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. FUD Against Google and FOSS Security Amid Microsoft Windows Security Blunders

    In the age of widespread fraud due to Microsoft Windows with its back doors there is an attempt to shift focus to already-fixed flaws/deficiencies in competitors of Microsoft



  2. Microsoft Spin Watch: IDG Turns to More Microsoft Propaganda, Hires Microsoft Boosters

    Media in Microsoft's pocket is telling Microsoft's lies and deceives the public for Microsoft's bottom line



  3. Microsoft's Massive Tax Evasion Becomes Better Known

    A new report about Microsoft's admission that it plays dirty tricks with tax (sometimes using moles in government) is increasing awareness of Microsoft's criminal aspects



  4. Links 25/8/2014: China's Linux Revolution Imminent

    Links for the day



  5. Links 24/8/2014: GNU/Linux Specialisation and Benchmarks

    Links for the day



  6. Links 23/8/2014: GNU/Linux Growth

    Links for the day



  7. Microsoft-Funded Attacks on Android Security and Patent/Copyright

    A look back at examples of people who smear Android and are receiving (or received) money from Microsoft



  8. Blowback in Chile and Munich After Microsoft Intervention

    Microsoft's attacks on the digital sovereignty of countries involves lobbying, corruption, an attack on standards (e.g. ODF), an attack on FOSS policies, and even an attack on accurate reporting (truth itself)



  9. The End of Microsoft is Nigh

    A look back at a tough year for Microsoft and a not-so-promising future



  10. Links 22/8/2014: Linux Foundation LFCS, LFCE

    Links for the day



  11. UPS Burned by Microsoft Windows, Gives Away Massive Number of Credit Card Details

    UPS is the latest victim of Microsoft's shoddy back door with software on top of it (Windows); attempts to blame FOSS for data compromise actually divert attention from the real culprit, which is proprietary software



  12. Microsoft's Funding of ALEC and Other Systemic Corruption

    Microsoft role in writing of laws by proxy, via groups such as ALEC



  13. Microsoft is Still Preying on British Taxpayers, Playing Politics

    Some news from the UK showing how Microsoft uses politics to extract money out of taxpayers, irrespective of their preferences



  14. Microsoft's Patent Troll Intellectual Ventures is Collapsing as 20% of Staff Laid Off

    More good news regarding the demise of patents as Microsoft's leading patent proxy is collapsing more rapidly than anyone ever imagined and software patents too are collectively doubted



  15. Links 21/8/2014: Conferences of Linux Foundation, Elephone Emerges

    Links for the day



  16. Links 20/8/2014: Linux Event, GNOME Milestone

    Links for the day



  17. Corruption Watch: Microsoft Lobbying Designed to Kill Chile's Free Software Policy and Promote Microsoft With Subsidies, More Dirty Tricks Emerge in Munich

    icrosoft is systematically attacking migrations to GNU, Linux and Free software, using dirty tricks, as always



  18. Vista 8 Such a Disaster That Even Microsoft Cannot Cope With It, Vapourware Tactics Start Early

    Microsoft's Windows-powered services are failing and Windows gets bricked by Microsoft patches, whereupon we are seeing yet more of Microsoft's vapourware tactics (focusing in imaginary, non-existent versions of Windows)



  19. On BlackBerry and Other Patent Trolls

    A roundup regarding patent trolls, starting with the bigger and latest joiner, BlackBerry's new patents apparatus



  20. Links 19/8/2014: Humble Jumbo Bundle 2 Betrayal, Mercedes-Benz Runs GNU/Linux

    Links for the day



  21. BlackBerry -- Like Microsoft Nokia -- Could be the Next Patent Proxy Troll

    BlackBerry is restructuring for patent assertion (i.e. trolling) in the wake of some alliances with Microsoft



  22. After Microsoft's Soft Bribe Some Non-Technical Deputy Does Not Like Free Software, Microsoft-Linked Media Responds to This Non-News by Making Bogus Claims of Munich Leaving GNU/Linux (Updated)

    The subversive forces that have secretly been attacking Munich over its migration to GNU/Linux (Microsoft press, Gartner, and even HP) are back to doing it while China and Russia follow Munich's lead



  23. Gates Foundation CFO Quits and Debate About Revolving Doors Recalled Amid Systematic and Shrewd Bribery of Public Officials

    More officials step out of the Gates Foundation and their destination is not known yet; Gates continues to corrupt the public sector with his money so as to increase personal gain at taxpayers' expense



  24. Links 19/8/2014: GNU/Linux Raves and Alternative to Proprietary Voice Chat

    Links for the day



  25. Links 18/8/2014: Linux 3.17 RC1, Escalation in Ferguson

    Links for the day



  26. Gartner Group Advocates Using Defective Software With Back Doors

    Despite strong evidence that Microsoft has been complicit in illegal surveillance, Gartner continues to recommend the use of Windows and other espionage-ready Microsoft software



  27. The Microsoft Patent Trolls: Android Extortion, Vringo Versus Google, and Intellectual Ventures

    Roundup of news about patent aggression by Microsoft and some of its proxies



  28. Links 16/8/2014: Microsoft Linux, US Government Turns to Free Software

    Links for the day



  29. Links 15/8/2014: Reiser4 in Headlines Again, GNOME and KDE Events Finish

    Links for the day



  30. Links 14/8/2014: Kernel Summit Coming, KMix on KDE Frameworks 5

    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