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Friday, February 01, 2008

Will they say Woof...?

Steve Ballmer could not have timed his offer better. Yahoo’s Q4 earnings have lagged and Google momentum is clearly slowing.

In Q4 2007, Microsoft had online revenue of $863 million, compared with $4.8 billion at Google. Yahoo and Microsoft together had more than $2.6 billion in revenue, still trailing well behind Google but in a far stronger competitive position. In effect, this deal is a clear admission by MSFT that its online strategies have failed to work.

MSFT has grown solidly for years, but investors give it little credit. Its stock price has long been stagnant, despite the company’s extremely profitable businesses. The Office division alone had quarterly revenue of $4.8 billion — equal to Google — and an astronomical $3.2 billion in operating profits. The Windows unit is even more profitable. But it has not shaken things up as it used to for quite a while.

It’s a risky strategy for both trying to take on the leader by going to bed with strangers. Never mind so long as they don’t say Woof



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