Why does Microsoft want Yahoo?

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Ed Felten’s been thinking about the question. Here’s his analysis:

Last week Microsoft offered to buy Yahoo at a big premium over Yahoo’s current stock price; and Google complained vehemently that Microsoft’s purchase of Yahoo would reduce competition. There’s been tons of commentary about this. Here’s mine.

The first question to ask is why Microsoft made such a high offer for Yahoo. One possibility is that Microsoft thinks the market had drastically undervalued Yahoo, making it a good investment even at a big markup. This seems unlikely.

A more plausible theory is that Microsoft thinks Yahoo is a lot more valuable when combined with Microsoft than it would be on its own. Why might this be? There are two plausible theories.

The synergy theory says that combining Yahoo’s businesses with Microsoft’s businesses creates lots of extra value, that is that the whole is much more profitable than the parts would be separately.

The market structure theory says that Microsoft benefits from Yahoo’s presence in the market (as a counterweight to Google), that Microsoft worried that Yahoo’s market position was starting to slip, so Microsoft acted to prop up Yahoo by giving Yahoo credible access to capital and strong management. In this theory, Microsoft cares less (or not at all) about actually combining the businesses, and wants mostly to keep Google from capturing Yahoo’s market share.

My guess is that both theories have some merit — that Microsoft’s offer is both offensive (seeking synergies) and defensive (maintaining market structure).

What — no comments?

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I sometimes get emails from readers which begin, with a reproachful air, “Since you don’t allow comments on your blog I’m emailing…”. Which is fine by me. But a post on James Cridland’s blog made me stop and think: why no comments here?

Three main reasons. The first is time, shortage of. I’m busy enough as it is. If people took the trouble to comment, then I would feel obliged to reply properly to what they wrote. As a result, blogging would take up more time, and I would do less of it. That doesn’t mean, incidentally, that I don’t admire bloggers like Quentin or Ed Felten, who do allow comments and invariably respond fully and thoughtfully. I just wish I had their capacity for hard work.

Secondly, although it’s nice to have readers (and I have no idea how many there are, because I’ve never done any kind of tracking) and I’m glad that people find this stuff worth reading and linking to, fundamentally I keep a blog for myself. I started blogging in 1998, and for the first three years or so, my blog was private. It was a personal notebook in which I kept stuff that I thought was noteworthy or useful. Because it had a search engine, it meant I could always cheat my poor memory by retrieving stuff instantly. (This, incidentally, is what started Tim Berners-Lee on the path that led to the invention of the Web.) I knew that if I had blogged about something I would always be able to find it again. This philosophy survived the switch to public blogging which took place, I think, sometime after 9/11. It’s just now that my personal notebook is publicly available to anyone who wants it.

Thirdly, one reason I took to blogging was because of Dave Winer, someone I’ve always admired, and whose Userland software I used for years. Following a link from James Cridland, I alighted on Dave’s argument about why a commenting facility is not a sine qua non for a blog. Here’s the relevant passage:

Do comments make it a blog? Do the lack of comments make it not a blog? Well actually, my opinion is different from many, but it still is my opinion that it does not follow that a blog must have comments, in fact, to the extent that comments interfere with the natural expression of the unedited voice of an individual, comments may act to make something not a blog.

We already had mail lists before we had blogs. The whole notion that blogs should evolve to become mail lists seems to waste the blogs. Comments are very much mail-list-like things. A few voices can drown out all others. The cool thing about blogs is that while they may be quiet, and it may be hard to find what you’re looking for, at least you can say what you think without being shouted down. This makes it possible for unpopular ideas to be expressed. And if you know history, the most important ideas often are the unpopular ones.

Me, I like diversity of opinion. I learn from the extremes. You think evolution is a liberal plot? Okay, I disagree, but I think you should have the right to say it, and further you should have a place to say it. You think global warming is a lie? Speak your mind brother. You thought the war in Iraq was a bad idea? Thank god you had a place you could say that. That’s what’s important about blogs, not that people can comment on your ideas. As long as they can start their own blog, there will be no shortage of places to comment. What there is always a shortage of, however, is courage to say the exceptional thing, to be an individual, to stand up for your beliefs, even if they aren’t popular.

The advent (and exponential growth) of comment spam confirms the wisdom of being chary of allowing comments. I’m responsible for a couple of other blogs which do allow them, and one of my daily chores is weeding out the fake comments by pornographers and other online hoodlums which have got past the filter. Life’s too short for this.

Tulip mania (contd.)

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My excuse: I wanted to see how my old 85 mm manual AI Nikkor lens worked with the D200. Conclusion: pretty well (though of course now its equivalent focal length is 85 x 1.5 = 127.5 mm).

Turkey flights

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This morning’s Observer column…

It’s the metaphors and similes that get me. It’s a shotgun marriage, declared one commentator, ‘with Google holding the gun’. Putting Microsoft and Yahoo together, said another, was like trying to produce an eagle from an alliance of two turkeys. This is unfair. Microsoft isn’t a turkey, but a profitable, boring mastodon that entertains fantasies about being able to fly. Yahoo, for its part, is an ageing hippy who invented hang- gliding but aspired to fly 747s and then discovered that he wasn’t very good at it. The mastodon hopes that by employing the hippy it will learn to hang-glide. The hippy’s feelings about the whole deal are plain for all to see…Update: The NYT (and lots of other sources) claim that the Yahoo board has decided to reject the Microsoft bid, on the grounds that it undervalues the company. Ho! If this is true then what’s likely to happen is that (a) some big Yahoo shareholders will revolt and (b) Microsoft will wage a proxy war with the aim of eplacing the Yahoo board at the next AGM. This one will run and, er, ruin. There are also ways you can get to buy ar-15’s from Palmetto State Armory where you can make sure you are safe and also get the right equipment.

Why bird-watching is still popular with aeronautical engineers

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“A Blackbird jet flying nearly 2,000 miles per hour covers 32 body lengths per second. But a common pigeon flying at 50 miles per hour covers 75.

The roll rate of the aerobatic A-4 Skyhawk plane is about 720 degrees per second. The roll rate of a barn swallow exceeds 5,000 degrees per second.

Select military aircraft can withstand gravitational forces of 8-10 G. Many birds routinely experience positive G-forces greater than 10 G and up to 14 G.”

From a report on research at the University of Michigan.

Asleep at the Wheel

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Om Malik is not impressed by the way the Yahoo Board has dealt so far with the Microsoft bid.

What has taken them so long? Nearly a week has passed since Yahoo received an unsolicited offer of $44.5 billion from Microsoft.

Since then everyone — including Google — has had his or her say on the deal. The only group that has been silent on the topic – Yahoo’s board of directors -– is the one that really matters. Reuters is running a long piece on Yahoo’s board and its role in this merger. It is a bit of PR puffery; it tries to position the board as key players in the deal, and notes how they need to deliberate everything in order to get it right.

Malik believes that the Microsoft offer is a great deal (in financial terms) and I agree with that. Nobody in their right mind wold pay a premium for Yahoo in its present state. So he thinks the Board should just bite the bullet and take the cash.

While it is easy to blame the management, Yahoo’s board of directors can’t duck the blame. It was on their watch that a culture of mediocrity enveloped this once-iconic company. The board, instead of being proactive, sat idly by as the company lost its direction, focus and eventually, its market leadership.

If Wall Street and the media were aware of Terry Semel’s rumored lack of interest in the job, why wasn’t the board aware of it? Instead they decided to reward him with $71 million, much to the chagrin of the investors, before showing him the door. As one talented executive (and engineer) after another left the company, looking to go chase opportunities at either Google or with other Silicon Valley startups, what, exactly, was Yahoo’s board doing?

Where was the board when the company was making one strategic blunder after another -– losing its technology focus and instead chasing the ephemeral opportunities in la-la land? Where were they when politics and bureaucracy started to eat at Yahoo’s insides?

Whatever spin you might read in the news media about Yahoo’s board, simply put, they have failed in their duties.

Good stuff. I see an intriguing parallel between what happened to Yahoo and what happened to Apple after Steve Jobs was fired. Terry Semel plays the role of John Sculley in that analogy. The problem is that there was no Steve Jobs to return to turn Yahoo away from its corporate torpor. And, in any event, there’s less of a possibility of a charismatic individual being able to do that in a non-hardware company anyway.

Flip-flop and out

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Michael Tomasky sums up the ludicrous Mitt Romney, now departed.

Romney is proof that elections aren’t only about ideological openings. His problem was that he just wasn’t a persuasive person. Everything about him and his campaign seemed a little insincere. He was a liberal Republican in the 1990s, and now he’s a straight down the line wingnut. Early in the campaign he was about leadership, or something. Then, when he saw that Barack Obama was catching on with this “change” thing, suddenly he was about change. Then, when that didn’t quite take, he was about fixing Washington. There was a most recent fourth iteration that I’ve wiped from my memory.

So he was kind of a fake all along, and apparently not just to this liberal. I always thought that he was hurt very badly by his lame answer last year when he was asked by a citizen (an anti-war activist of some kind) why, if he was so gung-ho about the Iraq war and war in general, not one of his five sons – all draft age – had volunteered to serve in the armed forces. He replied in part that “one of the ways my sons are showing support for our nation is helping me get elected because they think I’d be a great president.” I should think that equating the willingness to get a paper burn stuffing envelopes with the willingness to be blown to bits halfway around the world was a bit much especially for conservatives.

So off he goes. He is not of great interest, and I have trouble imagining we’ll have to worry about him again in four years or eight.

Laws of the land

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“Dr Rowan Williams’ interview with the BBC’s World at One, in which he called for greater public recognition of some aspects of sharia law, is entirely characteristic. It is the product of deep thought; reasonable, thought-provoking, and in parts quite astonishingly silly.”

Andrew Brown, commenting on the Archbishop of Canterbury (or, as John Lennon styled him, the Archprick of Canterbubble).

See also Steve Bell