01 February 2008


Busted Toledo2
Originally uploaded by csquard

Microsoft's bid for Yahoo shows how far afield Microsoft realizes they are as well as the continued struggles of Yahoo. Is this a good idea, and will it work?

First, let's look at the latter. The cultures of Microsoft and Yahoo will be quite difficult to mesh, as Microsoft executives seem to struggle to get away from the illness of Not-Invented-Here along with other challenges that Microsoft struggles with.

It has been almost eight years since I was at Microsoft's headquarters. These were in the heady days of the internet, when everyone was an expert in everything. I was struck by the sluggishness of the newly wealthy managers there, the youth of the senior executives there, the dynamics of the industry. The entire internet industry was filled with arrogance combined with lack of experience, a deadly cocktail that ultimately cratered many firms.

The combination of Microsoft and Yahoo will be quite the struggle, but is it a good idea? It's hard to imagine how the combined firm can create value rather than destroy shareholder value, but maybe I'm wrong. Will this be an AOL/TimeWarner merger, a Daimler/Chrysler takeover? It will be interesting to see how the combined force can some transform themselves into a lean, nimble company or collection of firms who can leap from Google. We'll see.

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