/3 will be a blood bath. And then Microsoft comes in and makes their $34 per share final offer and it gets done, or Yang is strung up by his privates on a flagpole in front of corporate HQ.
The stock has plenty of room to drop, and it won’t drop until MS passes on nominating a slate.
So the correct gamblers’ strategy is to get out now, and back in a little more every day until MS buys in.
I would agree that there is a contradiction there. But any business person would change their stance if a great opportunity presented itself, even if it means being contradictory. I am reading into this with the belief that a new opportunity has presented itself in a fairly short time frame, but he can’t speak about it at this point. Let’s remember, Gates is arguably one of the best visionaries of our time who has been able to capitalize on great opportunities at key points. You have to believe MSFT has a strategy, even if it sounds contradicting.
Seems like a neurotic need to always resent what other people have. What’s wrong with an operating system near monopoly?
With all their moolah, you’d think M$ could perfect Live Search and compete with Google. Does Google have a patent position that prevents this? I don’t know.
I think that despite paying for surveys to state the contrary ( http://idisposable.net/2008/05.....ine-print/ ) , Microsoft has a crisis on their hands in terms of cloud computing and the shift of applications to services.
At what point will the elephant in the room start knocking about? When people are buying Linux based PC’s to bridge the gap between cell phone and notebook, and Apple is taking more market share every quarter, of course Microsoft won’t sit idly by.
However, I am not sure they can “buy” their way out of this. For every MSN Live, there are Facebooks and Myspace. For every ad play they make, Google makes their ad supercomputer better. I think Bill G has to pull a rabbit out of the hat here, and quick.
Here’s my take on Microsoft’s Shopping list:
http://sramanamitra.com/2008/0.....ping-list/
I think strategies evolve.. it doesn’t change rapidly in a day or two..
I think MS still wants yahoo and is just waiting for the stock to bottom out before putting in another bid. I don’t think Ballmer will give up this easily and will get yahoo at 33 one way or another.
The first comment refers to partnerships and acquisitions in general(like the one with Hyundai) while the latest one talks about the online space…
Taken out of context they seem to contradict each other.
Yahoo’s top shareholders:
Filo 5.8%
Yang 3.9%
Top institutionals: more than 30%
Capital Research: was 11%…now at 16%
Gordon Crawford (Capital Research) is pissed at Yahoo, like I said in an earlier comment. He will oust Yang within a year. Remember what happened to Steve Case from AOL?
So now, the MSFT strategy is the same:
1-Let the stock tank,
2-Let institutions be angry (replace?) at Yang & friends,
3-Go hostile. (Shareholders will welcome MSFT with open arms)
Of course Bill and Steven won’t say that to the media.
But Gates’s speech was coherent with the strategy.
ignore my prev comment…looks like he was refering to the same thing both days. That’s weird. I guess the second one was to drive the stock price up in the short term
This is much worse for Yahoo than Microsoft playing possum to get them at a better price. Think about Microsoft’s culture and the personalities of their leaders. They’re done with Yahoo. Yahoo fought too hard instead of welcoming the embrace.
Microsoft’s next logical move is to totally attack Yahoo to take the market share. It’s the old Alexander the Great tactic. Circle the city, give them 24 hours to surrender, or tell them their city will be sacked. Yahoo choose the latter option.
Microsoft’s culture is ideally tuned to lay waste to a weaker foe. They’d much rather focus that energy and attack on Yahoo than Google because Google is not winnable, at least not right now.
Even worse for Yahoo is that Google may see that coming and decide they need to attack as well, lest Microsoft get all the share.
Business is war, and Microsoft has the warlords.
More on my blog:
http://smoothspan.wordpress.co.....uch-worse/
But…. but… but… what about Ballmer’s grand 5 year plan?
http://blog.wired.com/business.....wants.html
I interpreted Bill’s comments Monday as corporate speak for “no comment.”
While this is probably just poor word choice from Gates (does he have a speech writing team?), there is a difference between a partnership and an acquisition. With a partnership, Microsoft can avoid some of the bureaucracy involved with forming consensus in a room full of powerful egos.
Coupled with the presidential election, Microhoo is producing a huge pile of non-news. 2008: When American’s Became Clairvoyant.
It’s Yahoo all the way. think different.
Hi Bill, if you are reading through, we’re taking investments in my new company. The details are on the home page of our social network http://www.sitespaces.net
Microsoft is absolutely doing the right things and saying the right things regarding this whole YHOO deal.
I hope the shareholders kick Yang right in the Yangers.
Mike,
I’m not sure if “partnerships ” translates to acquisition. You’re reading too much into it. Must be the lawyer within u
I think too much is being read into this. Often, you have to aggregate all of these specific comments to specific questions, and then form an overall picture. In this case, Gates might have been trying to convey something to a very specific question about acquisitions, while the partnering comment may have been in regard to alliances/partnerships/etc.
In any case, I think we are looking too closely for intent.
michael, seems you still cannot accept that the microsoft yahoo! deal did nt happen. don’t know why you want it. and no, guess you are one of the few that still thinks it will happen. see, yahoo!’s share are higher than before the offer, microsoft’s are lower than before the offer. so who lost?
all your groundless presumptions won’t change what happened. but guess all these messages are catching a lot of readers like me.
nothing more!
studimaus - getting lots of comments like yours. I’ve said this before but not recently - the reason why I want this deal to happen is that both microsoft and yahoo need it to have any chance of competing with google. the health of the internet demands a balance of power, and there is no balance there now. I may write a post explaining this in more detail.
but you are 100% right that i predicted the deal would happen. I still think it will, as do the markets. more on that later.
meh. A few weeks ago Bill made an offhand comment about windows and suddenly all the folks who read too much into his nattering, like yourself, were convinced he was hinting at an early release for windows 7. MS had to clarify his statements (like the often do). The idea these comments have any to do with their overall strategy is silly. Who considers Gates “media trained”? He’s not and never has been the guy that drops hints. Reading these statements as some massive 180 difference is melodramatic.
If Microsoft wants to fix their internet strategy, maybe, just maybe, they could stop being such a cluster**** operation and at the very least maintain more of their existing live.com offerings. To mention that Live.com still looks fractured (though not as fractured as Yahoo’s stuff, but that’s mostly style) should be another indicator.
Buy other companies for the tech, but MS still needs to get their **** together at home.
michael, you really think microsoft would do anything postive with yahoo!? they would be too busy restructruring yahoo!, porting services to microsoft products and when they are done, nothing will really work.
the deal would not do any good for microsoft, and not for yahoo! either.
My five suggestions for Alex Bogusky, the new ad guru Microsoft hired to re do their advertising: http://blogs.jobdig.com/wwds