The news has been full of stories about the withdrawal of Microsoft’s attempt to buy Yahoo. Now that a couple of days have passed and the initial shockwave is dying down, it’s time to begin an assessment of whatever implications there are. For one thing, Yahoo’s stock price will take a hit. Some Yahoo shareholders will almost surely sue. But what long-term results might there be? Was Ballmer’s walk wise or not? Analysis is all over the place. Some say that Ballmer pulled back from a bad decision. For example, long-time Microsoft observer Mary Jo Foley writes:
Some — probably many — are going to portray Microsoft’s decision announced on May 3 to withdraw its Yahoo bid as a victory for Yahoo and a defeat for Microsoft Chairman Steve Ballmer & Co. Me? I see this as the smartest thing Microsoft could do.
On the other hand search engine specialist Danny Sullivan says:
If Microsoft’s walkaway from the Yahoo deal is indeed a ploy to save $5 billion, Microsoft CEO Steve Ballmer may have proven himself pennywise and pound foolish. He was prepared to spend billions to finally make Microsoft a serious rival to Google. For a bit more, he may have destroyed Microsoft’s chance to get there.
Others say that Ballmer is making a bargaining ploy and that after Yahoo’s stock goes down, he’ll be back with a less generous offer. Meantime, Ballmer’s letter to Yahoo withdrawing the offer is being parsed, dissected, and interpreted by numerous commentators. Whatever develops. neither Ballmer nor Jerry Yang of Yahoo can be proud of the way they have handled the situation. Yang, in particular, is likely to come under heavy attack from disgruntled stock owners.
So, what’s Microsoft’s path now? Steve Lohr at the New York Times writes:
Steven A. Ballmer, Microsoft’s chief executive, walked away from a Yahoo deal on Saturday still looking for an answer to his company’s fundamental problem: its time-tested recipe for success isn’t working against Google, the leader in the current wave of Internet computing.
With a bid for Yahoo, Microsoft was trying to buy its way out of the problem. It was a controversial step and a gamble, but at least it was a big move. Now, there is no clear prospect of a quick fix for Microsoft, as the center of gravity in computing continues to move away from the personal computer, Microsoft’s stronghold, and to the Internet.