Cell Life

Microsoft withdrew its $47.5 billion bid for yahoo this past weekend. Microsoft came out a winner on this one. It saved them from a messy merger and one which was disliked by the rank and file of Microsoft employees. They left a top online competitor in limbo state searching for answers and responding to lawsuits, criticisms from shareholders and employees alike. $47.5 billion was the appreciated offer based on Microsoft raising the bid from $31 to $33 a share in last few days. That’s a lot of money left on the table for Yahoo team and shareholders. It would have been a great exit strategy for an iconic internet firm which revolutionized the portal concept.

Can Yahoo do it alone ? Sure. But with no new breakthrough business models and powerful Google capturing it all in the online ad space, Yahoo faces an uphill task. The likely outcome of this saga is that Microsoft will swoop in later and get the Yahoo prize at a much lower valuation; if not that, Yahoo will loose further market share to Google and the team in Redmond will shift its focus elsewhere eg forming alliances with AOL or FaceBook etc. Yahoo is discussing a deal to outsource the ad display to Google - that will essentially validate Google’s dominance as the pre-eminent search engine with most bang for the buck. That is the reason we feel Yahoo should have taken the bait even though we feel any combination of Microsoft or Yahoo could not dethrone Google from its leading perch. As stated before, innovation does not happen in a box however you assemble that box.

MT