Translating Steve's Letter to Jerry
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News Commentary. What would a letter from Microsoft CEO Steve Ballmer be without a little interpretation? |
His letter to Yahoo CEO Jerry Yang is a masterpiece of PR messaging. Microsoft really outdid Yahoo. What might Microsoft's CEO have expressed if only he could write freely? Here's my unwritten interpretation:
"After over three months, we have reached the conclusion of the process regarding a possible combination of Microsoft and Yahoo."
Translation: Jerry, are you out of your fracking mind?
"I first want to convey my personal thanks to you, your management team, and Yahoo!'s Board of Directors for your consideration of our proposal. I appreciate the time and attention all of you have given to this matter, and I especially appreciate the time that you have invested personally. I feel that our discussions this week have been particularly useful, providing me for the first time with real clarity on what is and is not possible."
Translation: You're a bunch of Charlie Brown blockheads. We talked and talked, but nothing got through those two-by-fours between your ears. I got clarity all right, about how stupid you really are and how much cheaper it will be to bulldoze you rather than flush away $33 per Yahoo share.
"I am disappointed that Yahoo has not moved towards accepting our offer. I first called you with our offer on January 31 because I believed that a combination of our two companies would have created real value for our respective shareholders and would have provided consumers, publishers, and advertisers with greater innovation and choice in the marketplace. Our decision to offer a 62 percent premium at that time reflected the strength of these convictions."
Translation: I made you an offer you couldn't refuse, you dimwitted snot. Haven't you ever played Risk? Players unite against the guy holding Australia—that would be Google—and wipe his pink turd pieces off the map.
"In our conversations this week, we conveyed our willingness to raise our offer to $33 per share, reflecting again our belief in this collective opportunity. This increase would have added approximately another $5 billion of value to your shareholders, compared to the current value of our initial offer. It also would have reflected a premium of over 70 percent compared to the price at which your stock closed on January 31. Yet it has proven insufficient, as your final position insisted on Microsoft paying yet another $5 billion or more, or at least another $4 per share above our $33 offer."
Translation: You stupid, greedy son of a bitch. Would you like my firstborn child, too? How about my vacation house, or the keys to the Microsoft executive suite? We've already got to borrow to buy you, and you won't meet us halfway between $10 billion more? Where did you study economics, the Game of Life?
"Also, after giving this week's conversations further thought, it is clear to me that it is not sensible for Microsoft to take our offer directly to your shareholders. This approach would necessarily involve a protracted proxy contest and eventually an exchange offer. Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo! undesirable as an acquisition for Microsoft."
Translation: We talked to your shareholders and know they're ready to burn you. So you want to do the burning first—a little scorched earth so that Yahoo is worth less. Jerry, I wanted to go hostile and let you destroy Yahoo so I could climb over the carcass and get to Google. But you've done enough damage to Yahoo over the last three months. Why bother?
"We regard with particular concern your apparent planning to respond to a 'hostile' bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo today. In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo! undesirable to us for a number of reasons."
Translation: We've been partners for years. Haven't you heard the saying about the devil you know being better than the one you don't? We would have salvaged something from the Yahoo wreckage and taken on Google. But, no, you'd rather sell your soul, your lucrative ad business, to Google. Jerry, I ask again: Are you out of your fracking mind?
"[The Google deal] would fundamentally undermine Yahoo's own strategy and long-term viability by encouraging advertisers to use Google as opposed to your Panama paid search system. This would also fragment your search advertising and display advertising strategies and the ecosystem surrounding them. This would undermine the reliance on your display advertising business to fuel future growth. Given this, it would impair Yahoo's ability to retain the talented engineers working on advertising systems that are important to our interest in a combination of our companies.
"In addition, [the Google deal] would raise a host of regulatory and legal problems that no acquirer, including Microsoft, would want to inherit. Among other things, this would consolidate market share with the already-dominant paid search provider in a manner that would reduce competition and choice in the marketplace."
Translation: Go ahead, smart boy, sell your soul to Google; the antichrist will come to dominate online search and advertising. Could you possibly be any more desperate, or stupid? Your talented engineers have already spoken to our recruiters. We're getting them anyway, with big fat raises and without spending 33 bucks a share buying Yahoo.
"This would also effectively enable Google to set the prices for key search terms on both their and your search platforms and, in the process, raise prices charged to advertisers on Yahoo. In addition to whatever resulting legal problems, this seems unwise from a business perspective unless in fact one simply wishes to use this as a vehicle to exit the paid search business in favor of Google. It could foreclose any chance of a combination with any other search provider that is not already relying on Google's search services."
Translation: Look, Jerry, we know a thing or two about monopoly pricing. Those Google nitwits will laugh all the way to the bank and howl about how much dumber you are than them. The legal stuff is just an excuse to cry to our buddies over at the Justice Department. We've got enough trouble in Europe, though and don't want any more, bud. Nice spoiler, lame brain.
"Accordingly, your apparent plan to pursue such an arrangement in the event of a proxy contest or exchange offer leads me to the firm decision not to pursue such a path. Instead, I hereby formally withdraw Microsoft's proposal to acquire Yahoo. We will move forward and will continue to innovate and grow our business at Microsoft with the talented team we have in place and potentially through strategic transactions with other business partners."
Translation: I'm done waiting, bozo. You blew your chance. No guts, no glory. But I learned something over the last three months: Yahoo is run by a bunch of wimps. Wimps are chimps, but you're no Monkey Boy, bud. The competition has started, and we've taken out our checkbook to buy whomever and whatever it takes to bulldoze Yahoo on our way to get Google.
"I still believe even today that our offer remains the only alternative put forward that provides your stockholders full and fair value for their shares. By failing to reach an agreement with us, you and your stockholders have left significant value on the table. But clearly a deal is not to be."
Translation: Your shareholders are going to read this letter and revolt. It's lynching time for you and your board. When the shareholders have finished you off, we'll be waiting to make a fair offer. How's 20 bucks a share?
"Thank you again for the time we have spent together discussing this."
Translation: Thanks for wasting three months of my time, Jerry. Google will take Yahoo's soul, and we'll get the body.
"Sincerely yours."
Translation: So long, you stupid son of a bitch.
Comments (10)
Ouch.
Did someone "enhance" your morning coffee with PCP?
This may be a naive question but why would Yahoo shareholders drive the company's value down through revolt and somesuch when it's clear that the best case scenario of that is a cheaper buy of their shares by MS..? (i don't know much about stockmarkets, so this may be a silly question)
Posted by whatever | May 5, 2008 1:54 AM
Joe,
I'm sure anxious to find out what made Yahoo a faster-moving, better-organized and more nimble company than it was just a few months ago! The value of such a thing, to transform an entire company and a LARGE one at that!(WOW!) What could it be? I think Ballmer knows.lol
VERY interesting quote by Yahoo's CEO Jerry Yang on February 14th:
Yang told stockholders the company is 'a faster-moving, better-organized, more nimble company than it was just a few months ago.'
http://biz.yahoo.com/bizj/080214/1590978.html?.v=1
Posted by I-Man | May 5, 2008 2:35 AM
And what did Jerry answer with his silence?
Do you think that I don't know that your friendly overtures are false?
Do you think that I don't realise of this hypocrisy?
You want to buy my child (Yahoo) to kill it and take its organs to put them in your ageing and dying body. I won't allow you to do it, because my child is the future (internet). But you lack a future.
I am an oriental and I know that revenge is a dish best eaten cold. And so, I will sit on my doorway to see your cadaver go by.
Posted by Marco | May 5, 2008 11:18 AM
Sleep more, post less that late Joe!
While I find your commentary interesting, you wmay have gone over the top here.
Of course we all know the first rule of "Pundit Law"...
Make it sensational so whether or not it has value is never questioned!
Having said that, you do a lot of good work and so I am not going to take you to task for a piece that made me laugh at the very least.
Strategically, this may have been a bad move for Yang on a personal level but you cannot question the potential for agility exists far more in Yahoo's model than it does in Microsoft's.
This would have been a huge culture clash and if the engineers are really migrating to MSFT then they did so to take the money and run not because they feel like they could turn the battleship.
I am far from anti-MSFT at this point but I am also realistic. MSFT is mired in a business model that cannot survive going forward and if anything they need to build the culture internally and nourish it to overcome the problem rather than try and graft in a company like Yahoo. This is not about engineers man, this is about culture. This is about vision. Pure and simple..
Microsoft needs to break these markets open itself and not rely on an acquisition of this magnitude to do it and they need to do it quickly before they collapse in on themselves.
They held on too long to the old way. I see glimmers of hope, internally, for them breaking out but if they do not fan those embers they will be in for a lot worse before it gets better...if it gets better. The anti-trust stuff is killing them imo though making it harder to really make the moves they need to make. Of course, they did that to themselves as well and so many have no pity and can never really see MSFT as the upstart or the underdog and they need that right now. They need to be viewed at least in some quadrant as the hungry competitor.
I hope they can pull it off because the ecosystem is healthier across the board when there are multiple valid competitors in key critical areas. I find it rather interesting that I am saying this with MSFT as the number two or three considering the past but such is life. At least it stays interesting!
Regards,
David O'Berry, CISSP-ISSAP, ISSMP, MCNE, CSPM
Director of Information Technology Systems and Services
The SC Dept. of Probation, Parole, and Pardon Services
Posted by David O'Berry | May 5, 2008 1:00 PM
You always seem to state the OBVIOUS...and also AFTER it has already happened. And youre shocked that the stock didnt plummet. Are you shocked that Microsoft didnt buy Yahoo??? For armchair analyst youre pretty blazee dude.
Posted by joe balmer | May 5, 2008 2:05 PM
Joe, I find your article quite on track. Obviously, I am no big fan of Microsoft, but who else could take on Yahoo? Google knows they could never get an acquisition to fly with Fed approval, and who else is there?
However, if Ballmer had left Yahoo alone, I can't help but believe they could have made it on their own. Or at least work in a friendly manner with Microsoft or AOL. But making this offer and then Yahoo dismissing it, could spell the end of Yahoo. They will be under huge stress to prove they did the right thing. And if they don't show results quickly, they could become irrelevant.
Advantage? Could it not be Google? I don't thing Microsoft can get the search/online thing going properly to compete well with Google. And with Yahoo possibly fading out, well Google just gets a bigger chunk of the business. It is too bad. I would like to see 3 major players instead of just 1.
Posted by Bob Maine | May 5, 2008 4:42 PM
It is amazing how few people seem to get the concept of parody any more. The point of this piece seems to have gone wizzing over the heads of David, Joe, and Whatever...
This is an attempt to read between the lines of the letter and get into the head of Mr. Ballmer (scary place that it may be)...this does NOT (correct me if I'm wrong, Joe) reflect Joe's personal beliefs on the deal, etc. If you had read any of Joe's previous posts on the Microsft/Yahoo! mating dance, you would know that.
So stop asking whether Joe's analysis is "right." Start asking whether Joe's analysis is an accurate respresntation of what Ballmer and Co. are probably thinking at this point. When finished, feel free to apologize to Joe W.
Posted by Mark Blafkin | May 8, 2008 12:46 PM
Thank you Mark.
Posted by Ann | May 8, 2008 1:47 PM
Nice! Politically incorrect - just the way things should be.
It would be so much better if we could actually speak this way. Maybe, just maybe, we'll do a better job of really getting the point across.
Hmm...maybe I can do the same:
"...MSFT is mired in a business model that cannot survive going forward and if anything they need to build the culture internally and nourish it to overcome the problem rather than try and graft in a company like Yahoo. This is not about engineers man, this is about culture. This is about vision. Pure and simple.."
---David
Translation: I want to be CEO of Microsoft. I have all the brains to do so. I know exactly what they should do. Step one: do as the dotcoms of the 90s, it's about vision dude, not products.
Sorry David, nothing personal, Microsoft is doing fine, across multiple product lines and markets. The ONE area they're not is online search...which, if one really thought about things, is the ONLY market/area that what the PERCEIVED winner of all things (Google) has (so far).
Yes, it's a big market, but think of it this way. Even MS, on a cold day in hell, can outsource it's online advertising to Google. They can concentrate on Windows, Office, Servers, Dynamics, Mesh, Visual Studio, .Net, etc., etc., and keep humming along. The reverse? Hmmm....
Neither of these entities will sit idly by, so it's definitely a great time as an end user to eat all of this new stuff up!
Posted by EdSF | May 8, 2008 3:53 PM
First of all, Joe is fine but he did go over the top with that post a bit considering the forum he was posting to and the analysis he has done in the past. Why would I apologize to him? My comments were appropriate and my opinion was voiced. I do not hide behind anon etc. and snipe. I get the in the head thing but there seemed to be a bit more personal feeling to what he was saying. He is entitled, you are entitled, and I am entitled.
Nice world we live in!
As far as the rest of this..
Sorry EdSF...nothing personal and with all due respect...
You set up several straw men in your passage and of course can knock those down appropriately. Lets try to look at what I was really saying.
1.) You are missing a huge shift if you believe that MSFT is currently poised to win over the new generation of computer users and therefore the companies that employ them. Huge...
2.) Stop acting as if my opinion was arrogance speaking. I do not pretend to "know" what goes on internal to their process at the moment but am more than able to see external trends and the sentiment that is more prevalent than in times past. To be clear, I also have no desire to be the CEO of MSFT and if you folks that get so defensive over it would look a bit deeper at the real culture situation, you would get what I am saying. This is not all totally on them though. The scrutiny they operate under was brought on by their business habits but it is seriously unfair at some points to have to deal with those types of eyeballs while trying to be nimble.
3.) MSFT clearly has good products in many areas (some not so great in some) and I am a consumer of said technologies. The issue is they, in many cases, are living off of what they did in the past. Period. They have missed the boat several times in their history but been able to recover. This time, they are not recovering the same way. I am telling you that they could be a secondary player at some point if they do not right this ship internally while figuring out how to get back in the game.
4.) Show me the mobile? Show me the Vista uptake? Show me the valid follow-on to Office Licensing? Show me the uptake of that initiative? Show me why they would need to go after Yahoo if they were so well positioned for the future? Instead, they got jilted, pushed aside, and smacked around in this situation by a company that surely should not have been able to do that.
If you will read more closely, you will get that to me MSFT should work organically here to compete. I think they can do it but it is getting late in the game for some of this to actually be able to be affected. Much like Dell did when Michael Dell came back, they need to refocus quickly and figure out how to get their mojo back. They won the market at one point with amazing products but the lock-in kinda made them lazy in some areas. They have started to right that in the past year or so and I am all for them continuing to do so. To me, the Yahoo thing was a distraction for the company and the cultures so different as to possibly have the capability to sink them both.
If any company in the world can pull this off, they can but stop sticking your head in the sand and thinking this is only about search. This is about the market finally finding its own voice and MSFT has to listen to that voice better than they did before this year.
Now..what else?
David O'Berry, CISSP-ISSAP, ISSMP, MCNE, CSPM
Director of Information Technology Systems and Services
The SC Dept. of Probation, Parole, and Pardon Services
Posted by David O'Berry | May 9, 2008 11:33 PM