EditorsAbout the SiteComes vs. MicrosoftUsing This Web SiteSite ArchivesCredibility IndexOOXMLOpenDocumentPatentsNovellNews DigestSite NewsRSS

10.17.10

Unsubstantiated Takeover Rumours

Posted in Microsoft, Rumour, Search at 12:31 am by Dr. Roy Schestowitz

America Online logo

Summary: Why Microsoft will not manage to grab yet another Internet giant, not any time soon anyway

CONSOLIDATION sounds like a nice word, but usually it means removal of choice and that’s not necessarily a good thing. Microsoft has already eliminated the second search engine in all sorts of nefarious ways. Microsoft never bought Yahoo! It just achieved a sort of hijack from the inside. The company is now run by many former executives of Microsoft.

Well, one reader from Brazil told us about reports like this one yesterday:

AOL Inc. and several private-equity firms are exploring making an offer to buy Yahoo Inc., according to people familiar with the matter, devising a bold plan to marry two big Internet brands facing steep challenges.

Considering rumours/speculations that turned out to be false regarding Adobe takeover, Nokia takeover, and even AOL [1, 2, 3], it’s probably a case of boy crying “Wolf!”

Microsoft cannot afford to buy anything significant anymore (it would require borrowing more money), so for anything significant to happen here is unlikely unless the takeover is indirect. As Cringely put it:

If you think AOL actually intends to buy Yahoo, you are wrong. That story hit the press this week but it’s a ruse to motivate Google exactly as I explained a few days ago. AOL has neither the money nor the motivation to buy Yahoo, which is analogous to a bus company buying a poorly-managed airline. AOL just wants to make Google jealous.

In other Yahoo! news, it’s harmed by Google’s Instant despite revamp attempts. Is Yahoo! still developing a search engine? Why bother anymore? Won’t Microsoft just devour the whole thing?

To Microsoft, Yahoo! is just a tool now, just like SCO was once a tool. Now it’s just dead:

SCO’s stock is now back up to 7 cents, up from 2 cents or maybe less — I don’t track it closely — and 7 is where it’s been hovering most of the time for the last few months. Do people really make money from these little dips and surges? What a life that must be. That is actually a fraction of a penny higher than the stock sold for on the day SCO filed for bankruptcy. Go figure.

There’s a long list of companies that ended up as corpses outside Microsoft’s lair. Which one will Microsoft exploit next?

“On the same day that CA blasted SCO, Open Source evangelist Eric Raymond revealed a leaked email from SCO’s strategic consultant Mike Anderer to their management. The email details how, surprise surprise, Microsoft has arranged virtually all of SCO’s financing, hiding behind intermediaries like Baystar Capital.”

Bruce Perens

Share this post: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Reddit
  • co.mments
  • DZone
  • email
  • Google Bookmarks
  • LinkedIn
  • NewsVine
  • Print
  • Technorati
  • TwitThis
  • Facebook

If you liked this post, consider subscribing to the RSS feed or join us now at the IRC channels.

Pages that cross-reference this one

13 Comments

  1. Nate said,

    October 17, 2010 at 8:54 am

    Gravatar

    As useful a resource Techrights is to follow this sort of news, you’re also a source of unsubstantiated rumours, such as constant allusions to Microsoft’s supposedly deteriorating finances.

    “Microsoft cannot afford to buy anything significant anymore (it would require borrowing more money)”

    As much as many of us would love to believe it is true, Microsoft is NOT facing financial hardship. How can you justify stating that they cannot afford to acquire anything significant when they have 37 BILLION U.S. dollars in cash and short term investments on hand? This isn’t a figure which has gone down but one which has gone up from the year prior reports. The debt figures you would point out are but a small fraction of that amount.

    Microsoft isn’t becoming any smaller as a company either. From the year ago reports, Microsoft’s total assets have risen by 8 BILLION U.S. dollars, while their total equity rose by 7 BILLION U.S. dollars. All of this is very clearly on record with the United States Securities and Exchange Commission.

    From the year ago report, Microsoft’s total revenue has gone up; their gross profit has gone up; their net income has gone up. Microsoft’s growth may not be what it used to be, their future prospects might not be bright, but to paint their finances as if they are dire is either naive or dishonest.

    Dr. Roy Schestowitz Reply:

    Take a look at this page. Things are not as simple as it would have journalists believe.

    Nate Reply:

    I’ve probably read (or at least skimmed) most of those posts, as I follow your RSS feed “religiously.”

    The reason I made the comment above is because I have not found your posts I’ve read about Microsoft’s finances to be very persuasive. For example, the post you link to above makes a big deal about the fact that Microsoft hasn’t made an acquisition yet this year. So what? Neither has Red Hat. In fact, Red Hat is currently in the midst of their longest run without an acquisition since they made their first in 1999. Red Hat is arguably stronger now than it has ever been and is growing like crazy.

    I think it is disingenuous to make claims that Microsoft “can’t afford” to make an acquisition, and especially that they would HAVE TO borrow money in order to do so when Microsoft currently has enough CASH money in their pocket to make ANY BUT ONE of the acquisitions they’ve made since their first in 1987. That’s acquisitions they could practically make at a moment’s notice. That’s not counting what’s possible if they were to adjust their short term investments, which I believe would be typical for a company making an acquisition.

    Finally, you don’t seem to understand that debt can be rational. Why is Microsoft borrowing money when they have the money, you might ask? If you are genuinely interested in knowing an answer, you should consider that it is a business decision, and that business decisions tend to be made with the goal of maximizing profit, which Microsoft has obviously been successful in doing to some extent. Microsoft currently has 31 billion USD in short term investments they can pull from, but they don’t. Why? One potential reason is that the interest rates they are paying on loans they take out are lower than the return rates they are realizing on those investments. This is basic economics. (I do have a minor in Economics, for whatever that is worth.) One of my professors in the economics department at the university I graduated from told us how, after all these years, he still owes a bunch of money on his student loans (despite that he makes a very comfortable salary at a top university and could pay them off at any time). He makes the minimum payments each month, and he says he’ll still be paying off those loan when he dies. This isn’t an indication that he is in bad financial shape, or that he is forced to keep that debt, but rather an indication that he made a rational economic decision based upon opportunity costs. His loans are locked at a low interest rate, and paying them off will not save him as much money as he will make putting the money to use elsewhere.

    My point is that your posts on that topic seem to be based more upon wishful thinking than on rational consideration. Maybe I’ve missed something. I’ll watch your posts on the subject more carefully. Perhaps you will agree to do the same?

    twitter Reply:

    The company has squandered all advantages and is clearly on the rocks. Just a few years ago the company claimed to have $60 billion in cash and zero debt. That they now have billions of dollars in debt and claim to have far less cash means they have flushed a great deal of money down the toilet. I started a little Microsoft Death Watch a few years ago to track these developments, but it is pointless because Microsoft lies about everything they do. As several hushed up former employees prove, Microsoft especially lies about money. If Microsoft has built up any cash reserve, they have done so by axing about ten thousand employees and all manner of monopoly supporting divisions. Calls from Wall street to basically follow Judge Jackon’s anti-trust wishes and their continued low stock valuation tell the story better than I can. Microsoft is well known as the poorest performing tech stock. The only wishful thinking that can go on is Microsoft thinking they can compete with free or sell thousand dollar computers like it was 1995. It smells like Enron or Worldcom to me.

    I don’t expect them to last much longer because their primary money makers, Windows and Office, are poor performers in every sense. Vista, Windows 7 and several versions of Office have all been resoundingly rejected by the market and rival systems have held proffits very low. Almost everything else they do loses heaps of money, yet the company continues to axe programmers, so they won’t be able to fix their software. Their choke hold on the US retail is costing their partners a fortune. Their next quarterly report will be amusing.

    Dr. Roy Schestowitz Reply:

    It’s not just that they axe employees. Many of them are paid less (fewer benefits and working on visa/overseas in Asia).

    To me, some things just don’t add up. Windows revenue declined and now there’s this:

    Microsoft’s operating margins for the Windows operating system business have declined from an estimated 77% in 2006 to around 68% in 2009. We expect this margin decline to continue over our forecast period as netbooks and Windows sales in emerging markets account for a bigger share of Microsoft’s sales mix.

    Nate Reply:

    “That they now have billions of dollars in debt and claim to have far less cash means they have flushed a great deal of money down the toilet.”

    Not necessarily. You should report back to us with the other relevant figures Microsoft reported at that time, if you have easy access to that information, so that it will be clear whether that is the case.

    Say that I start with a million dollars in cash and no debt, but then I buy a factory and equipment and then have only 200 thousand dollars in cash and 50 thousand dollars in debt. If my total equity at that point is greater than or equal to the original million dollars, I haven’t squandered anything.

    Dr. Roy Schestowitz Reply:

    Microsoft has investments, assets, and reserves. It also has debt. Novell is the same. It’s still not the ideal position to be in, especially if the debt keeps growing (Microsoft, unlike Novell) and the assets lose value (both Novell and Microsoft).

    twitter Reply:

    Microsoft would be in great shape if Vista 7 and Office were productive assets instead of universally loathed failures. As things are, they can’t afford to spend their monopoly rents on Kin, Zune, Bong, employees and a host of other advert “squirting” stuff that’s gotten the axe. What’s worse is for them is the emergence of cheap, portabe computers and that people are starting to understand software freedom. Microsoft can’t maintain their non free software model when retail prices dip below $200 per computer and that is the future for most people. Apple and the telcos are doing a wonderful job of demonstrating just how bad non free software can be on those devices. Even if Microsoft had the technical ability to compete they won’t succeed because the corporate culture is so arrogant, greedy and malicious. This conversation is an exercise in restating the obvious.

    Dr. Roy Schestowitz Reply:

    Nate has raised legitimate points which are worth addressing for others to whom the answers require further discussion. Being challenged is an OK thing.

    twitter Reply:

    I disagree that there’s a legitimate argument here. Nate has disregarded facts and a consensus opinion that stretches from Time Magazine to Wall Street, to groundlessly accuse Techrights of “wishful thinking”. I’ve watched long time Windows users sigh over the poor quality of Vista and Windows 7, Microsoft’s inability to keep up basic function is that obvious. Most Microsoft people still see Windows as “the center of the universe” and that makes them think Microsoft is eternal. Creating this irrational belief is the only thing Microsoft ever did well, but the illusion faded for most technical people years ago. Steve’ Ballmer’s ranting and raving has not turned things around. The next few quarterly reports will prove the financial failure of Windows 7 and that will pretty much seal the company’s fate.

    Dr. Roy Schestowitz Reply:

    This new departure is an early clue.

  2. Nate said,

    October 18, 2010 at 7:32 pm

    Gravatar

    twitter,

    You’re arguing a separate topic, and you’re arguing with people who agree with your overall point.

    Dr. Roy Schestowitz Reply:

    I think he misidentified a sceptic.

What Else is New


  1. In the European Patent Office, One Gets Rewarded for Mentally Torturing ('Interrogating') Staff

    Elodie Bergot and her "Gestapo" have both enjoyed spectacular promotions, broadening the reach of Battistelli's "police state" culture



  2. IP Kat Participates in Deletion of Information About EPO Scandals

    IP Kat has just deleted nearly 40 comments (some of them very detailed); we bring these back to life for the sake of history and preservation



  3. Links 23/10/2017: Wine Staging 2.19, GNOME 3.27.1

    Links for the day



  4. SUEPO Has Just Warned That Patent Quality at the EPO is About to Get Even Worse

    The staff union of the EPO (SUEPO) speaks of increasing "production" pressure, which is certain to result in low-quality European Patents



  5. The EPO No Longer Measures Quality of Patents; Instead It Publishes Fake Statistics

    The decline in patent quality at the EPO is a long-known issue and suppression of information about it merely enabled several more years of questionable patent grants, thereby putting at risk the perceived value of EPO services



  6. Speaking of “Social Democracy” While Suffering Extreme Democratic Deficiency

    The EPO represents an even broader assault on democracy in Europe (implicating ILO, Team UPC, national delegates, and national governments), but Benoît Battistelli is unique in the sense that he's disguising it or lying to himself about it



  7. Management by Intimidation Has Caused Deaths at the European Patent Office (EPO)

    An accurate diagnosis of the conditions created at the European Patent Office (EPO) by Benoît Battistelli and his cronies, who have essentially hijacked the Organisation -- not just the Office -- then attacked every 'enemy', either real or perceived



  8. The Difference Between Alain Pompidou and Benoît Battistelli as EPO President

    The different approaches adopted by Pompidou and Battistelli; one pursued amicable mediation and training, whereas the other resorted to vindicative witch-hunts, kangaroo courts, and a culture of terror which resulted in many suicides



  9. The Darker Past of the Next President of the EPO - Part IV: Links Between CGD (Former Employer of António Campinos) and the INPI

    More information about connections between CGD and the Portuguese Intellectual Property Office (INPI)



  10. Links 21/10/2017: Purism Against ME, Pop!_OS Ready

    Links for the day



  11. US Patents Appeal Board Attacked by the Patent 'Industry', Defended by Federal Courts, and Dodged by Patent Trolls

    PTAB, the branch or the 'court' responsible for eliminating bad patents, is coming under attacks from those who rely on poor patent quality and receives praises from everyone else, as usual



  12. In the United States, the Patent 'Industry' is a Dying Breed and China Adopts This Destructive Force

    The decaying patent microcosm, or the pipeline of low-quality patents and frivolous lawsuits these entail, loses its grip on the US; China, much to the astonishment of people who actually create things, is attempting to attract that ruinous microcosm (which preys on real, producing companies)



  13. Microsoft and Nokia's Patent Trolls by Proxy: First Conversant, Now Provenance Asset Group Holdings LLC

    Microsoft's shell game with patents (passing Android-hostile patents to trolls) carries on and publishers funded by these trolls offer the details, albeit vaguely and with obvious spin



  14. Anonymous Professionals Speak of Benoît Battistelli's Destruction of the EPO, But Why Does the Media Turn a Blind Eye?

    Everyone in the circles of EPO staff and EPO stakeholders knows that dysfunction has become the norm; European media, however, remains suspiciously silent about what otherwise would be a major European scandal (bigger than FIFA or Dieselgate)



  15. The Darker Past of the Next President of the EPO - Part III: More Details About Caixa Geral de Depósitos, Former Employer of Campinos

    The side of Campinos which he prefers to conceal, or rather his association with a rather notorious Portuguese bank



  16. UPC Looks Like More of a Distant Dream (or Nightmare) as Germany Adds Another Two Months' Delay

    The likelihood that the UPC will be altogether scuttled is growing as delays keep piling up and more complaints are being filed by public interest groups (as opposed to Team UPC, which hoped to shove the UPCA down everyone's throats behind closed doors)



  17. Patent Trolls Roundup: BlackBerry, Dominion Harbor, IPNav, IP Bridge

    A quick review of recent news regarding patent trolls or entities which resemble (and sometimes feed) these



  18. Battistelli's Destruction of the EPO is Bad for Everyone, Even Patent Attorneys

    The collapse of the European patent system, owing primarily to Battistelli's totalitarian style and deemphasis on patent quality, means that "the war is lost," as one professional puts it



  19. Links 19/10/2017: Mesa 17.2.3, New Ubuntu Release, Samsung Flirts With GNU/Linux Desktops

    Links for the day



  20. Some of the USPTO's Most Ridiculous Patents Are Scrutinised by “Above the Law” While Dennis Crouch Attempts to Tarnish Alice

    Controversies over patent scope and level of novelty required for a patent; as usual, public interest groups try to restrict patent scope, whereas those who make money out of abundance of patents attempt to remove every barrier



  21. Microsoft's Software Patents Aggression in Court (Corel Again)

    Microsoft's tendency to not only abuse the competition but also to destroy it with patent lawsuits as seen in Corel's case



  22. The Spanish Supreme Court Rejects the EPO's “Problem and Solution Approach” While Quality of European Patents Nosedives

    European Patents (EPs) aren't what they used to be and their credibility is being further eroded and even detected as such



  23. Europe is Being Robbed by Team Battistelli and the UPC/PPH Would Make Things Worse

    The European Patent Office (EPO) has put litigation at the forefront, having implicitly decided to no longer bother with proper patent examination and instead issue lots of patents for judges and lawyers to argue about (at great expense to the public)



  24. Team UPC Continues to Promote Illusion of UPC Progress Where There's None

    The core members of Team UPC in the UK spread obvious falsehoods in the media, probably in an effort to attract 'business' (consultation regarding something that does not exist)



  25. António Campinos: A True EPO Reformer or More of the Same?

    More unfortunate reminders that Campinos and Battistelli don't quite diverge on the big issues, they're just more than two decades apart in age (but the same nationality)



  26. Juve Has Confirmed That António Campinos is French

    The relationship between Campinos and Battistelli has a nationality aspect to it, not even taking into account the interpersonal connection which goes a long way back



  27. The Darker Past of the Next President of the EPO - Part II: António Campinos at Banco Caixa Geral de Depósitos

    A look at the largely-hidden banking career of the next President of the EPO and the career of the person who competed with him for this position



  28. SUEPO to the Media, Regarding Campinos: “No Comment, It’s Too Dangerous”

    António Campinos, who is Benoît Battistelli's chosen successor at the EPO, as covered by German media earlier this month



  29. Staff Union of the EPO (SUEPO) Willing to Work With Campinos But Foresees Difficulties

    New message from SUEPO regarding Battistelli's successor of choice (Campinos)



  30. Links 18/10/2017: GTK+ 3.92, Microsoft Bug Doors Leaked

    Links for the day


CoPilotCo

RSS 64x64RSS Feed: subscribe to the RSS feed for regular updates

Home iconSite Wiki: You can improve this site by helping the extension of the site's content

Home iconSite Home: Background about the site and some key features in the front page

Chat iconIRC Channel: Come and chat with us in real time

CoPilotCo

Recent Posts