Yahoo’s Last Chapter

My wife (who, like me, used to work for Yahoo!) rolled her eyes this morning when I told her about the Microsoft offer. We used to excitedly hear rumors of this kind of thing every three to six months but they were only rumors. Now it’s the real deal, and I have to say, I’m excited (and not just because of the 48% bump in YHOO this morning on the news).

I think this is a good thing for both companies. It will be a good thing for most of the people within Yahoo! who are left after the two businesses combine, although one would be naive to think that a lot of people aren’t going to lose their jobs because of this. But we knew that there was going to be a big restructuring anyway; my sense is that the Microsoft-led post-acquisition restructuring may cut deeper but may wind up with a better, more focused organization in the long term. My guess is that the Jerry Yang restructuring was going to nip and tuck at underperforming sales and marketing people; I assume that the Steve Ballmer reorganization will take aim at underperforming managers, too.

I think there are things in each companies’ DNA that the other company lacks. Microsoft was always skittish about having a meaningful physical presence in Silicon Valley and they are utterly clueless about how to do consumer Internet; that could end here with the stroke of a pen. For its part, Yahoo always paid lip service to transforming itself into a platform but could never devote the resources to making it happen.

Anytime the Microsoft rumor started up around Yahoo!, you’d hear embittered griping by people (mostly engineers who had been with the company for more than a few years) who’d say they’d never in a million years go to work for the evil Microsoft. They now have the chance to put their money where their mouth is, but I suspect that the people who haven’t left already will stick around for a while. It’s really not worth quitting your job because someone is trying to separate you from your beloved FreeBSD.

Update: Over breakfast we were wondering whether another prospective suitor might step in to bid against Microsoft. Google probably wouldn’t for a couple reasons, not the least of which being that they may have just sunk $4.6 billion into wireless spectrum. On his blog, Fred Wilson theorizes maybe News Corp. but probably not, and since there’s a credit crunch on, he doesn’t see anyone else stepping up.