Well, there is no surprise here. When Ballmer stated that he expected Microsoft to generate 30% of its revenue from advertising within the next few years, it was clear that this goal could not be achieved without an acquisition of a large online ad player.
The deal makes sense for all the reasons that have been mentionned since the announcement: a solid number 2 against Google, larger scale, complementary assets...
More interesting to me are two topics that have not be discussed much: the Yahoo brand and Jerry Yang.
Yahoo has a much stronger brand equity than Microsoft or MSN among consumers. Yahoo stands for the web, for an early digital leader; it is the default home page for millions of users... while it has lost a bit of its appeal over the past few years due to Google extraordinary growth, the Yahoo brand remains one of the top digital brands in a world that is increasingly digital. My hope is that should the deal go through, Microsoft would 1) keep the brand and 2) invest in it.
The other thought that crossed my mind is Jerry Yang's state of mind. Was Microsoft offer all what he was waiting for when he decided to come back... was the strategy to "dress up the bride" to ensure a sale of the company he founded at a "reasonable" price? or did he come back because he loves his company and believes deeply that he can turn it around... if that is the case, what is Jerry's state of mind?
I believe Jerry deeply loves his company and believes that it can be turned around... i can't wait to see how he personally reacts to Microsoft unsolicited offer.
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