The Hindu Business Line : Microsoft’s offer to buy Yahoo

Microsoft’s proposed buyout will redefine the dynamics of the global Internet space. Both MS and Yahoo can gain from the tech synergies and huge cost savings. At a time when MS is unable to make any perceptible market penetration with its Windows Live, this will provide an opportunity for MS to protect its Office Suite business in the long run with Yahoo’s online engineering expertise.

Google’s free offer of word processing and spreadsheet services on the Net is bound to increasingly eat into MS’ pie. Now, MS can expand in terms of subscriber numbers for e-mail messenger and other related services in the online world. This will also help MS reach small businesses addressed at present by Yahoo. Data centre business in both the entities can offer opportunities to save costs and MS envisages an annual saving of $1 billion.

MS’ bid has come at a time when Google has raced ahead of the competition in the ad-services-rich business while Yahoo is in doldrums with lay-off plans. MS’ unsolicited offer of $31 a Yahoo share represents a 62 per cent premium, causing an electric effect in the stock market. Yahoo’s share price rose by almost 50 per cent from its four-year low price. Yahoo presented a grim tale of losing 30 per cent of its share value last year, even as Google’s shares have been gaining. The merger providing 30 per cent of the total US market share will result in a potent competition for Google.

The proposed merger provides a base for pursuing both profit and growth simultaneously, signalling a prosperous and stimulating growth. In India, the acquisition will create, among other things, additional revenue streams. Both MS and Yahoo have a significant presence in the country and will continue to play a dominant role along with Google, enhancing the country’s user base and Net experience.

The merger plan is a bold act and will probably not attract anti-trust suits especially in Europe where public holdings are judged with an eagle’s eye. Google also stands in the same position because it has consolidated its dominance through acquisition. Let us await the outcome in the battle of wits.

*T. S. Sundareswaran, New Delhi

Microsoft’s bid for Yahoo is another attempt by the Seattle giant to wrest the lucrative search market from Google. Microsoft, in recent times, has become more vulnerable as increasingly more people access services and programmes online instead of acquiring packaged software applications.

Given this scenario, Microsoft needs to substantially increase its Internet audience and, thereby, online ad revenue to cross subsidise the free services on the Net. At the same time, Yahoo is under pressure to accept the merger proposal given that its revenue numbers have been none too healthy of late. The beating taken at the hands of an unkind stock market hasn’t helped either.

It remains to be seen if Microsoft’s technological expertise will blend well with Yahoo’s uncanny ability to attract people to its site. Considering the size of the deal, it is hoped that Gates has done his homework and is not bowled by a googly!

R. Vishvesh, Mumbai

Microsoft’s offer of $44.6 billion to acquire Yahoo has not come as a surprise to those watching the performance of the two Internet firms after the launch of the Google, the giant in the portal of Internet Service Providers (ISP).

Within a short span, Google has become the No. 1 search engine. Though Microsoft and Yahoo offer free e-mail service, people have switched over to Google as it offers unlimited space. This and other aspects have made Google the most sought-after Web browser and online and e-mail service provider. This has resulted in a big jump in its advertisement revenue.

In this context, Microsoft’s efforts to acquire Yahoo is inevitable and it has always wanted to be a dominant player in the field. The acquisition should help Netizens enjoy better service in terms of more advanced versions of Web browsing, and so on.

S. Nallasivan, Tirunelveli

It is a bold gamble on the part of Microsoft to buy Yahoo. In case the deal comes through, it will create one more monopoly. But the end-users will stand to benefit, as the competition will be intense, with both MS-Yahoo and Google trying to outdo each other.

Krithivasan, e-mail

The Yahoo portal is familiar to most Internet browsers around the globe. The hard work put up by Yahoo family is being tested with a hefty offer — three times than that of the current market price. The whole world is eager to know the reaction of the Yahoo family. Considering the present global trend, the deal is likely to conclude with a few compromises.

R. Swaminathan, Coimbatore

More Stories on : Mergers & Acquisitions | Sticklish Issues | ISPs

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