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Microsoft to Acquire or Merge w/ Yahoo: BAD IDEA

Yahoo again making news. The NY Post breaks the story that Yahoo and Microsoft are once again flirting with marriage or purchase. Personally, I don’t put much stock in the NYP’s finance and technology coverage - so I think this may be hyperbolistic coverage on their part - on the other hand, maybe its legit.

If it, the combined entity would on paper be more of a Google competitor with search and advertising inventory.

Mashable is bullish, asking “Why wouldn’t Microsoft buy Yahoo?” Personally, I think this is a simplisitic assessment - as demonstrated already today, Yahoo is stumbling managing its own products (as is Microsoft - ahem, Vista) - would these two battle damaged, beleaguered companies be able to successfully execute on an acquisition or a merger? I tend to think not: even if the execution was successful, the act would consume so much organizational resources from each for so long that their market positions would erode badly in the meantime as their business languishes while integrating.

Nicholas Carr points out (from the WSJ) that highlevel executive conflict and culture clash would have a derailing effect as well.

Considering that both Yahoo and Microsoft need to get their own houses in order badly, and that throwing an integration on top will just cause further disarray, I hope this discussion remains conceptual or results in tighter business relationships without a purchase or merger. I don’t see why, for instance, Yahoo and MS couldn’t pool their technologies and engineering resources to create a best-of-breed search engine without merging. Spin off the the search units from both MS and Y! into an independent entity 50% owned by each parent.

Henry Blodget proposes something similar, suggesting that the Yahoo/MSN, in the event of a merger, should be spun out as a separate company. Otherwise, he contends, they’ll fall victim to organizational politics and wither on the the vine.

TechCrunch declines to offer an opinion, agnostically reporting the news.

EDIT: Mathew Ingram summarizes the idea as Two Icebergs Roped Together:

They are like icebergs: not only is nine-tenths of them unseen, but they are slow-moving and difficult to steer. Impressive? Yes. Powerful? No doubt about it. But fast, or nimble or imaginative? No. Roping them together would do nothing but compound their problems.

merger, microsoft yahoo

2 Responses to “Microsoft to Acquire or Merge w/ Yahoo: BAD IDEA”

Richard Ball | May 4th, 2007 at 10:05 am

I concur. I think it’s a bad idea. Google will be the beneficiary if this deal goes through as they remain nimble and the new Microhoo (Yasoft?) would struggle to combine clashing cultures.
Rod | May 4th, 2007 at 10:09 am

You bet! That’s a better summary than mine. Yahoo and MS would spend forever and a half stumbling around trying to figure out the new entity while goog continues to clobber them. We shall see….