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Posts Tagged ‘Steve Ballmer’

Microsoft: Loan required for acquisition of Yahoo

By Emil Protalinski | Published: February 05, 2008 – 08:59AM CT

In an annual strategy meeting with financial analysts, Chris Liddell, Microsoft’s chief financial officer, announced that Microsoft requires a loan to finance the cash portion of its 50-50 stock-and-cash offer for Yahoo:

It’s going to be a mixture of the cash we have on hand plus debt. We could fund most of that through our cash holdings, but it’s likely we’re actually going to borrow for the first time. It will be a mixture of the cash on hand, plus debt.

The cash portion of the deal would be more than $20 billion, and since Microsoft had about $21.1 billion in cash and cash equivalents at the end of its most recent quarter, the software giant would have to spend itself dry to buy out Yahoo without a loan. The fact that this would be the first time in its history that Microsoft would need to borrow money may sound a bit impressive, but the acquisition would also be Microsoft’s largest to date (the current largest is the all-cash purchase of aQuantive for $6 billion in August 2007). Liddell did not say how much external financing Microsoft would seek.

Liddell also declined to say whether Microsoft was already buying up its Internet rival’s stock on the open market in an effort to exert greater control over the company’s board. Liddell did reveal, though, that he expects Microsoft’s revenue to grow at a double-digit rate in the coming fiscal year, despite a potential economic slowdown in the United States.

Microsoft CEO Steve Ballmer was also present at the meeting. He stated his belief that the offer for Yahoo was a generous one (the proposed $31 per share represented a 62 percent premium over Yahoo’s closing stock price the day before Microsoft’s announcement) and that he expected Yahoo’s board and shareholders to agree to the buyout quickly. Microsoft said that combining with Yahoo would speed up the process of building a company capable of capturing 40 percent of the digital advertising market.

Ballmer noted, however, that if the company was successful in its bid, it would continue to invest in building the business. “We’re trying to increase scale and increase capacity to give ourselves a better chance to be more successful more quickly,” he said.

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Ballmer talks a big game against Google

By Jacqui Cheng | Published: November 09, 2007 – 03:30PM CT

Google ain’t no thang, according to the confrontational stylings of Microsoft CEO Steve Ballmer. The leading search-turned-services giant poses no real threat to Microsoft, Ballmer said, which is doing fabulously, thankyouverymuch. Ballmer is clearly tired of the big G’s shadow, so he turned up the “what, me worry?” attitude in Tokyo this week during the launch of Windows Live Services—Microsoft’s suite of IM, e-mail, photo sharing, and every other service imaginable—and made a serious effort to play down Google’s level of competition.

Ballmer’s comments are misdirection: Microsoft isn’t doing as well online as it would like us to think. Live Search has long taken a distant third to Yahoo and Google in the search realm, although it recently got revamped to better compete with the big boys. But Ballmer knows this: “In the area of search specifically, Google would lead,” he was quoted saying by the Sydney Morning Herald. Ballmer’s message is simple: sure, Google owns search right now, but the pie is much, much bigger.

If not search, then what else is Microsoft trouncing Google with? Microsoft’s sacred cash cows are its financial strength: the client OS and Microsoft Office. The latter, however, is under attack from online offerings, and Microsoft has been playing catch-up. Consider Office Live, which offers software-as-a-service add-ons to Microsoft Office, creating an ecosystem solution that competes with Google Apps for Your Domain. Both allow small businesses to outsource their domain, e-mail, web hosting, and document collaboration to Google and Microsoft. Google made moves in the space first, but Microsoft believes it still has the lead here, if only because Microsoft Office is the default office suite in use by most businesses today. The question is, for how long?

Microsoft currently has no answer for Google’s set of free online apps. Google Documents & Spreadsheets (and now Presentations) is slowly siphoning customers away from Microsoft’s Office suite. Although there are still a large number of criticisms for Google Apps, it’s still picking up steam for being easy-to-use, platform agnostic, and most importantly, free for most users. It’s not going to take down Microsoft Office overnight, but the threat is real.

And now Google is making its foray into another area that competes with Microsoft with its recently-announced platform for mobile phones. Ballmer took a (not entirely undeserved) jab at Android when asked about how it compared to Microsoft’s popular Windows Mobile platform. He told reporters that it was difficult to comment on something that was still “just words on paper.” Harsh, but true. Why exactly Google chose to announce Android when it had no phones and not even a developer SDK available is still a mystery. For its part, Microsoft’s view is “wake us when there’s something to comment on.”

Microsoft is still basically a client/server software company—one that is struggling to compete with what could be considered its powerhouse equivalent in the “online” world. And even with Google’s foibles, the company has still managed to take a strong lead in nearly every area it chooses to seriously explore. If that’s not a threat to Microsoft as people’s desktops move online, we don’t know what is.

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