YHOO just came out with their Q1 report. To give them credit, Q1 was decent (see our assessment here) but not good enough to raise the bid, ultimately, and this makes me wonder why all of the huffing, puffing, and bluffing?
Ultimately, this recaps YHOO’s disastrous handling of this opportunity. They have taken a wonderful opportunity (a $45B exit) and turned it into a disaster.
Let me count the ways:
AS A SHAREHOLDER:
While MSFT offered YHOO $31/share initially, the actual value has fallen. Combined with the time value of money, YHOO will ultimately risk not getting anywhere as much as it could have obtained had they acted promptly.
In fact, I think this will cost investors $4-9 / share.
But while I held a low 6-digit holding in YHOO (and since sold 90%) I am appalled more as an observer than as a shareholder.
AS AN EXECUTIVE:
On Day 1 when MSFT launched its offer, YHOO should have gone to the table and discussed this deal.
I think they could have said that they wanted $40 / share at least… and walked away with $35-40 fairly easily. Had a deal been consummated quickly, the value of that would have been considerable to MSFT. But now, here we are 2 months into this stalemate and MSFT holds all of the chips.
AS A CEO MYSELF:
Jerry Yang is getting some bad advice. I wish I have advisers that have the courage to tell me when I am being wrong or fail to read the signs as they appear. Yang’s legacy of building the uber brand of Web 1.0 will probably be somewhat tarnished by his emotional and childish behavior in this deal. Jerry, when the world’s biggest and most valuable technology company (MSFT) comes to you and offers a 62% premium to bail your company out, you do not rush into the arms of world’s biggest Web company (Google) who is the main cause of 99% of your worries!
This is where investment bankers, lawyers and board members need to earn their fees and they have not, frankly.
AS A USER:
Why in God’s name is YHOO buggy? What superior engineering is MSFT talking about when I - a long time YHOO user can no longer use your products because none of them work?
AS A MARKETER:
If this was not all enough, YHOO now decided to increase minimum bids too. For one, no one I know uses YHOO Search Marketing… and this will kill off anyone else crazy enough to still use this crapbox.
What kind of shipwreck is this people? Best of all, to cap it all off… all of this bluffing for what?
Disaster I tell you. All right, back to work.
Note: Own some shares in YHOO.
Read our overview of the Q1 report here.
Tags: Yahoo!|
Posted By: Ashkan Karbasfrooshan | Apr 22nd
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April 22nd, 2008 at 5:10 pm
[…] April 22, 2008 · No Comments So Yahoo earnings are out and they are a little better than expected. But you have to think Yahoo tried very hard to beat the expectations pulling all possible levers to make this happen. If that assumption is true then the real numbers are probably more inline with what the street expected (or worse). So now what? Well, Ballmer said he doesn’t care what the earnings are. That makes sense because if MSFT did their homework, they already figured out what Yahoo was worth to them. I guess I don’t understand how Yahoo could argue that they are worth so much more. The stock was sub $20 before the bid was launched so in what reality is it worth $40 (or whatever they want). Hipmojo does a nice analysis here. […]