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Live by the Web, die by the Web - we look at what the blogosphere is saying about Microsoft's $44.6BN offer. Among blogs mentioned are those by David Kirkpatrick, Mark Cuban, Patty Seybold, Mark Anderson, Jon Fortt, and Marc Andreessen.


David Kirkpatrick (Fortune):

"Wonderful as Google is, the world and the entire Internet and media industry needs for its power to be countered and, if possible, matched. Without genuine competition everybody loses. That's what drives innovation. Even Google may benefit because if its share of search and online traffic grew much larger regulators would almost certainly begin to find ways of restraining it."

"Microsoft expects to reap $1 billion in operating efficiencies by combining the 14,000-person Yahoo with the 80,000-employee Microsoft. Looks great on paper. The reality, though, may be something else entirely. Start with efforts to meld or eliminate overlapping businesses. There are dozens of them, everything from news Web sites and Net portals to e-mail, instant messaging services, and online advertising technology. To achieve the projected cost savings, Microsoft will have to choose which businesses survive and which ones don't.

Ballmer says: 'Yahoo, the brand, will live.' But eventually he'll have to decide between Yahoo Mail and Microsoft's Hotmail, Yahoo Finance and MSN's finance site, and others. Inevitably, products will be jettisoned, managers will lose clout, and people will lose jobs."

"The question isn't whether Yahoo should sell. It should. The only question is what the structure of the deal should look like so that Jerry and David can achieve many of the goals they set out to accomplish on the net under the MSFT umbrella.

Jerry definitely is about customers first. This is his chance to show it. This deal accelerates his opportunity to get customers where he wants to take them if he negotiates it right. Something I didnt think would be that hard. There is too much upside for Microsoft to nitpick the non financial deal points."

"What else can MS do with its cash hoard that will earn it more money? Not put it into stocks, or cash, or buy back shares. MS has become a cash generation machine, and one of its greatest challenges is the efficient use of cash....It doesn’t matter, in the short run, whether MS can get Yahoo to beat Google, which is what all the pundits seems to be locked into discussing. What matters is whether the buy makes sense for MS, i.e., whether this will lead to a better use of cash, and increased earnings. I have no doubt the answers to both are Yes."

Patty Seybold (Outside Innovation Blog)

"If Microsoft and Yahoo DO merge, they’ll need a new brand. They need a trusted brand identity. This need to re-brand for the mass market could precipitate the splitting up of Microsoft into two separate businesses: Microsoft, the consumer business (Yahoo/MSN and Xbox and Microsoft Live consumer software as a service), and Microsoft, the enterprise business (office applications, server software, and distributed systems)."

"In the end, Yahoo’s most effective evasive maneuver might be to drag the process out as long as possible. Why? Microsoft’s stock has dropped more than 10 percent since it announced its hostile bid — a development that both decreases the value of its offer and irks any Microsoft shareholders who are skeptical of the deal. That’s why you can be sure that Microsoft won’t give Yahoo board members long to ponder their escape options before the software giant moves to take the deal directly to Yahoo shareholders."

"Speaking of Ballmer, if Microsoft fails in this attempt to buy Yahoo somehow, it may be time for him to go. From an outsider's glance it might make sense for Microsoft and Yahoo to become one - for both sides.

It seems obvious at this point that neither will be able to catch Google on their own, so why is Yahoo so against the idea of joining with a company that can help them take down their chief competitor - to the point where they seek anyone else, and are even willing to partner with that #1 competitor? Well there certainly is still very much a 'big brother' aura around Microsoft these days despite their promises to be a more open company. It may be that no matter what they do, the image of their company will not improve until Ballmer, a very divisive figure, leaves."

"Microsoft states in its letter that:

Depending on the nature of your response, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!’s shareholders are provided with the opportunity to realize the value inherent in our proposal.

So, what is Microsoft really getting at?...Yahoo has a shareholders rights plan, also known as a poison pill, with a 15 percent trigger. As a result, Microsoft cannot effectively acquire an interest in Yahoo above that threshold unless it obtains prior approval from Yahoo’s board.

But if the Yahoo board resists Microsoft’s offer, Microsoft can still pursue a hostile bid.

In the face of an unaccommodating board, the only effective option for Microsoft to force Yahoo’s directors to come to the negotiating table or to otherwise acquire Yahoo is a proxy contest."

Marc Andreessen ("Venture Blog"):

"The Microsoft/Yahoo deal, if it happens, means very little for the entrepreneurial climate in Silicon Valley, or the opportunities available to you and your startup. Your job is exactly the same as before: build something people want, scale it up, make sure it's defensible, and make sure you can make money with it. Build a company you are proud of."

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