I dunno, and we’re not likely to find out in the next few weeks. Later? Very possibly.
With its offer for Yahoo!, Microsoft might have pulled off one of the greatest moves ever, worthy of an NBA highlights film (where a drive down the court features a fast break, behind-the-back passes, hip-swiveling fakes, and an across-the-basket skyhook pass that’s intercepted and jammed).
Steve “Pistol Pete” Ballmer-a guy I’d love to work for-started the downcourt drive with a fast break, the unsolicted offer. After a blind pass (in the form of appeals to Yahoo!’s board), he laid a huge fake on Yahoo! by raising MSFT’s offer…but not to what Yahoo! demanded. Steve has scored big by withdrawing the offer, because now Jerry Wang has to deliver, and deliver big, on his promises of Yahoo!’s future. He’s sold his vision to his board of directors once; they won’t give him another chance. Let’s see what happens to YHOO tomorrow; we’ll find out if the market believes JW. He’s likely to have a fistful of stockholder lawsuits on his desk in the next few weeks.
If Yahoo! doesn’t show substantially better results, the stage will be set for another MSFT bid at a much lower price. Yahoo!’s board must act in the interest of the shareholders, and it will be an “I-told-you-so” moment when a lower offer comes from Redmond. While I still believe Microsoft’s long-term interest is not served (I don’t think Yahoo!’s technology or culture will play well with Redmond’s) by acquiring Yahoo! at any price, I don’t think Microsoft takes “no” for an answer.
If Yahoo! does show better results, it will likely be due to its partnership with Google. But that partnership may backfire, because Microsoft will have a legitimate antitrust issue.
At one point I wondered if part of Yahoo!’s hidden value was Jerry Wang as a possible successor to Steve Ballmer. But I don’t think he’s played his hand well these last few weeks, and I suspect the fallout over Yahoo’s cooperation with the Chinese government will have a long half-life.
Microsoft’s best option is to leapfrog the search engine advertising content and to focus on other advertising delivery opportunities.
