Posted May 1, 2008 10:03 am by with 7 comments

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As Microsoft weighs its acquisition options with Yahoo, it’s interesting that its board is pretty much leaving the decision to CEO Steve Ballmer. Could it be that Ballmer’s next move be the one that decides his future at Microsoft?

Ballmer really doesn’t face an easy option when it comes to his company’s takeover bid with Yahoo. There’s not a "no brainer" decision that he can opt for, and walk away with everyone smiling. Consider his choices:

  1. Offer more for Yahoo. Microsoft has indicated it might increase its bid to $33 a share, but that’s still off from the $35-37 number that Yahoo (and its shareholders) appear to want. Offering more would bring a swift conclusion to the protracted negotiations, but down the road he might find stakeholders questioning whether he overpaid or not.
  2. Back out completely. Microsoft is struggling with its online channels–hence the bid for Yahoo in the first place. If he pulls out now, Yahoo would claim victory, and Microsoft would be in a worse position than before–struggling with online AND the sting of failing to find a white knight.
  3. Make a hostile bid. Ballmer could decide that he has Yahoo’s valuation correct and launch a hostile bid for the company. That could get messy, reduce employee morale of both companies, and create a big distraction for Google to take advantage of.

I’ve had the privilege of meeting with Steve Ballmer in the past–we discussed MSFT’s search marketing and opportunities to compete with Google–and I write this post with the vague possibility that I may bump into him during my visit to Redmond today. Despite the silly faces and rumored antics (chair throwing anyone?) he’s incredibly smart and comes across as a man that can make a decision that others will want to follow.

The question is, what decision will he make with Yahoo? Either of the three choices have the capacity of being the perfect, or worst, decision for Ballmer. If he can pull it off–whichever one he decides on–he’ll secure his legacy at Microsoft. If he can’t, it might be one that he never fully recovers from.

Which option would you choose? Do you see a fourth option? Maybe Ballmer will read this post, so offer up your advice. 🙂

  • The fate of the deal is in his hands. Personally I would offer more for Yahoo. I feel that Microsoft really need to get a foothold in the online business as it’s going to be ever more important to the future of the company.

    Yahoo should take the deal. They are a slowly sinking ship in need of a complete makeover. The shareholders deserve better.

    I wouldn’t agree with a hostile bid as it will surely dent the morale of the employees.

    All in all, I’m very glad I’m not the one who has to make the decision at the end of the day.

    Good luck Steve Ballmer!

  • I don’t think that he will offer more for Yahoo.

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  • I’d offer $34 and meet them at the low end of half-way. If they didn’t take that, I’d walk away pick up a few small players with loyal users and eager leaders and look overseas for someone that has a large share in foreign markets.

    With a little innovation in search features, tools and some help from overseas, Microsoft could probably stand a chance w/o Yahoo. Paying $37 a share seems risky… unless they have it, if they have the money, why not?

  • I would go the hostile take over route.

  • Microsoft needs Yahoo! pure and simple. They will get it. It’s only haggling about the price that is the current issue.

  • Is there a deadline for the answer?

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  • now we’ll see what the MS ceo is made of