Microsoft’s bid values Yahoo! at 40% of Google

The blogoshpere and indeed more traditional news outlets are reeling at the news earlier today that Microsoft has offered $44.6bn to acquire Yahoo!.

It’s not yet known just how much of a premium Microsoft is willing to pay for that exclamation mark at the end of Yahoo’s name, but analysts are already saying the exclamation mark was a “deal-maker” for Microsoft.

A senior Gartner analyst has been quoted as saying, “Look, Microsoft could have gone for Google since Micosoft’s market cap is over $287bn and Google is a miserly $121.3bn. But Google doesn’t have an exclamation mark in its trademark, and sources say that Gates and Ballmer particularly liked the impact and energy that the exclamation mark brings to Yahoo!’s brand.”

“We have long expected this move, and we expect Microsoft to quickly integrate Yahoo! into Microsoft and call the combined entity Microhoo! Finally, Microsoft has an exclamation mark in its name, and a more sustained rivalry with Google can commence.”

“We expect Google to react in turn by changing its name to Google!, or perhaps just Goog!, in order to step up its own brand awareness in the fight for brand equity (12% probability),” said the analyst. “Our advice to users is to wait and see how the dust settles, but we would note that Microsoft Vista is a more secure and robust operating system than Windows XP, if that helps.”

OK so Gartner didn’t say any such thing. But it might do, I reckon. They just need some time to digest the news and do a full exclamation-mark-brand-value-analysis-Magic-Quadrant, but because there are so few companies with an exclamation mark in their name, the upper right hand corner is looking pretty lonely. Especially now that Yahoo! won’t be in it either.

Of course the obvious thing to say is that this is Microsoft seriously stepping up its rivalry with Google. And if anyone is going to state the obvious, I’m your man.

Let’s be clear though, Yahoo!, with its exclamation mark, is worth $44.6bn to Microsoft. Google’s market cap on Nasdaq is around $121.3bn. And Google doesn’t even have an exclamation mark. All it has is world dominance when it comes to advertising-driven Internet search, a robust enterprise search business and a whole plethora of related applications that look a more and more serious threat to Microsoft every day that passes.

In a nutshell? Microsoft + Yahoo! = $331.6bn market cap. Google = $121.3bn market cap. Google won the advertising-search war, but if this deal closes, Microsoft has just closed the gap. But it’s cost it 15% of its business to do it, when it should have been innovative enough to do it itself.

Type: White Paper


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