New York Times Op-Ed: An Economy You Can Bank On by Casey Mulligan, University of Chicago Economics Professor

Over the weekend there were rumors that Yahoo! would reject Microsoft’s $44.6 billion dollar offer, claiming that Microsoft’s offer “substantially undervalues the company.” Well, Yahoo’s shareholder relations office confirmed that rumor this morning, and it didn’t take Microsoft very long to respond with it’s own press release decrying how “unfortunate” this move is for Yahoo!.

And that’s when the stupid began.

Yahoo’s Bold Whimper Hasn’t Fooled the Market

TechCrunch’s Mike Arrington was the one who coined the term “Yahoo’s Bold Whimper” so props to him. It’s only natural that Yahoo! would ask for more money, but as every other blogger on Earth has been quick to point out:

• Yahoo! was trading at $18/share on January 31st, before Microsoft offered to buy all of the shares at $31/share;
• Yahoo’s trading at almost $30/share now and it’s value rose by another 2.29% today despite the news that Yahoo! was going to reject the bid;
• Yahoo doesn’t have a lot of other options;
• and it’s unlikely that Yahoo will get a better offer; ever.

What interests me so much is that despite Yahoo’s board saying “no,” its shareholders are saying “yes.” This is the same genius board that has mismanaged the company into the ground, sitting idly by while Yahoo got its ass kicked by Google.

Microsoft’s Stock Value is Now Less than Yahoo’s

I think it’s interesting that Yahoo’s stock is actually worth more than Microsoft’s stock is after today’s trades closed. This, again, indicates that the market still thinks the deal is going to happen. Microsoft’s shareholders are worried that Yahoo is a bad investment, and Yahoo shareholders want to cash out while they can and rid themselves of the foul taste left in their mouths by years of mismanagement.

For the Last Time, Google Cannot Acquire Yahoo!

Point by point, here is why Google cannot acquire Yahoo:

Google Does Not Have the Capital to Match Microsoft’s Offer

From last time I went over this:

Google doesn’t have a magic money factory behind the employee parking complex at Mountain View; they simply can’t finance a takeover at a higher premium than Microsoft.

and

Google doesn’t have the capital to match Microsoft’s $44.6 billion offer. Microsoft doesn’t need to rely solely on debt to finance their acquisition: they have $22 billion in cash assets and are financing at least half of the acquisition with Microsoft stock. In addition Microsoft’s projected profits are over four times what Google earns, and Google is still tangled up in Europe with its $3.2 billion acquisition of DoubleClick, Google’s largest acquisition to date.

Even if Google Did Have the Capital, It Would Get Blocked by the SEC

Again, from the last time:

The S.E.C would block Google from acquiring Yahoo!; even if Google had the capital it wouldn’t be able to as this move would be considered monopolistic on Google’s behalf. Google already has a 58.4% U.S. search engine market share, while Microsoft + Yahoo! would have a 32.7% market share combined.

Microsoft is Still Going to Get Yahoo

End of story. Microsoft is going to be able to get Yahoo regardless of what the board of directors says. Later this week I’ll have more thoughts up on how MSFT-YHOO won’t be anything like AOL-Time Warner.

Technorati Tags: Yahoo,Microsoft,Acquisitions

One kind reader was kind enough to Digg my 8 Bold Predictions Post under the following headline: AjaxNinja predicted Microsoft’s offer for Yahoo 1 month ago

On Microsoft’s Move to Acquire Yahoo!

While I could go on about my great batting average with my predictions, I’d rather talk about the major news item of Microsoft’s move to acquire Yahoo! in a hostile take over by purchasing all Yahoo! stock options at a $31 per-share premium.

Most of the big-name bloggers aren’t adding much value to the blogosphere in this particular conversation; most of what I’ve read today consists of either total hysteria on the behalf of anti-Microsoft lunatics, near-baseless speculation that someone other than Microsoft will buy out Yahoo, and some stuff that is just way, way out there.

Let me add something meaningful to this conversation.

No One is Going to Outbid Microsoft

There are a lot of bloggers out there who sound like they hope that Google or a private equity firm will come to Yahoo’s rescue and save it from the fate of having its shareholders be made filthy rich by selling off their shares at a price that Yahoo! could never achieve on its own.

Sorry to disappoint those guys, but it’s not going to happen. Here’s why:

• The S.E.C would block Google from acquiring Yahoo!; even if Google had the capital it wouldn’t be able to as this move would be considered monopolistic on Google’s behalf. Google already has a 58.4% U.S. search engine market share, while Microsoft + Yahoo! would have a 32.7% market share combined.
• Google doesn’t have the capital to match Microsoft’s $44.6 billion offer. Microsoft doesn’t need to rely solely on debt to finance their acquisition: they have $22 billion in cash assets and are financing at least half of the acquisition with Microsoft stock. In addition Microsoft’s projected profits are over four times what Google earns, and Google is still tangled up in Europe with its $3.2 billion acquisition of DoubleClick, Google’s largest acquisition to date.
• Google doesn’t have a magic money factory behind the employee parking complex at Mountain View; they simply can’t finance a takeover at a higher premium than Microsoft. (I just wanted to make sure that everyone noticed this particular piece of snarky commentary)
• I don’t think any of the private equity firms that were interesting in bidding on Yahoo! has the gumption or the assets to match Microsoft’s high premium on Yahoo! stock.

Microsoft Will Pull the Acquisition Off

I don’t know where a lot of bloggers get their ideas, but when I want quality financial analysts, I turn to people who actually know something about the financial industry, not a bunch of pissed off anonymous Flickr users.

The stakes have a reached a point where the conversation has moved beyond the tech industry and into the financial industry, and the financial industry is saying that things are looking pretty good for Microsoft.

Microsoft is Going to Throw A lot of Yahoo!’s Code Out the Window

There are a lot of people out there wondering about how Microsoft is going to integrate all of Yahoo’s services into the Microsoft Network (MSN;) let me give you a hint: Microsoft isn’t going to integrate all of Yahoo’s products and services into MSN.

Some of Yahoo’s services will be left, intact, on their current hosts for years, simply because the cost of migrating those services to a Windows architecture will be too great in the initial wake of the takeover. It will take half a decade to port all of those technologies over to Windows Servers.

Some of Yahoo’s services will be dissolved and discontinued. Say "Goodbye" to Brickhouse.

Some of Yahoo’s services will be immediately integrated into MSN.

Point by point, here’s what I think might happen in the months after Microsoft’s takeover:

• Yahoo’s Publishing Network and Paid Search are scrapped and all publishers/advertisters are moved onto Microsoft’s new search platform.
• Microsoft rebrands Windows Live Search with the Yahoo! brand search engine. The Yahoo! brand is simply better than Windows Live, and that’s the primary reason why this acquisition is being considered in the first place. Well, branding and market share.
• Yahoo! Accounts are integrated with Microsoft’s Windows Live ID. Among other implications, this means that Yahoo! Mail subscribers may see their service ported over to Hotmail, even though users will still keep their @yahoo.com  email addresses for years to come.
• Del.icio.us and Flickr will be left, intact, at least for a while; these services are harder to integrate into MSN because they are anchored with powerful communities that might be actively resistant to change. Microsoft will handle the networked services a bit more carefully than some of the other parts of Yahoo!.

The Fate of Yahoo’s Search Engine: Ever Seen Old Yeller?

The Yahoo! brand will live on, and I suspect that Microsoft will use the Yahoo! brand to dress up Windows Live Search. But Yahoo’s search engine itself? That’s going to be the saddest part for the anti-Microsoft cheer leaders.

The Yahoo! search engine, which we have known and loved for over a decade, will be unceremoniously taken out to the backyard and shot like Old Yeller. Microsoft’s technology is better at satisfying queries and there is no point in holding onto a technology that is expensive to maintain, difficult to port, and worst of all, cannibalizes Live Search.

The dismemberment of the Yahoo! search engine will also help expedite the process of getting advertisers to switch from the Yahoo! Publishers Network to Microsoft’s equivalent service.

In theory this move might create a lot of outrage; my guess is that most Yahoo! users won’t even notice when the switch occurs, well, they might notice the quality of their search results improve, but that’d be about it. Even if they did notice I doubt most of them would care. Don’t let the vocal minority convince you otherwise.

The Implications for Google

For once, Google looks like the one who might be in trouble in online search, well, until the rest of the blogosphere realizes that Google still has the majority of online search by a wide margin. In all likelihood, Google saw this coming and it’s not going to affect Google’s bottom line in the short term.

In the long term however, Microsoft might be able to leverage itself into a larger market share, and by that I mean larger than the sum of Yahoo! and Microsoft’s current market share, through clever utilization of the Yahoo! brand. Microsoft’s most recent branding efforts with the Live! moniker have been confusing and mismanaged; the Yahoo! brand name is just the cure that Windows Live Search needs.

I’ll have more analysis up during the week; I’ve already spent an inordinate amount of time writing this stuff on a Friday night.

Something got screwed up with my domain name forwarding and as a result all of the domain references to AjaxNinja.com are not working; there is nothing I can do about it other than wait for the DNS change to propagate down the Internet pipeline. It should be fixed within 1 hour best case, 24 worst case.

Thanks!

-Aaronontheweb

Update: The DNS cache has been cleared and AjaxNinja.com is now forwarding to Marketing-Ninja.com properly. PHEW.

I will be redirecting all content from this URL to the new one shortly.

So Update Your Bookmarks; Our Domain has Changed But Our Content Will Not

As for why I made the move, I just thought that the title AjaxNinja was a bit of a moniker, given that I don’t talk about AJAX very much at all. I had originally intended on making AjaxNinja more of a web development blog but it turned out to move in a direction that I could not have anticipated. Thus the blog’s new title, Marketing Ninja, more accurately reflects AjaxNinja’s subject matter.

If there is one thing that I’d like to underscore here, it’s the fact AjaxNinja’s subject matter will not change once I’m over at Marketing-Ninja.com; I just think that the new title makes more sense and will result in increased readership over time.

Once Google gets off its Googely ass and indexes Marketing-Ninja.com I will redirect the full AjaxNinja URL over to Marketing-Ninja.com. I will also be posting this on Marketing-Ninja just so my RSS subscribers are clear.

Expect more great content at Marketing-Ninja.com!

Today I got a call from an employer who wanted to set up a lunch meeting to discuss a possible internship; I wasn’t expecting anything out of the ordinary until my contact dropping the following bombshell on me:

We were outsourcing our test cycle to a firm in India that specializes in this kind of software testing, but as a result of two major undersea cables being damaged late last night we’ve been unable to feasibly work with that firm. We’re now looking for interns who can assist us with the testing cycle.

India’s bandwidth has been reduced by 50%, according to Fox News. Ouch.

That means that a lot of Indian firms that collaborate with U.S. firms using VoIP and real-time collaboration tools are going to have to rely on satellite-based Internet connections and other lower bandwidth forms of collaboration. That can’t be good for the productivity of these outsource specialists.

AjaxNinja has a lot of Indian subscribers; I was wondering why our RSS subscribership dropped this morning despite posting a month-high traffic day yesterday. India’s internet outage might have something to do with it.

The Implications for U.S. Firms

This isn’t the first time that large regions of Asia have had massive Internet outages; Southeast Asia suffered large Internet outages after undersea cables were damaged by an earthquake in 2006. The question here is though, how much business will outsourcing firms lose as a result of the Internet outages? In the previous outage, Internet was not restored to Southeast Asia until two months later. If that’s the case again, then I predict a significant decline in the amount of U.S. firms that rely on outsourced labor for various information technology-related needs.

To cover it point-by-point:

• U.S. Firms are not optimistic about the timeframe for restoring the undersea cables; the employer who contacted me said "we expect it will be up to 2 months before they get their service restored; we simply cannot wait that long."
• This incident may damage the reputation of outsourced firms; if India’s infrastructure is so fragile that damage to two undersea cables in the Mediterranean can wipe out the Internet all over the sub-continent, then what’s to stop this from happening again in the future?
• Speaking as someone who is going to graduate with a B.S. in C.S. in may, I think I just saw my average starting salary increase upon hearing this news. Firms with an urgent need for I.T. people are going to be hiring more Americans for labor that would traditionally be outsourced.
• U.S. Firms are going to get hit in the pocketbooks by the inability to communicate with partners in India; if the U.S.IT firms have to rely on an increase in labor from America counter-parts, then the costs of I.T. are going to go up.

Overall, my job prospects for graduation were already looking pretty good; they look great now.

It’s not often that I get to mention WoW in the subjects that I blog about on AjaxNinja, but this article practically wrote itself the moment I saw the AddOn Studio for World of Warcraft on CodePlex.

What is an addon for World of Warcraft?

If you haven’t heard of Blizzard’s smash-hit MMORPG World of Warcraft, then you’ve probably been living in a cave for the past several years. There are World of Warcraft commercials featuring William Shatner and Mr. T all over television and not to mention an entire Southpark episode ("Make Love, Not Warcraft") dedicated to the game. WoW is one of the most popular video games on Earth, and by far the most popular MMO on the market.

The World of Warcraft API is a set of functions, provided by Blizzard, that allow you to interact and modify the World of Warcraft game through the use of addons and macros. (WoWWiki)

Users develop macros and addons to automate monotonous tasks, customize the heads-up-displays, or to add additional functionality that isn’t included in the default game. I use TitanPanel to help provide me with in-game coordinates and Auctioneer to help me data-mine all of the auction houses in order to determine what the most appropriate rates for selling items to other players.

What is AddOn Studio for World of Warcraft?

AddOn Studio for World of Warcraft is an extension for Visual Studio 2008 (requires .NET 3.5) and it was developed by the Visual Studio Extensibility (VSX) Team. It offers a number of standard Visual Studio features for WoW AddOn development, such as:

• Visual Design Surface
• Lua Code Editor
• FrameXML IntelliSense
• Auto-Generate Table of Contents
• Auto-Generate Lua Events

As a long-time Visual Studio user I can tell you that IntelliSense and the Visual Design Surface are invaluable production tools; the drag and drop features of the VDS expedite GUI design significantly and IntelliSense saves developers on a  look of "look-up time," time you’d normally use to look up function names and parameter lists in a reference guide if you didn’t have IntelliSense.

In short, AddOn Studio for World of Warcraft brings all of the power of Visual Studio to WOW developers.

Why is this Good for Visual Studio and World of Warcraft?

AddOn Studio for World of Warcraft is good for WoW players obvious reasons; anyone who’s interested in making his or her own addon for World of Warcraft now has an intuitive, free tool for developing addons. Free? That’s right, AddOn Studio for World of Warcraft works for any of the Visual Studio Express 2008 editions, which are free editions of Microsoft’s Visual Studio IDEs. To clarify, this Visual Studio Extension will not work with Visual Studio 2005.

In short, WOW players who didn’t want to develop WOW addons due to the complexity of them now have a tool that makes the process much simpler, so ultimately there may be more addons, which means a better playing experience for a lot of WOW Players.

Now, the benefits for Microsoft and MSDN are much more interesting; by giving WOW addon developers access to a powerful, free tool, Microsoft can potentially attract a number of passionate developers (which any addon developer is) to Microsoft’s tool set, and eventually the .NET framework. In a sense, Microsoft can essentially establish some "Microsoft Brand Loyalty" among WOW players as a result of this contribution to the WOW community.

Maybe I’ll develop an addon, but I had probably ought to level my rogue to 70 first!

I have a big post of predictions for Web 2.0 in 2008 that I was prepping for yesterday but I got interrupted in the course of writing it and, obviously, was unable to publish it. I’m sitting in the San Diego airport waiting for a flight to Salt Lake City writing up the rest of it at the moment, so I should have it out by the end of the day.

How cool is that? Check out WebProNews’ article, AjaxNinja Whips Shurikens Into Digg!

On another note, I’m sorry for the delay of updates; I have a lot of work this week so some of my blogging has been hindered, although I promise I will have a list of some cool .NET hacks later this evening!