Is buying Yahoo crazy?
Friday, April 11, 2008 18:59$41 billion.
I mean, let’s take a moment and think about this. $41 Billion.
Yahoo sells about $7B, has gross profit of about $4B, and net income of about $0.7B.
Let’s be generous and say they net about $1B today.
This means that Microsoft will be getting a 2.5% return on this investment if things remain the same.
Of course they won’t.
Microsoft will cut costs (people) and key technologists from Yahoo will cash out or leave in frustration for greener pastures. This has begun and will accelerate once it becomes a hostile takeover. The question is not whether Microsoft can buy Yahoo, but rather, should Microsoft buy Yahoo?
This may be the worst corporate blunder in American history. It certainly is up there with the best of them. It is a desperate measure by limited minds to save an aging technology company.
There is so much more that they could do. $41B. Why not invest $100M each in 400 promising start-ups? How about $50M in 800 of them? What kind of returns could you expect from that? Networking, Internet, solar, materials technology, etc. How about just 10?
Why not use wealth to create and promote technology instead of just trying to catch Google in search.
Is buying Yahoo crazy or just the act of limited minds? You decide.
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