And I think that Ballmer has to win this one. He really wants to do something to regain cachet. Are these not very different companies? Even though they have some similarities in their products, in terms of their culture, they seem to be very different.
How difficult is it going to be to meld these into one large company? There are going to be some problems. There are other practical questions. How do you take 14, employees and meld them into 80,? Traditionally, this industry has looked very much down on acquisition and layoffs.
All of a sudden, we are getting more acquisitions. Suddenly, what are they doing? There are buying capabilities. They have begun to hire people from the outside. So not only do you have a potential cultural integration issue of Yahoo and Microsoft, you have some cultural problems within Microsoft that you have to worry about.
Hsu: I think that that answer is right on. And Microsoft itself has done quite a bit of acquisition over the years, starting, I believe, in But, what goes counter to the culture of innovation in some of these spaces [is]: either you are going to be acquiring smaller startups or preferably you are going to be doing it organically in-house.
When we think about the previous cases of success versus failure in these mega-acquisitions in the technology or Internet space, that track record does not look good. The integration, the redundancies, all of those things have to be managed. At the end of the day, you have to think: What are the possible synergies? What do we have to deliver as an integrated company?
How are going to be able to get up to that frontier much fast than our competitor, Google, in this particular instance? Whether the answer is going to be a direct attack on the online marketplace model or some other new battleground, remains to be seen. The management of these companies has to be mindful of the difficulties and the logistical integration difficulties associated with this type of size.
Hrebiniak: Just one other point to hitchhike on what David just said. So, how does he combat it? They are gaining dominance through acquisition. What you dumped on a company for doing two or three years ago, you are now doing. We have to grow organically. Knowledge Wharton: Speaking of dominating through acquisition, you both mentioned the antitrust factors. Could you speak to a little bit about that and what it might mean for consumers? Hsu: In the antitrust analysis, you have to understand what the relevant market is.
Google is clearly playing off the dominance — not really the dominance, but the high market share of both Microsoft and Yahoo in the space of email and instant messaging. To your earlier question of: Is it a credible threat that Google would come in with its own acquisition of Yahoo?
I think that the Microsoft and Yahoo merger faces a lower hurdle with respect to integration on antitrust grounds. We also have to think about the pricing side of the equation. For consumers, a stronger competitor for Google could be a good thing on the online advertising space, in that there may be some platforms for advertisers.
A different competitor is always going to put downward pressure on prices. I suspect that consumers will end up being the beneficiaries of a Microsoft-Yahoo deal, not only in advertising online space, but in the consumer products that are associated with the Yahoo assets.
Hrebiniak: I agree with David, except for one little thing. I found an awful lot of reaction and industry comment on the fact that most of the synergies talked about are going to benefit Microsoft-Yahoo or Google.
My leadership team and I would be happy to make ourselves available to meet with you and your Board at your earliest convenience. We believe this proposal represents a unique opportunity to create significant value for Yahoo! We hope that you and your Board share our enthusiasm, and we look forward to a prompt and favorable reply. Developers are in short supply. Here are the skills and programming languages employers need. Time for a Linux smartphone? The painful shame of owning an Android phone.
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Share story. By Benjamin Romano. Benjamin Romano : or bromano seattletimes. Related Coverage. The fees for paying lawyers and solicitation firms to wage a proxy fight are a fraction of what it would cost Microsoft to raise its offer.
A Yahoo-Microsoft proxy fight would be the largest corporate proxy fight in the eight years FactSet SharkWatch has been tracking statistics on this, it said. Unlike manufacturing companies with fixed assets, a key Yahoo asset is its engineering talent, and a hostile approach by Microsoft could lead to an exodus of Yahoo talent to Google Inc or other Web rivals.
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