Yahoo vs Microsoft - Dealing with Uncertainty


When Microsoft was being hounded by the DOJ on antitrust issues, Bill Gates continued to put forward, with some audacity, his company’s mission “to get a workstation running our software onto every desk and eventually in every home.” This signaled to software buyers that MSFT was intent on maintaining their OS as the standard and, to employees, it made clear what their mission was.

Even though the DOJ could have posed a near existential threat, and even though their stated commitment to gaining market share might antagonize the DOJ, MSFT didn’t lose focus. It realized that they couldn’t contol what the DOJ was going to do. They hired attorneys, stepped up their lobbying efforts, but, most http://www.digicamreview.co.uk/images/out_of_focus_large.jpgimportantly, concentrated on building their business.

One can’t help but feel that Yahoo couldn’t use a little of this focus and bravado. With their posturing on the MSFT offer, their quite personal responses to Icahn, and their current management exodus (although, to be fair, I haven’t seen good data on whether or not the senior management attrition rate has spiked or is just getting more attention), they still have a terrific business that kicks off nearly $1 billion in free cash flow.

As one reads this blog, there are hundreds of analysts modeling new futures for YHOO. YHOO can spend spend their human capital anticipating and responding to them, and they should have a small team dedicated to this, but other operating units need to stick to their coding. YHOO can’t control Icahn nor the emergence of new Icahns. If it’s decided that it’s in the shareholders best interest to athwart his takeover bid, then retain counsel, put in poison pill and other defenses and, most importantly, just focus on how to continue to build and monetize great products.

Wm
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