Read D.F.'s bio and previous columns
February 4, 2008
Still Thinking About
That $44.6 Billion Offer? Say Yes, You Yahoo!
You are Yahoo. Oh, sorry . . . you are Yahoo! You have problems. Your
business model has never really translated into the profit margins you
envisioned. Your chief competitor has taken your concept and done it
better than you, which is robbing you of market share and eating away at
your share price.
You’ve just axed your CEO, but he shouldn’t feel bad. The rancid
fourth-quarter earnings reports are expected to be followed by as many
as 2,500 new layoffs, so he’ll have lots of company. At least when Ford
lays people off by the thousands, and loses money by the billions, it
can offer the excuse of being part of an old-fashioned, dying industry.
What’s Yahoo’s excuse? “No one uses the Internet anymore”?
Even more amazing, Yahoo has managed all these losses while pulling 130
million unique viewers per day. Do you know how much money I would have
if that many people looked at my web site one time? Let alone
what do you suppose the good folks at Yahoo – sorry, it’s just that this
is so stupid – Yahoo! said on Thursday morning when they woke up with their
stock at $19 a share, only to receive a call from the folks at Microsoft
offering $31 a share, or $44.6 billion total, to take over the company?
You don’t suppose, perhaps, that they gave the only conceivable, logical
answer, which would be, “Yes! Oh God Yes! Oh God Thank You
Microsoft!!!!!!! Oh Dear Sweet Jesus In Heaven, Where Do I Sign?”
course they didn’t say that. That would be logical. That would make
sense. That’s not the Yahoo! way of doing things.
They told Microsoft they’d think about it and get back to them.
Now, you may be thinking, “D.F., you moron. You’re in business. You know
how this works. This is a negotiating tactic. They’re not going to
really say no. They couldn’t possibly be that stupid.”
would agree with you that even the yahoos! at Yahoo! couldn’t possibly
be that stupid, except that they already have been that stupid.
Microsoft offered to buy Yahoo a year ago, but then-CEO Terry Semel said
Yahoo would be better off on its own. The Yahoo board rewarded Semel for
that and many similar decisions by sending him off to Yahoo! Help Wanted
Ads to look for a new job.
Now Microsoft is back, this time offering a 62 percent premium over the
previous day’s closing stock price because, Microsoft CEO Steve Ballmer
says, he is not going to take no for an answer.
understand it is hard for Yahoo to know what to do. It’s not like it’s
obvious or anything. So let me help. The following dialogue from
“Ghostbusters” should be instructive:
Gozer (after Dr. Ray Stantz orders her to relocate): Are you
Ray Stantz: No.
Gozer: Then die!
(At this point, lightning flies from Gozer’s fingers and
nearly drives the Ghostbusters off the roof of the high-rise where they
Winston Zeddemore: Ray, when someone asks you if you’re a
god, you say yes!
I’m sure you’re picking up what I’m metaphorically putting down. When
your company is in a complete tailspin, and some gigantic company with
resources up the wazoo (or, if you prefer, Wazoo!) offers you your stock
value plus 62 percent to take it off your hands . . . you say yes!
Yahoo offers a great service. I use it every day. But it’s apparently
not great enough to be profitable on its own. The best thing about it –
the fact that it’s free – is also its biggest problem. Its best chance
at long-term viability is to add to the capabilities of a larger company
with complimentary products and services.
Yahoo can take the money and turn things over to the people who can
hardly breathe without making a profit. Or they can continue spiraling
into bankruptcy. I know. It doesn’t sound hard to me either. But then,
I’ve never stood atop a high-rise battling a prehistoric Sumerian god.
Maybe those who have know something I don’t. But I doubt it.
Yahoo! You say yes!
© 2008 North Star
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