I Was Right - Yahoo Was Stupid
- By Derek Vaughan on November 20, 2008
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FacebookFor those of you that follow such things, there was a hugely prescient blog post written here at TheWHIR in April. Here you can view the original post entitled, Why Yahoo Should Sell. Among the many other wise words included in this post were the following:
''The truth - though it hurts for Yahoo to hear it is this - they should immediately make a deal with Microsoft. If Yahoo is so certain that they are going to make a TON more money in the next three years, then they should make a deal that includes lots of Microsoft stock. That way, when the Yahoo piece of Microsoft outperforms, Microsoft stock will go up.''
So what was the deal that I was advocating at the time? Microsoft had offered to purchase Yahoo in a deal that was worth $38 billion (that's billion with a B). Yahoo turned the deal down. Then CEO, Jerry Yang, had said of the deal at the time, ''With the distraction of Microsoft's unsolicited proposal now behind us, we will be able to focus all of our energies on executing the most important transition in our history so that we can maximize our potential to the benefit of our shareholders, employees, partners and users.''
Okay Jerry. So what has transpired in the meantime? Yahoo's stock price has fallen to settle at a current company value of...drumroll please...$12.67 billion. So not listening to me has cost the company - wait, let me do the math: $38 billion - $13 billion = $25 billion. Wow - that was really stupid.
So now the financial cost has caught up with CEO, Jerry Yang - the man that most credit for the failed deal. Mr. Yang announced this week that he would step down as CEO of Yahoo. And so the man that popular investment television host Jim Cramer labeled a ''value wrecking ball'' will go. I contend that it's too late. Yahoo is essentially done. The value is gone. Microsoft has walked away - really.
This saga should act as a lesson for those of us fortunate enough to be working deals - of any size. Don't let the big buyer get away. You may never get another chance.
This content was written by Derek Vaughan exclusively for the Web Host Industry Review.
Derek Vaughan has been actively marketing on the Internet since 1995. His extensive online marketing experience includes the online direct marketing of books for $300 million per year NYSE traded book publisher Thomas Nelson. Mr. Vaughan also marketed products online at the Walt Disney Company as th... (Read full bio)
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Comment by Anonymous on Thursday, November 20, 2008
I think yahoo still has lots of users these days. They actually have more users than mozilla.
Regarding this post, I think some how you are right. A pity that they were not able to get the deal, in many cases things could go wrong, so maybe better luck next time. Microsoft is spreading so much that no one could stop them from doing so. They're just part of the progress these days.
Comment by Anonymous on Wednesday, November 26, 2008
I am a Yahoo user (mail, news, Flickr, del.icio.us). I was not a fan of the Microsoft bid. I thought it was a lot of money, sure. However, I felt Yahoo had a good product that needed to be managed well. I was expecting Yahoo to buy back most of its stock and go private. That did not happen. Jerry Yang mismanaged the company and let important people leave the company. The stock has tanked.
Microsoft will probably end up buying or parts of them for pennies on the dollar. So much for their open-source contributions. Zimbra we hardly knew you.
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