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Microsoft Watch - Corporate - Translating Steve's Letter to Jerry

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Home >> Corporate >> Translating Steve's Letter to Jerry
May 5, 2008 12:55 AM
Translating Steve's Letter to Jerry


Joe Wilcox
Joe Wilcox

News Commentary. What would be a Microsoft CEO Steve Ballmer letter without a little interpretation?

His letter to Yahoo CEO Jerry Yang is a masterpiece of PR messaging. Microsoft really outdid Yahoo. What might Microsoft's CEO have expressed if only he could write freely? Here's my unwritten interpretation:

"After over three months, we have reached the conclusion of the process regarding a possible combination of Microsoft and Yahoo."

Translation: Jerry, are you out of your fracking mind?

"I first want to convey my personal thanks to you, your management team, and Yahoo!'s Board of Directors for your consideration of our proposal. I appreciate the time and attention all of you have given to this matter, and I especially appreciate the time that you have invested personally. I feel that our discussions this week have been particularly useful, providing me for the first time with real clarity on what is and is not possible."

Translation: You're a bunch of Charlie Brown blockheads. We talked and talked, but nothing got through those two-by-fours between your ears. I got clarity all right, about how stupid you really are and how much cheaper it will be to bulldoze you rather than flush away $33 per Yahoo share.

"I am disappointed that Yahoo has not moved towards accepting our offer. I first called you with our offer on January 31 because I believed that a combination of our two companies would have created real value for our respective shareholders and would have provided consumers, publishers, and advertisers with greater innovation and choice in the marketplace. Our decision to offer a 62 percent premium at that time reflected the strength of these convictions."

Translation: I made you an offer you couldn't refuse, you dimwitted snot. Haven't you ever played Risk? Players unite against the guy holding Australia—that would be Google—and wipe his pink turd pieces off the map.

"In our conversations this week, we conveyed our willingness to raise our offer to $33 per share, reflecting again our belief in this collective opportunity. This increase would have added approximately another $5 billion of value to your shareholders, compared to the current value of our initial offer. It also would have reflected a premium of over 70 percent compared to the price at which your stock closed on January 31. Yet it has proven insufficient, as your final position insisted on Microsoft paying yet another $5 billion or more, or at least another $4 per share above our $33 offer."

Translation: You stupid, greedy son of a bitch. Would you like my firstborn child, too? How about my vacation house, or the keys to the Microsoft executive suite? We've already got to borrow to buy you, and you won't meet us half way between $10 billion more? Where did you study economics, the Game of Life?

"Also, after giving this week's conversations further thought, it is clear to me that it is not sensible for Microsoft to take our offer directly to your shareholders. This approach would necessarily involve a protracted proxy contest and eventually an exchange offer. Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo! undesirable as an acquisition for Microsoft."

Translation: We talked to your shareholders and know they're ready to burn you. So you want to do the burning first—a little scorched earth so that Yahoo is worth less. Jerry, I wanted to go hostile and let you destroy Yahoo so I could climb over the carcass and get to Google. But you've done enough damage to Yahoo over the last three months. Why bother?

"We regard with particular concern your apparent planning to respond to a 'hostile' bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo today. In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo! undesirable to us for a number of reasons."

Translation: We've been partners for years. Haven't you heard the saying about the devil you know being better than the one you don't? We would have salvaged something from the Yahoo wreckage and taken on Google. But, no, you'd rather sell your soul, your lucrative ad business, to Google. Jerry, I ask again: Are you out of your fracking mind?

"[The Google deal] would fundamentally undermine Yahoo's own strategy and long-term viability by encouraging advertisers to use Google as opposed to your Panama paid search system. This would also fragment your search advertising and display advertising strategies and the ecosystem surrounding them. This would undermine the reliance on your display advertising business to fuel future growth. Given this, it would impair Yahoo's ability to retain the talented engineers working on advertising systems that are important to our interest in a combination of our companies."

"In addition, [the Google deal] would raise a host of regulatory and legal problems that no acquirer, including Microsoft, would want to inherit. Among other things, this would consolidate market share with the already-dominant paid search provider in a manner that would reduce competition and choice in the marketplace."

Translation: Go ahead, smart boy, sell your soul to Google; the antichrist will come to dominate online search and advertising. Could you possibly be any more desperate, or stupid? Your talented engineers have already spoken to our recruiters. We're getting them anyway, with big fat raises and without spending 33 bucks a share buying Yahoo.

"This would also effectively enable Google to set the prices for key search terms on both their and your search platforms and, in the process, raise prices charged to advertisers on Yahoo. In addition to whatever resulting legal problems, this seems unwise from a business perspective unless in fact one simply wishes to use this as a vehicle to exit the paid search business in favor of Google. It could foreclose any chance of a combination with any other search provider that is not already relying on Google's search services."

Translation: Look, Jerry, we know a thing or two about monopoly pricing. Those Google nitwits will laugh all the way to the bank and howl about how much dumber you are than them. The legal stuff is just an excuse to cry to our buddies over at the Justice Department. We've got enough trouble in Europe, though and don't want anymore, bud. Nice spoiler, lame brain.

"Accordingly, your apparent plan to pursue such an arrangement in the event of a proxy contest or exchange offer leads me to the firm decision not to pursue such a path. Instead, I hereby formally withdraw Microsoft's proposal to acquire Yahoo. We will move forward and will continue to innovate and grow our business at Microsoft with the talented team we have in place and potentially through strategic transactions with other business partners."

Translation: I'm done waiting, bozo. You blew your chance. No guts, no glory. But I learned something over the last three months: Yahoo is run by a bunch of wimps. Wimps are chimps, but you're no Monkey Boy, bud. The competition has started, and we've taken out our checkbook to buy whoever and whatever it takes to bulldoze Yahoo on our way to get Google.

"I still believe even today that our offer remains the only alternative put forward that provides your stockholders full and fair value for their shares. By failing to reach an agreement with us, you and your stockholders have left significant value on the table. But clearly a deal is not to be."

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