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Practice Management: Chuck Newton
Microsoft Issues A $45 Billion (With A 'B') Offer For Yahoo
Now I am from the great State of Texas that invented the word Yahoo. Only in Texas it can be a verb or a noun. If used it with a short 'a' sound it is a verb as Yahoo! uses it. If it is used with a long 'a' sound it a noun that means old fool, idiot or something like that. In the long 'a' sense you will hear someone ask, "What in the hell does that Yahoo think he's doin'".
Yahoo!, the company, might very well have a right to employ the small 'a' verb when agreeing to take $44.6 Billion dollars out of Microsoft's pocket, but I tend to think the long 'a' noun might apply to Microsoft in making such a bid - as in "What in the hell does that Yahoo think it's doin'".
Now Bloomberg notes that Google's stock fell the furthest since it went public on the news. It lost $48.40 or 8.6% of its value after Microsoft made the bid. This is despite the fact that Google had sales growth of 52%.
I will tell Google not to worry, and I would tell investors to pile up on Google while it is cheaper. I am no expert, but it seems to me that Microsoft, as much as it desires, is not going to compete effectively against Google. Microsoft makes its money by altering software and and charging the bejesus out of people and companies to buy it and use it. Microsoft's goal is to restrict use. Google on the other hand basis it success on providing all services for free, with few if any restrictions to the public, and to make these services easy to use in the hope of gaining eyeballs. These eyeballs cause ad revenues to flow in.
Google snuck up on Yahoo! and Microsoft because it provided a quality service without all of the costs and blocks, booby traps, obstructions and vicissitude as these older companies. People learned to Google, as to oppose to MSN or Yahoo! because it is a better set of services. Merging the two doddering giants does not solve anything.
It reminds me of the banking crises in the late 80s in Texas. We had two large banks that were foundering. The solution was to merge them. First Allied and Republic of Texas became First Republic. Well, two halves might make a whole, but two failing banks do not make a solvent bank. The federal government had to just clean up a bigger mess by the time it was over.
Now, I am not saying that Microsoft and Yahoo! are foundering, but neither one of them is succeeding against Google. They are not succeeding because they have inferior products to offer to the public. Combining inferior products does not make a good product.
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