MediaFile

Microsoft-Yahoo: whither the boatloads?

July 30, 2009

It takes a deft touch to vanish a boatload of cash, but Yahoo seems to have done it.

Disappointed investors voted with their feet initially when the Microsoft-Yahoo deal, announced in the early hours of Wednesday, came with reams of detail on search, revenue-sharing, technology and advertising tie-ups — but no anticipated upfront payment, which some had put at around $1 billion. Yahoo prompty lost about a 10th of its market value.

“This agreement comes with boatloads of value for Yahoo, our users, and the industry, and I believe it establishes the foundation for a new era of Internet innovation and development,” Yahoo Chief Executive Carol Bartz said in a press statement released jointly with Microsoft on Wednesday.

Back in May, Bartz said her company would be open to any deal with “boatloads of money” and the right technology. Microsoft is indeed cash-rich, but the market might be wondering why shareholders won’t immediately see much from its coffers.

Asked what had happened to the boatloads of money on a conference call for investors and media, Bartz appeared to go on the defensive.

“What was really important to Yahoo is that we had a deal that flowed successfully through our P&L. Having a big cash payment upfront doesn’t really help us from an operating standpoint,” Bartz responded, before launching into an explanation of traffic acquisition costs, expense lines and investing in the business.

“So listen, it’s easier to talk about boatloads of cash and value because you guys understand that. But as far as we’re concerned the boatload of cash is us preserving our revenue line.”

Comments
6 comments so far | RSS Comments RSS

It would take a lot more than a boat load of cash to ressurrect yahoo and msn into a going concern,people wont change to them from google no matter what they call themselves and Bing just doesnt do it. Negative PR and a silly name means this deal is dead in the water before it even sets sail

Posted by cheryl | Report as abusive
 

a silly name is one thing, but with search algorithms that seem to be written by my 5 yr year old nephew i really don’t see ‘bing’ going very far.

to sum it all up; a silly service with a funny name.

Posted by hamzah | Report as abusive
 

Yahoo really faces the strategy wilderness. It just has not made the transition to Web 2.0 in terms of interactivity, community and collaboration. Nor has it embraced the four key interrelated and mutually reinforcing technology developments that are currently revolutionizing the way people and companies use IT:

1. Cloud services
2. Next gen mobility (smartphone services and apps)
3. Web 2.0 content and community
4. Stream/on demand services and products

Not sure where Yahoo goes from here. Strategically the MSFT deal helps add what yahoo does not have, but it does not develop the ability in-house for Yahoo to exploit as business model paradigms continue to evolve in an iterative way.

 

I pretty much agree with everyone, this does sound like a strange deal. But let’s not forget, Carol Bartz is smart (make it very smart), she is also pro-microsoft (make it very pro-microsoft), that is why Yahoo brought her in in the first place. So be sure that she has something up her sleeve, and I’ll bet the farm there is more to this deal too than meets the eye.
As far as breaking the Google dominance, perhaps not yet. Certainly not until Google starts loosing it’s appeal naturally. Sure Google is (much) trendier but it will happen eventually, it always does.
And Yahoo is still second in the world after Google. (No, I am not a user :) Maybe so because, not in spite of their being more conservative than the big G??

Posted by Laz | Report as abusive
 

Oh, one more thing. Google is betting the store on cloud computing. My prediction? Cloud computing is NOT the future of computers.

Posted by Laz | Report as abusive
 

Oh, one more thing. Google is betting the store on cloud computing. My prediction? Cloud computing is NOT the future of computers.

methoo.com

 

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