MSFT and Yahoo: Nom nom nom

Kara Swisher at All Things Digital always gives me grief when I do this, but I’m going to do it anyway: Namely, point to a rumour — in this case, a rumour in the Times of London about Microsoft making some kind of convoluted deal to proceed with what amounts to a creeping takeover of Yahoo (Update: Kara says that sources tell her it is “total fiction”). According to the report, the deal would involve Ross Levinsohn (formerly of Fox Interactive Media) and Jonathan Miller (formerly of Yahoo) raising $5-billion and Microsoft putting in another $5-billion, and the two groups acquiring a 30-per-cent stake in the troubled Web giant, which Levinsohn and Miller would run. Microsoft would manage the search business and would have a call option on buying the whole enchilada for $20-billion.

MG Siegler at VentureBeat says he ran this report by Levinsohn, who said he had no idea what the paper was talking about. Which would normally put such a rumour to rest pretty quickly, except for a couple of things: The first is that this is a pretty detailed story in the Times of London, a paper not known for running off at the mouth with crazy rumours. If it had appeared in the Daily Mail or the Inquirer or something like that, then I would be dubious. But this particular report has plenty of detail, although there are no sources given (just the usual oblique phrase “it is thought”).

The second reason for believing something might be up, even if it’s not this specific deal, is the simple fact that Microsoft desperately wants Yahoo’s search business, and Yahoo just as desperately wants to dance with the giant software company somehow. Although Steve Ballmer keeps saying he isn’t interested in Yahoo, a lot of that could be designed to push the stock price down and make it easier to acquire the whole company — and even when he tries to put the kibosh on a takeover, he has left the door open for a search deal. The Levinsohn-Miller arrangement seems overly complicated to me, but it’s not hard to believe that something is up.

12 thoughts on “MSFT and Yahoo: Nom nom nom

  1. Although as you note there are probably deals in discussions now, but I think this rumor is both bogus and very interesting because this is a major, reputable paper that will create market movement if this is not flatly denied. If this is *false* one has to wonder if this is a stock manipulation attempt or perhaps just a reporter a bit to anxious for the big headline.

  2. No offence to Kara Swisher but last time she said Jerry was staying. That turned out to be untrue. I just hope that MS buys all of Yahoo and not just search. Buting just search is going after Google. It will fail. Buying all of Yahoo will give them a real brand that they can focus all their live and msn activities into. Plus Yahoo has a bunch of great web 2.0 services that rock. I've posted about this earlier today

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  6. I'm gonna second that, Matthew. I hear rumblings from folks who should know about some sort of bastardized Yahoo/Facebook/Myspace frankenmerger, swirling around this week. Something's definitely in play — and Icann is buying up Yahoo.

    Facebook could do right by the ad platform (Overture) that Yahoo has built. Maybe the Three Gorillas will be Microsoft, Google, and Facemyhoo. Strange times call for strange measures.

  7. “If it had appeared in the Daily Mail or the Inquirer or something like that, then I would be dubious.”

    Ouch!! The Daily Mail is a pretty horrible newspaper, but I don't think they're known for poorly-sourced tech. stories. Fear-mongering about immigrants, single mothers and gays is more their line.

  8. I make my living off of MSFT products and use them extensively (.NET development). I am not afraid to be the first to criticize nor the first to praise even if it's not cool among my techie friends to defend them.

    Microsoft needs to get it together. It needs to understand what it wants to be. It's like it's having a midlife crisis trying ot figure out what's next or “is this my life?” I think it needs some new meat gunning the ship, one who gets the web and where things are moving. They keep changing their name, putting out shoddy products that push even loyal users slowly away, and are all over the map. They have divisions that overlap work and don't even talk to each other. Way too many meetings, way too little QA, way too little user acceptance. Just b/c they put out some funny commericals on Vista doesn't mean that Vista doesn't give me all sorts of headaches.

    Capturing yahoo is either going to make both of them irrelevant eventually by mucking it up, or if they could figure out how to use the best from both, get a consistent name branding thing going on, fix the flaws, then they can win.

  9. I make my living off of MSFT products and use them extensively (.NET development). I am not afraid to be the first to criticize nor the first to praise even if it's not cool among my techie friends to defend them.

    Microsoft needs to get it together. It needs to understand what it wants to be. It's like it's having a midlife crisis trying ot figure out what's next or “is this my life?” I think it needs some new meat gunning the ship, one who gets the web and where things are moving. They keep changing their name, putting out shoddy products that push even loyal users slowly away, and are all over the map. They have divisions that overlap work and don't even talk to each other. Way too many meetings, way too little QA, way too little user acceptance. Just b/c they put out some funny commericals on Vista doesn't mean that Vista doesn't give me all sorts of headaches.

    Capturing yahoo is either going to make both of them irrelevant eventually by mucking it up, or if they could figure out how to use the best from both, get a consistent name branding thing going on, fix the flaws, then they can win.

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