Microsoft appears to be on the verge of sating its appetite for Yahoo, which it has coveted for several years. The companies were known to have had substantive discussions about a possible merger in 2006.
Steve Ballmer, CEO of Microsoft, gave a presentation for media and analysts to explain why his company is bidding for Yahoo, but the most salient information to emerge from this was not the strategy behind the move, but how well-prepared the presentation was.
Certainly, Microsoft has made its offer at a propitious moment in Yahoo's history: The former Internet bellwether just announced job cuts affecting 1,000 employees, and its stock was trading at a four-year low before the bid was announced.
The move also comes at moment when, for the first time, Google is showing signs of relative weakness. Its earnings report on Jan. 31 was the first in its history to disappoint investors with lower-than-expected earnings.
Yankee Group analyst Laura DiDio noted that, while Microsoft has seemed to languish in the face of popular online apps, Google has been seen as edgier and has been running away with the race for advertising dollars.
Indeed, the first item in Ballmer's presentation was the impact the deal would have on Microsoft's advertising revenues, where it has been lagging far behind Google. He noted that the online ad market is expected to grow from $53 billion in 2008 to $78 billion in 2010.
If ever the moment was right to strike, this was it. "You needed a bold, dramatic move, and this was it," she told eWEEK.
DiDio also noted that both the timing of the offer and the thoroughness of the presentation show a new side of Ballmer. "He's become incredibly more adaptable and flexible in this new, fast-paced market," she said.
Ballmer has been known for his fits of temper, but this deal shows his growth and more reflective approach, said DiDio. It also shows his understanding of the market.
DiDio recalled Ballmer hawking Windows 3 on the Home Shopping Network in the late 1980s, and with his trademark enthusiasm, offering free mood rings as a throw-in.
"He was on it like P.T. Barnum," DiDio recalled. "Twenty years has gone by, but he still knows how to make a pitch. And I'd say he's correctly gauged the mood of the industry."