Microsoft CEO Says 'Nobody Gets' Yahoo Deal - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Mobile // Mobile Applications
03:36 PM
Connect Directly

Microsoft CEO Says 'Nobody Gets' Yahoo Deal

Steve Ballmer says he was surprised by the market's reaction to the search and advertising partnership but also characterized the deal as "a little bit complicated."

Yahoo shares were hit hard after the deal was announced. Shares were down 14.2% Wednesday afternoon to $14.75 from their Monday close of $17.20. Microsoft, meanwhile, was up a modest 3.7% from $23.11 to $23.96 as investors saw their side of the deal more positively.

"On the Yahoo side -- this is the one that stuns me that people haven't figured it out," Ballmer said. He pointed out that while Yahoo loses 12% of its search revenue as part of the deal, it will eliminate a significant amount of ongoing research and development costs and capital spending.

In a PowerPoint slide deck posted online to accompany Ballmer's presentation, Microsoft initially included a slide about the Yahoo deal, which Ballmer did not reference in his presentation.

That slide has since been removed from the deck, but it included details about the Yahoo deal that the presentation said were "not for disclosure," including a breakdown of expected costs like $170 million in additional search research and development expenses.

The slide said that Microsoft expected the deal to begin impacting the companies' businesses in the second half of 2011. The slide also noted that Microsoft expects that the deal would be a net money loser for the first two years, with the tide then turning. "More of our financial upside comes from long-term work," Ballmer said during his speech.

InformationWeek's Informed CIO series lays out 10 steps to achieve excellence in service assurance initiatives. Download the report here (registration required).

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
2 of 2
Comment  | 
Print  | 
More Insights
The State of Chatbots: Pandemic Edition
Jessica Davis, Senior Editor, Enterprise Apps,  9/10/2020
Deloitte on Cloud, the Edge, and Enterprise Expectations
Joao-Pierre S. Ruth, Senior Writer,  9/14/2020
Data Science: How the Pandemic Has Affected 10 Popular Jobs
Cynthia Harvey, Freelance Journalist, InformationWeek,  9/9/2020
White Papers
Register for InformationWeek Newsletters
Current Issue
IT Automation Transforms Network Management
In this special report we will examine the layers of automation and orchestration in IT operations, and how they can provide high availability and greater scale for modern applications and business demands.
Flash Poll