A Deal Against The King - JRM

“A deal against the KING”

From: Jay R Modi, MBA

In the past….

• In spring 2008, Microsoft made a $47.5 billion hostile offer to buy Yahoo that went into vein.

• It led to lots of soul-searching at Yahoo and the replacement of its co-founder Jerry Yang with an outsider, Carol Bartz, in the chief executive role.

continued…

In the past….

• In summer 2008, Microsoft denied its interest in acquiring Yahoo, but said that it would like to enter a deal for Yahoo's search advertisement business.

…..and finally the deal got stuck against our own, yes its our on 29th July 2009

…..the whole economy was still recovering from the clutches of recession but the world’s largest software giant got its wish accomplished.

continued…

….. gets better opportunity to compete more effectively with Google in online search and advertising.

….world’s second largest search engine will be directly benefited to use Microsoft’s searchtechnology on its website.

continued…

…. also receives a big bump in annual revenues, 88% of the search-generated ad revenues from its own sites for the first 5 years of the 10-year deal, much higher than is standard in the industry.

Can Yahoo-Microsoft jointly capture half of the market share?

Well its hard to predict this so early but its not that difficult…..

continued…

Can Yahoo-Microsoft jointly capture half of the market share?

• is launched couple of months back and is getting positive reviews.

My thoughts…

Personally I’m obsessed with using Google but when I searched with my name “Jay R Modi”, surprisingly I got the same number of hits that I get in Google.

So if not better, I can say that is as good as Google.

Can Yahoo-Microsoft jointly capture half of the market share?

• Yahoo-Microsoft’s combined share is less than half of the Google’s total market share

65%

8%20%

My thoughts…

For the next 5 years, there is no chance to surpass Google. Yes, I am quiet confident on this.Google has 2/3 of market share not just by fluke but its because of “Customer satisfaction and Customer loyalty”

Can Yahoo-Microsoft jointly capture half of the market share?

• Under the 10-year deal, Yahoo.com and Bing.com will maintain their own branding but search results on Yahoo.com will say "powered by Bing." Yahoo, in turn, will be responsible for attracting premium advertisers.

My thoughts…

I think that Microsoft got a bigger bite over burger.

• It has got market share from 8% to 12% with no upfront payment.

continued…

My thoughts…

• Microsoft also has revenue share of ads served over Yahoo’s much larger volume.….and how can we forget the increased audience for Microsoft among internet users.

Some quotes from the greats…

When the shares of Yahoo fell 12 percent, to $15.14, after the deal was announced.

“It certainly feels like Yahoo is giving away their strong and hard-fought share of the search market for really a modest price.”

» Darren Chervitz, the co-manager of the Jacob Internet Fund (owns about 100,000 shares of Yahoo)

Some quotes from the greats…

After the deal announcement.

"I got an opportunity to swing for the fences in search."

» Steven A. Ballmer, Microsoft's chief executive

Some quotes from the greats…

After the deal announcement.

"By combining the ... technology of both companies, we can create a real, viable alternative for advertisers.“

» Carol Bartz, Yahoo Chief Executive

My Questions ???

• Is this deal going to get a green signal from antitrust hurdles like EU?

• How this deal will affect customers?• Can we expect any new product or feature

from Google as an answer to this?

Please leave your comments to answer this questions. I hope you enjoyed this presentation.

References

www.businessweek.comwww.cnnmoney.comwww.blogs.nytimes.com