CBS to buy CNet, but why did it take so long?

CNet is one of the biggest names on the Internet you never hear about. It's one of those brands who's logo you noticed when you stumble upon one of its websites (it has many) in search of the latest technology gear or review, but otherwise forget that it even exists. The reason, quite simply, is that it's not exciting.

Like the many brick and mortar businesses we never hear about, CNet is profitable and growing. The only difference when compared to the likes of Google and MSN is that it's growing slowly and doesn't really make a lot of fan fair about the addition of a new feature or technology to its arsenal. With a price tag that had floated between $1 and $2 billion dollars, the sheer cost to acquire the giant didn't do much to attract buyers either. So, why is CBS different?

How about TV.com and News.com to start. That's right, CNet is the guy behind the domains we would all love to own. TV.com may represent an incredible opportunity for CBS to take a position in online entertainment and News.com, similarly, could represent an opportunity to revive its once-great news programming. At the end of the day, however, it's just smart business. Whereas Facebook and Digg may be a lot more sexy these days, they are smaller in the size of their actually businesses and significantly more risky. With an internal rate of return (IRR) of about 13% projected by CBS for the deal, the purchase may not mean a sky-rocketing stock price, but it's certainly not the gamble that the likes of Microsoft are making in their on-again-off-again bid for Yahoo!

D-Day + 1 Week :: Lose-Lose

Well, I must admit that I'm surprised by the outcome, but Microsoft has decided to withdraw its buyout offer for Yahoo! after a fight over, you guessed it, price. Here's a short excerpt:

Microsoft said it offered to raise its $44.6 billion bid by about $5 billion, to $33 a share. Yahoo demanded $37, Microsoft said yesterday in a statement.

After careful consideration, we believe the economics demanded by Yahoo do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal,'' Ballmer said in the statement.

I think that this is a copout - at least to some extent - on the part of Ballmer. He went out on a limb and got burned. He made bold statements that left him with few alternatives and made Microsoft's decision just that much more difficult.

It's probably one of the first things you learn in any strategy or negotiations class: Don't state your position until you clearly understand your counterpart's position. Sure, it's not always easy, but the underlying principle is simple; you can ensure that your position, once stated, accommodates the goals of the other party such that accepting your proposal can be seen as both a fair and equitable compromise. What Ballmer did was foolish - he drew a line in the sand and left himself very little room to negotiate further.

Yahoo!'s management, on the other side of the table, certainly appear to have made a selfish decision - choosing to protect their own job security rather than serving to the needs of their shareholders and stakeholders. The stock will drop between 20 and 30% tomorrow morning when the markets reopen - that's gotta hurt!

UPDATE (The following morning): Yahoo! down 21% before the market open... Microsoft, actually up a few cents...

D-Day + 2 ...at least they're talking about the deal now.

I woke-up this morning to find that the Microsoft and Yahoo! deal was in the news once again. Nothing new, really, to report, but at least they're talking about it. I found it simply strange that nothing was said on Sunday when so much was discussed coming-up on the Saturday deadline for Microsoft's offer to buyout Yahoo!

Today, I heard an interesting opinion on the deal. Could it be another AOL-Time Warner? Could it be another dot-com deal orchestrated by Wall Street with no real business sense? I said it was an interesting opinion, but not that I agree with it.

AOL was doomed to begin with. When Time Warner bought it, it was buying a dying entity. AOL's success was on making the Internet accessible. Could anyone possibly argue that the Internet still needs to be simplified today? Furthermore, could anyone argue that there are not a multitude of alternative service providers offering equally (or better) solutions to get Internet-newbies signing-on to the web? AOL was slow to adjust its business and Time Warner paid the price. I don't believe that this is the case when it comes to Yahoo!

Yahoo!'s business is display advertising. The only problem that it's having is converting its traffic into great revenues. Microsoft is already in the same business, but offers a broader reach and richer-content that helps to keep users clicking on its sites. I believe that there exist true synergies between these two companies. Put differently, Microsoft + Yahoo! is worth more than each is worth separately.

UPDATE: Microsoft, according to those 'close' to the ground, is now saying that it's likely to be a proxy fight that they'll announce later this week.

D-Day + 1 ...and no news on MS / Yahoo! deal?

Is it jsut me or does anyone else find the lack of any news on the Microsoft Yahoo! deal a little bizzare? Yesterday, the day of the deadline on Microsoft's buyout offer for Yahoo!, it's all we heard about. Today, I've listening to the radio for a couple of hours and ...nothing?

My best guess? Something is brewing behind the scenes. But what?

D-Day :: Decision day on MS & Yahoo! Buyout

Today is the day. Yahoo! is to make a final decision today on the buyout offer from Microsoft or face two possibilities:

1. A retraction of the bid by Microsoft, or
2. A hostile bid for Yahoo!

Personally, I don't think that either will happen, but I do believe that Microsoft cannot walk away from this deal. So, how do you reconcile this: an all-cash-offer. Microsoft's bid for Yahoo! is in stock; Yahoo! has been adamant that its offer is too low and Microsoft has been equally stubborn on its stance not to increase its offer. By offering an all-cash bid in lieu of its stock-bid, Microsoft could make its offer a little more enticing as well as offer Yahoo! an 'out' without forcing a hostile action by its soon-to-be owner.

Microsoft needs Yahoo! Google has already made its quasi-white knight intentions clear and Microsoft certainly cannot afford to let Yahoo! slip into the hands of its arch rival. It will be interesting to see what happens next from both a business perspective as well as from the perspective of a consumer.

I'm both a Yahoo! user and Google user. I don't really use MSN's search offer, but do enjoy its homepage as a news aggregator. A merging of some search and rich-content could very well help Microsoft take a dominant position in the market. In terms of display ads, the mere purchase of Yahoo! by Microsoft will make it bigger than Google in this arena, but I think that its true success will come from leveraging the synergies that these two future siblings can offer together in providing us lowly surfers with an even better way to spend our time online.