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Strategic distraction

In a recurring example of an apparent corporate committment to be/become #1 or a major #2 competitor in each of the markets it enters, Microsoft has repeatedly been distracted by a willingness to expend huge amounts of cash to purchase either Yahoo in its entirety, or to effect a more modest and slimmed down purchase of the Yahoo search property. The latest word of that eagerness appears in The New York Times of May 28, 2009 article headlining, "Yahoo Still Open to Microsoft Deal at Right Price." One of Wikinvest's contributors, David Turetsky ("richSOB"), posted this comment on The New York Times web site summarizing the issue:

"I thought Steve Ballmer had it right when he reflected that Microsoft had “moved on” from doing a deal with Yahoo

And Carol Bartz, Yahoo’s new CEO, certainly has it right when she teases about the possibility of a sale in those new units of U.S. currency, “boatloads” and “big boatloads”

I can understand why Yahoo would strategically welcome such a transfusion of cash in a slowing economy whose worse days may still lie ahead and whose best days of technological leadership are behind it. For Microsoft, a deal has the allure of a quick fix for its market share in search, but over time that hefty purchase price will make less and less sense as Microsoft must continue to invest in digesting the purchase, updating the technology, all the while suffering the inevitable erosion of the combined customer base

That critical mass may well turn out to be an expensive illusion and a huge strategic distraction

Why not instead consider the purchase of The New York Times?"

Separately, in the same edition of The New York Times, "Bloodied by Google, Microsoft Tries Again on Search," Mr. Ballmer is cited as "no longer interested in buying Yahoo but still hopes the two companies will find a way to team up to take on Google in search, and talks on a partnership are continuing." The article describes a newly enhanced search engine, newly labeled "Bing," soon available at www.bing.com, which attempts to go beyond the capabilities of current search engines and which would seem to represent a more promising investment of resources

It should also be noted that the Times article expressing a continuing interest in a sale by Yahoo may represent Yahoo's perspective and not be indicative of any current purchase interest by Microsoft

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