This weekend, WWE behemoth Brock Lesnar stepped into the octagon for his UFC debut. He was defeated by former UFC heavyweight champion Frank Mir, who inspite being repeatedly pounded by the much stronger former WWE superstar, managed to lock in a kneebar and submitted Lesnar. In an even bigger upset Eli Manning leads the NY Giants to victory against an undefeated New England Patriots to capture the Superbowl 42 crown, in a heart stopping 17 - 14 game. Much of the internet however was watching another batch of giants and behemoths in a different kind of struggle.
It started out very early Saturday morning, (Friday EST) Microsoft made a bid for Yahoo to the tune of $44.6 billion dollars! The unsolicited bid, which would consist of cash and Microsoft stock, valued Yahoo at $31 a share, a 62% premium on Thursday’s closing price. As expected, Yahoo has not agreed to Microsoft’s proposal. Yet. Michael Arrington boldly states that for the most part, it’s really just a matter of time.
But the fact is, a perfect storm of factors is going to lead to a Microsoft takeover of Yahoo in the very near future, perhaps without any price increase over the original offer. The debt crisis means raising meaningful amounts of debt to leverage the transaction is impossible (the largest debt financed transactions in the recent past were in the $4 billion range, not nearly enough to do this deal). And Yahoo continues to spiral downward financially, making potential buyers leery of buying a dog. The fact is, the deal makes sense for Microsoft. It may not make sense for anyone else.
Many speculate quite logically that the move is Microsoft’s attempt to challenge Google’s dominance in the web. As local blogging juggernaut Yuga opines:
This seemingly hostile takeover by Microsoft is a reaction to Google’s dominance in the search market. It is already losing in the online advertising space with a $245 million loss despite an overall profit increase of 79%. Buying Yahoo can bring back life to that division and even help it save some. Since the Redmond giant has tons of spare change (about 40+ Billion in gross revenues in the last fiscal year), it can afford to take up Yahoo at a premium. And for very good reason.
Simply put, Microsoft acquiring Yahoo allows them to better compete with Google. And while I am no big fan of Microsoft, I’m all for this kind of healthy competition. I will go out on a limb and say that this will invariably benefit the lot of us. From a blogger’s perspective for instance, I can see how this can push Google to make improvements in their Adsense programs, like a better UI and more importantly, a bigger slice of the pay per click pie. We can also expect a merged Microsoft and Yahoo to be aggresive in this front. What else are they going to do with aQuantive, an ad network that Microsoft acquired last year? In these clash of giants, us bloggers may just end up to be the big winners.
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Hi! Welcome to Blog Soup! My name is Peter Juan, better known around the web as Adam Mordo, co-founder and part owner of the moderately infamous Man Blog.
While most of my writing there and on my personal blog would best be described as internet dickery, I do in fact have a somber, less ridiculous side. I just haven't let it out much. No. I honestly do not know why.
Truth be told, I take blogging quite seriously. In fact, I'm the product manager of I.PH blogs. Which is awesome because I actually love what I do for a living.
Blog Soup is where I throw in all sorts of stuff about blogs and the blogosphere, simmered with my own opinion, and sprinkled with a dash of absurdity, to cook up an informative and entertaining read. Soups on!
