Microsoft bids for Yahoo


It’s happening, slowly but surely it is. Ever since Sergei Brin and Larry Page unveiled Google’s plans for world domination, albeit in a subtler and less aggressive way than that of Microsoft’s, Bill Gates had been hurting. Gates’ empire seemed to have no response to the service that Messrs Brin and Page were offering to the world. That is, until now!Unable to really hurt Google, and gain ground alone, Microsoft Corporation has offered its erstwhile competitor a way out of the trouble, it is in right now. A $42 billion proposal to Jerry Yang’s now stuttering media giant, Yahoo, has left every one in the world shaken, but not really stirred. Gates has now more or less realized that the threat of Google holds, and in a bid to secure the future of a corporation under attack from several corners, Microsoft has resorted to the old fashioned route of a hostile take over.

However, how hostile is this take over in the first place? Yahoo had been in talks with the Redmond giants for the last few years, and several times at that, for a merger, but the offer always seemed to come up short. Last week, long time Yahoo CEO Terry Semel, resigned from his post, and now Yahoo is almost sure to be taken over by the monopolizing giant.The move has come as no surprise to anyone in particular. Google Inc. had begun offering online solutions to the needs of the computer user. Google has made available document editing, spreadsheets, and other computer programs online, giving the user an easier alternative, instead of relying on the packaged software that Microsoft has provided for eternity. The catch here is that Google’s applications are free, while Microsoft Corp. continues to levy a heavy fee for theirs.For Yahoo, the bid represents another painful reminder of how missed opportunities and mismanagement combined, to open the door for Google to supplant itself as the Internet’s main gateway, decimating its stock price in the process.Microsoft continues to be the world’s largest computer applications company, but it has lost too much ground to Google, in the lucrative online space market. Unless Microsoft plans to rapidly use the combined might of MS Corp and Yahoo to oust the giant from Mountain View, California, this acquisition will go the way other Microsoft takeovers have gone, with Yahoo dying in a few years from now.Microsoft is acutely aware of the upheaval that can be caused by a pivotal shift in technology, having been the biggest beneficiary during the 1980s and 1990s, of a transition from mainframe computers to personal computers, that knocked IBM Corp. off its pedestal.Yahoo is likely face intense pressure to accept, given its steadily sliding profits and a murky 2008 outlook, that caused its stock price to drop to a four-year low, earlier this week.Microsoft’s $31-per-share offer – originally valued at $44.6 billion – represented a 62 percent premium to Yahoo’s closing price late Thursday, although it is below Yahoo’s 52-week high of $34.08 reached less than four months ago. On Friday, the total value of the cash-and-stock deal fell to $41.7 billion, or $28.95 per share, because Microsoft’s shares declined on the news.Microsoft has offered a sum of money rivaled only by the AOL-Time Warner merger, which was reportedly $180 billion. This is a battle that MS Corp. cannot afford to lose, and to even stand a chance of making it against Google in the online space market, they must take down the Sunnyvale based Yahoo, and use its potential to outmaneuver Messrs Brin and Page.There are chances that Yahoo might not take up the offer, and maybe show up a white knight to rival the Microsoft bid. Chances are, that NewsCorp or InterActive Corp. might try and oust Microsoft’s bid, but their financial clout is nothing compared to Bill Gates’. A long shot, by many analysts, is that Apple Inc.’s CEO Steve Jobs might come to Yahoo’s rescue, and set up an old foes clash.Whatever the end result of this Microsoft-Yahoo courtship, the alarm bells are clearly ringing in Redmond, Washington, and Bill Gates’ high chair is definitely getting shorter.Vineet Kanabar