Microsoft drops Yahoo Bid – And the Game Begins

So finally the 3-month old story comes to an end.

Microsoft finally walks out of the deal (Steve Ballmer still screaming ‘developers developers developers!”)

If you look at the entire story (has it really ended?), I think it’s a classic move of negotiation play between two biggies :

  • MS goes public and offers to buy Yahoo,
  • Yahoo says not interested, price too less
  • MS says, No way! – We aren’t going to hike.
  • Yahoo plants google ads pilot tests for 3 weeks.
  • Microsoft threatens to replace the board with ‘it’s own’ friends
  • MS raises the bid, goes uptill $31
  • Yahoo sticks to it’s stand
  • MS calls it off.

While this may affect Yahoo’s shares in the interim, I strongly believe that now Y! needs to pull up it’s socks and deliver results.

Personally, I don’t think Y! + MS deal would have made sense – while it looks cool to have a desktop and web player marriage, the integration is a big challenge.

Disclaimer – I work for y!. Views expressed are entirely personal.

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