Last post for a while on this, unless news breaks, but something just for fun: Let’s say you’re advising Jerry Yang and the Yahoo board, and they don’t want to do the deal. What would you advise them to do?
Anything about value-creation, 100-day plans, and strategic arm-waving won’t fly. That sort of thing will have shareholders at your metaphorical door carrying pitchforks and waving lawsuits. Killing the deal requires immediate action, not fuzzy happy-talk about Yahoo’s inimitable wonderfulness. Even big layoffs wouldn’t likely do it, as it would be seen as a scorched-earth strategy intended to break the company, not fix it.
So if you wanted to kill the Microsoft deal, what would it take? In a word, Google.
Your recommendation to Yahoo would be that its single and best option is to immediately cut a deal with Google to outsource Yahoo’s floundering search platform. Yahoo would maintain content, community, etc., and all search would go to erstwhile competitor Google. Given higher and better monetization, and reduced costs on search engineering, the hypothetical anti-Microsoft deal would likely be a 15-25% bump to Yahoo’s value. Granted, it doesn’t create as much short-term value as Microsoft’s outsized bid, but it is coherent, timely, and constructive.
Ironic, huh? Yahoo needs Google to save it from Microsoft to save it from Google. It’s about as convoluted as last night’s Lost season premiere, but it does make its own sense.