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Topic: Microsoft and VCSY
Microsoft, Yahoo acquisition buzz fizzles (Updated)
Todd Bishop at May 4, 2007 6:59 a.m.
Update, Friday evening: The New York Times, Wall Street Journal and Bloomberg News are reporting that the companies aren't considering a merger or acquisition, but they're exploring some sort of strategic partnership.
Original post follows:
Microsoft and Yahoo are again discussing the possibility of a merger or some other combination, according to the Wall Street Journal and the New York Post, which was first to report the news. Both publications are citing anonymous sources. The WSJ cautions that the talks are in the early stages and notes that similar discussions previously didn't result in a deal.
Yahoo shares rose in early trading Friday, while Microsoft shares dropped.
As Mary Jo Foley notes, Yahoo CEO Terry Semel happens to be speaking at a Microsoft online advertising conference in Redmond next week. Semel has actually spoken at the same event in the past, but maybe this time he'll have something more interesting to discuss than general industry trends.
Would these two make a good combination? When I spoke to search expert Danny Sullivan in March, he said a Yahoo deal would do more for Microsoft than anything else the company has done in its efforts to catch up to Google in that market. But an acquisition like this would be a monster deal for Microsoft. Even before getting to the potential integration challenges, Yahoo wouldn't come cheap. Its market capitalization is more than $44 billion as of Friday morning.
Update, 9:50 a.m.: A Microsoft representative says the company has no comment. But the reports have clearly gotten the attention of Wall Street investors and analysts. In a note to clients, Sarah Friar of Goldman Sachs assessed the positive and negative aspects of a possible deal. She wrote:
Positively, in our view, an acquisition of Yahoo! would provide Microsoft with technology assets, advertising relationships, and "eyeballs" to prove its seriousness in this market. Negatively, large deals carry significant risk, not least being Microsoft's ability to retain Yahoo! talent. Thus we'd prefer more of a stock-based deal with strong lock-in for current yahoo! employees. We also believe a champion would also have to rise within Microsoft--perhaps Ray Ozzie--to ensure the success of the acquisition.
Update, 10:15 a.m.: Even as Wall Street goes into a frenzy, some analysts are highly skeptical about all of this. "My opinion on the matter is that it's extremely unlikely," said Matt Rosoff, an analyst at the Kirkland-based Directions on Microsoft research firm, when I spoke with him a few minutes ago. While some sort of partnership might be possible, perhaps related to advertising or search, Rosoff listed several reasons why an acquisition wouldn't make sense:
The huge price tag. Yahoo would be larger than anything Microsoft has acquired before.
The large amount of overlap between the two companies, and the big investments Microsoft has made in building out its search technology and advertising infrastructure in recent years.
The differences in the Yahoo and Microsoft cultures, and the likely problems integrating Yahoo employees into the Microsoft business.
The message that an acquisition would send. In some ways, buying Yahoo would amount to an admission of failure by Microsoft, and the company doesn't seem anywhere close to that point.
Posted by Todd Bishop at May 4, 2007 6:59 a.m.
Category: Windows Live, MSN & Internet Services
OK My turn with above.
...a Yahoo deal would do more for Microsoft than anything else the company has done in its efforts to catch up to Google in that market...
...$44 billion...
Or Microsoft could just give every person on the planet eight bucks each to be their friend.
...in our view, an acquisition of Yahoo! would provide Microsoft with (1) technology assets, (2) advertising relationships, and (3) "eyeballs" to prove its seriousness in this market...
(1) I agree it would bring technology assets but I would surely ask 'what assets?'
(2) Advertising relationships are like bank accounts. If you have the money, you have a bank account. If you have no money, all the bank account passbooks in the world won't make a dollar ... or 'friends' in the ad business... appear. How valid is a bought relationship? For the time being the relationship works well but the warmth runs out just as the meter flag goes down. No time for 'kismet', one might say, as what will be has been.
(3) Microsoft has more 'eyeballs' than anyone else on the planet, don't they? I mean 500 million computers with at least one splash screen that says 'Microsoft', right. I have a great idea. When all those Internet Explorers come on, give people a place to go. LOL Oh, I forget, one of the ideas MSFT has operated by is that the internet is a fad and XML is too hard to do.
So, let's revisit (1) since it's the only thing I think the author thinks is a worthwhile idea as once the money's changed hands and a few months ensue, (1) is the only thing you would be most likely to still have in hand. (2) and (3) are ephemeral wishes paid for by a knocked out tooth. And once they see you're a snagglepuss, count on the laughing to begin. Not in front where your teeth are. In back where you've showed your ass. Why? This line says it all: “...Negatively, large deals carry significant risk, not least being Microsoft's ability to retain Yahoo! Talent...”
So (1) brings us to WHICH? technology as, to my thinking, there can be nothing beyond specialized algorithms and the results of top secret R&D done by Yahoo and their partners that would be anything remarkable to Microsoft. So what is so valuable to Microsoft?
What else but Panama? And what is Panama but a host facilitating a means of connecting one ocean of 'stuff' with another ocean of 'stuff' at different levels with managed commerce (interchange)? This is 'virtualization', you do realize... virtualization as a core technology is much more involved than developers will tell you. But, it's still the ability to transactionally connect proprietary datastores to internet. It's the ability to interconnect different masses of information with each other for a 'transactional relationship'. Old timers would call it intercourse although I am not an old timer. I call it screwing somebody else for fun and profit. Well, that's how I felt about what was going on before July 18, 2007 when Yahoo said they would postpone their two-timing ways after we all saw this piece of paper telling us VCSY was granted patent 7,076,521 July 11, 2006 and Panama was delayed one week later. LATE! And with my sweet baboo's baby! But now that the baby is out (Panama finally delivered February 1, 2007, one week before VCSY sent Microsoft a 'cease and desist' about patent 6,826,744 .) me and Norman's gonna buy us a double-wide and....vvvvvvffsssssssssttttttt
What will be missed by the mainstream 'brains' out there is that Panama is an exercise in managed virtualization (7,076,521 can be said to be a micro-virtualizer at the core of its functional claims aka XML Enabler Agent and Emily Language. 6,826,744 is a management and assembly ecology for such a world built out of all these virtualized and virtualizable elements aka SiteFlash aka what Roosevelt sounds like – the boundaries are probably not clearly defined although I would not be surprised to find the SiteFlash/Emily boundaries are similar as the different uses dictate the different forms) assembled in a dynamic framework apparently more powerful than what Microsoft can show with .Net Framework. I also sense Cranium is more than 'a room' I would wager an environment as any conference toom no matter how glitzy is so much popcorn on a theater seat if actual construction of the applications are not a real time result of working in 'the room'. Otherwise your Cranium is wood also. Lotsa wood getting thrown around.
Yes, I do think Microsoft approached Yahoo on a technology because, if MSFT could by now, they certainly should have by now and we don't know why they would not have done so by now other than to come up with one glaring answer: they're impotent.
They either do not own technology or they do not have a right to the technology they own. We watched a weird dance with Chinadotcom trying to buy Onyx last year and speculated there was a technology deficit in CDC preventing them from fielding effective virtualization without technology available in founding members of Onyx re their backgrounds circa 1994-5 with Microsoft. Onyx nixed the hostile takeover and sold to someone else private. CDC subsequently bought C360 (I think – I can never remember their name) and Microsoft was brought in to help with CDC SaaS system which... who knows.
Anyway, virtualization is in the XML Enabler Agent patent and arbitrariness (arbitration as the system is an ecology for transactional states where the virtualization also represents the transactional states for each granular function or actuation) is in the SiteFlash framework working in conjunction with Emily as a very high level language application environment.
So, is Microsoft saying they can't do virtualization effectively? Why not? That's what Hailstorm demonstrated they are able to do in 2001. Sure it melted but Panama appears to simply be various Hailstorm elements fused and directed to facilitate ad metrics and management.
Like the VCSY marketing material said, Emily and SiteFlash may be anything to any vertical. That's the way fundamental capabilities impact your world in XML when you have the assets. If you do not have the assets, you have difficulty turning out products that do those things.
Microsoft looks to be almost a year maybe two behind Yahoo in fielding web-based applications in a specialized framework for executing their business. As fas as anyone can tell, the use of Microsoft's capabilities on the internet are rather limited in tools and teaching. I do not see any next generation capabilities in Microsoft's Live Dynamics Expression of an Experience in living black and white. The next generation capabilities I do see are the fundamental concepts necessary in mating a proprietary system such as .Net/Biztalk to arbitrary systems on the internet, but I do not see much in the way of Microsoft using those capabilities in producing products.
Maybe I'm wrong but it's like looking at a decoy duck in the pond. Looks like a duck. Floats like a duck. But... It doesn't bob to eat. It doesn't swim around. It just sits there and gets wet when it rains. It just sits there and bakes in the sun during the day. Doesn't sleep when it's night. Doesn't quack when quacked to. It just sits there and gets 'shown' and talked about. 'Mighty fine duck you got there, Walter.' 'Yessir that's a fine duck. What's for lunch?' 'Baloney sandwiches.'
You know, I had a deliciously cynical thought. What if MSFT knew they were not going to shell out $50billion to pick up a virtualized arbitration ecology because...
"The message that an acquisition would send. In some ways, buying Yahoo would amount to an admission of failure by Microsoft, and the company doesn't seem anywhere close to that point."
...but, instead, they wanted the duck to look real so they could line up what ducks they could to hear the 'we got good news and we got bad news' pops. So they bobbed around in the water all day Friday until the sun went down and then Monday morning we'll find they 'flew away home' over the weekend.
If you were a MSFT shareholder going to bed over the weekend with the thought that the huge pile of cash you've come to think of as part yours would suddenly be obligated to those who held 'that other company' shares. If you were sure you were going to have to shell out a big chunk of change for technology and you knew the poop would hit the ceiling fan, would you not want to scare your shareholders straight? Make them think 'Whew, we didn't have to spend 50billion for some ratty technology. We can get it from that whatchamacallit outfit they settled with. I'll be glad to spend whatever that little dinky company wants. It can't be 50 billion, can it?' Nothing will seem as bad as the Yahoo specter seemed.
Actually, it could be more expensive than that. It could be 'priceless'... meaning you don't get it at all especially due to the nastiness and apparent creepy grandfather role and the only way for Microsoft from that point to get on the internet is to hose Novell up real good.
What if Yahoo knew the proposal wasn't sincere? Furthermore, what if they have a license for the use of virtualization and arbitration intellectual property? What does that mean if Microsoft can not roll their own? What it means is that Microsoft stays on the proprietary island like some survivor wannabee. Lovely accommodations. All you need now is a boat.
But wither the boat? And ... I speculateth outrageously here with but what the hell, never stopped me before...what if CEO Wade means taters and not biskits when he says he wants a jury trial? It could mean he's either going to leave after eating his fill for the busy day ahead or he'll be settling in after dinner for a little poke in the plutonium before nighty night.
I would say the choice of Niro et al on a contingency basis indicates Wade will go a settlement route as Microsoft would be worth much more as a friend than an enemy as it's been all this time. At least with the civil infringement he will. I suspect once all the major players and relationships become more easily known, there will be many opportunities for underlings, grunts and gripers to vent about 'so and so said this and here's the transcript' etcetera etcetera etcetera, as the King of Siam so pretentiously repeated.
There are all kinds of ways to play this musical game of hide the spoon... especially when all three parties know the score. Like dancing in the dark; knowing what each other knows to be fact pushes the necessary logic to a level where most people go blind. And the three (maybe more?) know there's something sharp in there for the covenant blood-mixing. That's what makes the dance so much fun. You know there's a knife in there but you don't know if it's a pen knife or a cleaver.
We shall see. We shall see.
UPDATE
Microsoft, Yahoo May Partner to Challenge Google in Web Search
By Jonathan Thaw and Jason Kelly
May 5 (Bloomberg) -- Microsoft Corp. and Yahoo! Inc. have held talks about a partnership designed to boost their share of the Web search and advertising market and catch up with Google Inc., people briefed on the discussions said.
The discussions are in the early stages and focus on a partnership rather than a merger, said one of the people, who asked to remain anonymous because the negotiations are private. Shares of Yahoo jumped the most in three years yesterday after the New York Post said Microsoft wants to buy the company.
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