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Microsoft offered $1 bln for Yahoo search

     
8:41 pm on Jun 13, 2008 (gmt 0)

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SEATTLE/SAN FRANCISCO (Reuters) - Microsoft Corp offered Yahoo Inc $1 billion in cash to buy its search business in a deal that would have delivered $1 billion in additional annual operating income to Yahoo, a source familiar with Microsoft's thinking said on Friday.

In an alternative to a full acquisition, Microsoft would have taken control of Yahoo's search business, delivering the company better rates for advertisements tied to its search results than Yahoo's current Panama advertising system, the source said.

Microsoft would have also paid $8 billion to take a 16 percent stake in Yahoo, which would have valued the company's stock at $35 a share, the source said.

Talks between the two companies broke down after Yahoo entered into an advertising agreement with Google Inc. Microsoft is still open to discussing its proposal despite Yahoo's agreement with Google, the source said.

Yahoo had no immediate comment.

Reuters [news.yahoo.com]

11:05 am on June 14, 2008 (gmt 0)

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The fact that MS was looking to purchase Y!'s search engine tells me that they don't believe Live.com is cutting it.
11:41 am on June 14, 2008 (gmt 0)

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Where would Microsoft come up with 1 billion in ad money to share with Yahoo per year? I don't think they have enough advertisers.
1:06 pm on June 14, 2008 (gmt 0)

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So let me get this straight. Y! Turned down a 1 billion dollar deal for an 800million dollar deal and from the sounds of it the 800million dollar deal is a lower deal over the term (much lower) than the billion dollar deal?

I'd hate to be a Y! Shareholder now

3:51 pm on June 14, 2008 (gmt 0)

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Its not Yahoo shareholders that need to worry

msn have made a serious business blunder here, Yahoo is the ONLY target internet property that can give msn a respectable search engine with a chunk of market share at the same time. MSN should have put up the money Yahoo wanted and closed the deal - end of.

Whilst msn may have paid over more than they wanted to at the time, yahoo ads under the control of google will imo completly burry msn live search in the graveyard - msn have missed a serious trick here!

Once msn reflect on this they will need to eat a large slice of humble pie and get back to Yahoo with what they want to close the deal.

Meanwhile, If i were Yahoo i would make them pay even more now!

8:17 pm on June 14, 2008 (gmt 0)

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Yes, I think that Yahoo shareholders should worry, and possibly Google's too, if Microsoft ever really begins to take stock of its real strengths and brings them to effective use.

Now that Microsoft has an extra 1 billion not allocated to their arguably strange Yahoo! obsession, perhaps it would be wise and a good time for them to tuck away that money to earn some interest.

Using that interest, they could fund some truly exceptional "added value" capabilities for application in Live.Com over the next 6-12 months and simply spend it as an ad campaign at the other side of development to help the public understand why they should "love to go live".

After they are indeed "live" with their reinvented site, if they were to give away 1 million dollars a week for a year, if done properly, they would gain market share for a year that would cost them far less than 10% of what they are proposing to spend on Yahoo! and engrain the "live" brand into customer's minds as well as get an opportunity to prove they are indeed better (presuming their development work product was) than their rival.

With all those added eyeballs, they might just recoup their campaign from people actually wanting to advertise on Live's click system.

Then again, my cynical side says that perhaps this is simply a problem with the pronunciation of the "Live" at Microsoft. Somebody at Microsoft had better make sure that there is no miscommunication on the site's name being "live" as in "active, current, exciting and relevant", as opposed to "live" as in "we are just trying to 'live' on our annual budget".

It is the way I might approach the problem, of course, what do I know. ;-)

10:21 pm on June 14, 2008 (gmt 0)

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I would spend 500 million on hiring smartest engineers and develop better search engine and another 500 for aggressive advertisement campaign.
12:42 am on June 15, 2008 (gmt 0)

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hiring smartest engineers and develop better search engine

Most of them are already hired by Google, some of which left Microsoft to get better work environment. So long as Google's shares are sky high it is pretty much impossible to tempt them out.

As for new engineers of that caliber than it is hard to find them - search engine work of this scale is a very niche market that few get their toes in, most got burned and do something else for living.

3:58 am on June 15, 2008 (gmt 0)

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As for new engineers of that caliber than it is hard to find them - search engine work of this scale is a very niche market that few get their toes in, most got burned and do something else for living.

Gigablast

I have always been impressed by what happens over there. Certainly better than 'Live'.

And I would bet a whole lot cheaper than Y!

5:43 am on June 15, 2008 (gmt 0)

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what's a gready Microsoft! They need to open eyes wider to see that Google is about put up the Web Operating System and pushing Window into the corner and still MS can not get their ass together.

Google already have the platform, web service, word doc, spread sheet, gear, office suit, Google Engine, Open Social ... (Adsense, DoubleClick) and the support of thousand and thousand of developers and businesses. These are the preparation to launch the OS (allow other software to run on their platform and support of other companies services.)

How much time longer until Google roll out the OS? My bet is very soon. (with in a couple years). The forseen future of MS will not be very bright especially like they act right now. MS need to be more decisive and be bold. (Need more friends not trying to make more enemy)

MS can not be too greedy and let Yahoo go!
Definitely a biggest mistake that they will regret later!

8:30 pm on June 15, 2008 (gmt 0)

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They need to open eyes wider to see that Google is about put up the Web Operating System and pushing Window into the corner and still MS can not get their ass together.

Google already have the platform, web service, word doc, spread sheet, gear, office suit, Google Engine, Open Social ... (Adsense, DoubleClick) and the support of thousand and thousand of developers and businesses. These are the preparation to launch the OS (allow other software to run on their platform and support of other companies services.)

Good luck on that one.

For starters, many people do not trust putting their personal files (which an OS encompasses) online. Secondly, millions of people around the world have extensive know-how and have been habbitualized using Windows so I doubt a new OS will make people switch. Thirdly, most of the things Google offers is extremely basic (word doc, spread sheet, office suite), I doubt it will make any impact. Ever heard of Openoffice? It's free and it has many features as Office, or WordPerfect? These tools have as many features, if not more than MS Office, why haven't any of them even sucked a small % out of the Office marketshare? It's simple because of the reasons I pointed out above.

Lastly, the only thing Google is ever going to be good at is Adwords/Search and general Web 2.0 apps which everyone is impressed by, but won't ever really utilize in a real business infrastructure.

As far as I see it, Google is going to have such a hard time tapping into the Microsoft dominate products (office, windows), just as hard as how Microsoft is trying to tap into Google money making products (Adwords, Search)

1:18 am on June 16, 2008 (gmt 0)

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I disagree with some of your points.

First

For starters, many people do not trust putting their personal files (which an OS encompasses) online.

The online social network FaceBook, MySpace, Google & MS health record service proven that things are moving online whether we like it or not.

Secondly, millions of people around the world have extensive know-how and have been habbitualized using Windows so I doubt a new OS will make people switch.

I agree with you on this one, it takes time to change a habbit but it is possible. That's explain why Google able to take out Altavista & Yahoo while they were one time the King of the internet.

Thirdly, most of the things Google offers is extremely basic (word doc, spread sheet, office suite), I doubt it will make any impact.

This is true. they offer basic stuffs but the important thing we need to know is people, business, infrastructure, service, companies environment all moving online. This is the trend that is happenning and who ever control the internet will eventually win over. In this case Google own search. They are the most traffic network. They control 75-80% of the online advertising dollar. They own media video stuff with YouTube. The gmail, map, igoogle, ... gaining from the expense of Yahoo, MSN. If people continue using more online then MS will losing ground whether Google offering these basic stuffs. It is not MS water anymore.


Lastly, the only thing Google is ever going to be good at is Adwords/Search and general Web 2.0 apps which everyone is impressed by, but won't ever really utilize in a real business infrastructure.

As to be fair, think overall google services up to date beat all things came our from MS and Yahoo. That's explain why they continue gaining on market share of search, mail, map, ... and over taken Aol, MSN and Yahoo as the most popular traffic sites. All these things happened for a reason that they are good and their products are more superior that the others.

Google recently partner with SalesForce is to access more powerful business services and infrastructure. google definitely have good intention on this one.

For the adoption of businesses, I think it will happen. The reason I'm saying it is because I just watched a video about the google's conference. And it surprise me that google already pick up over 150,000 developers. This is very incredable when you talking about google platform still in its early stage.

For all these, MS definitely have a good reason to worry. One more thing I want to point out is MS need to make money on all of its products like Word, Excel, Power Point ... while google does not because they make money on online ads (adsense & adword).

This mean google can very much give these services for free and MS is the one that paying the cost.

12:53 pm on June 16, 2008 (gmt 0)

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Gigablast

I have always been impressed by what happens over there. Certainly better than 'Live'.

Sorry, but live.com is miles ahead of gigablast. While I do like to check them out once in a while GigaBlasts index just isn't even up to par against live.com's

Heck, as of this week for many verticles Live.com's index surpassed that of Google's. Google went penalty crazy and it shows that they don't have that right.

3:22 pm on June 16, 2008 (gmt 0)

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WOW, that's like offering a billion dollars for a dog turd (or a piece of bread with a face on it). Amazing. Yahoo! search is such junk, I wouldn't offer them a dollar for it...maybe a quarter though.

;)