Yahoo says Microsoft offer undervalues company

Yahoo rejected on Monday Microsoft's US$44.6 billion cash-and-stock offer on Monday, saying the unsolicited proposal substantially undervalues the company.

If Microsoft acquired Yahoo, it would face the perils and traps of integrating its Internet business with Yahoo, which has 14,000 employees and enough internal problems of its own. The integration process could be long and painful, slowing down both companies while Google speeds further ahead. Eliminating redundancies at the staff, technology and product levels would be a major undertaking.

At the product level, Microsoft and Yahoo have many overlaps in areas like Webmail, instant messaging, advertiser services, portals, content sites, mobile services, online media properties and international properties -- most, if not all, based on different technology platforms that would have to be merged. Then there are the long lists of partnerships and customer engagements that they would have to work through and sync up.

Beyond the inherent challenges in fusing its Internet operations with Yahoo, the bid also prompted swift condemnation from privacy advocates in the U.S., like the Center for Digital Democracy (CDD) and the Electronic Privacy Information Center (EPIC). These organizations argue that a combined Microsoft-Yahoo would have too much power over online journalism, entertainment, advertising and other forms of communications, as well as consumers' data.

Microsoft Monday did not immediately issue a reaction to the Yahoo statement. However, it said when making its offer that it is convinced that the time to make a move is now, when it still sees considerable growth for online advertising on the horizon. Microsoft expects the market for online advertising to almost double in size over the next three years, from US$40 billion in 2007 to US$80 billion by 2010.

With Yahoo, Microsoft is confident it can supercharge its research-and-development efforts, boost its data center infrastructure and gain a heavy influx of engineering and business talent. Microsoft also see cost reductions at the tune of about US$1 billion a year by generating "economies of scale" with a Yahoo fusion.

The merger plan would be drafted jointly by both companies and Microsoft will be aggressive with compensation offers to retain key Yahoo engineers and other staff, Microsoft has said.

While it never characterized the offer as hostile, Yahoo did describe it as unsolicited and didn't embrace it, remaining civil but noncommittal about its options, saying that it would review the offer and make the best decision for the company, its shareholders, customers and employees.

Possibly guessing that Yahoo's management would rather keep the company independent, Google promptly swooped in and blasted the Microsoft proposal, saying it raised "troubling questions" such as whether Microsoft would attempt to replicate its "inappropriate and illegal influence over the Internet that it did with the PC. Google also reportedly entered into discussions with Yahoo over possible partnerships that would allow Yahoo to justify rejecting the offer.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Jack Jeffries

MSI GS75

As the Maserati or BMW of laptops, it would fit perfectly in the hands of a professional needing firepower under the hood, sophistication and class on the surface, and gaming prowess (sports mode if you will) in between.

Taylor Carr

MSI PS63

The MSI PS63 is an amazing laptop and I would definitely consider buying one in the future.

Christopher Low

Brother RJ-4230B

This small mobile printer is exactly what I need for invoicing and other jobs such as sending fellow tradesman details or step-by-step instructions that I can easily print off from my phone or the Web.

Aysha Strobbe

Microsoft Office 365/HP Spectre x360

Microsoft Office continues to make a student’s life that little bit easier by offering reliable, easy to use, time-saving functionality, while continuing to develop new features that further enhance what is already a formidable collection of applications

Michael Hargreaves

Microsoft Office 365/Dell XPS 15 2-in-1

I’d recommend a Dell XPS 15 2-in-1 and the new Windows 10 to anyone who needs to get serious work done (before you kick back on your couch with your favourite Netflix show.)

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Featured Content

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?