February 01, 2008

Microsoft, Yahoo, and The Three Stooges

Greetings. Despite all of the deep analysis bandied about today regarding Microsoft's proposed buyout of Yahoo -- most of it framed in terms of somehow creating a "Google Killer" combination -- I still kept finding myself thinking about ... The Three Stooges!

In particular, the situation reminded me of a scene from the Stooges' Rumpus in the Harem (yep, you can see it here, at about 05:45 in from the clip start).

The sequence features the Stooges standing on top of each other mostly hidden under a tapestry. They attempt to intimidate their way into possession of a valuable gem, by claiming to be a powerful, evil spirit. Of course, their "tower of power" -- after putting on a pretty good show briefly -- ends up collapsing into a pile on bodies on the floor.

You know where I'm going with this. And while I'm not directly equating Moe or Shemp with MS or Yahoo, it's still a truism that some attempts at combining forces result in a creation that is actually less effective than the seeming sum of its parts.

We've seen this sort of disappointing (for stockholders, anyway) outcome happen often enough -- the initially much ballyhooed AOL - Time Warner merger is an obvious recent example.

Sometimes the operational fundamentals of combined firms just don't create the promised synergies. Or even worse, like two similar poles of magnets brought together, a damaging repulsive force is the actual result. This is especially likely when significantly different management styles are firmly rooted within the associated enterprises.

The financials of the proposed merger are way outside of my world, and whether Yahoo will accept the offer, or Microsoft engage in a hostile takeover attempt (Microsoft hostile?), I can't predict. Nor will I consider here the regulatory, privacy, or myriad other aspects of such a combined entity -- it's all a bit too speculative for now.

But my gut feeling is that while Google of course always needs to watch its back -- that's the price of being on top -- they may actually have far less to really worry about from any MS-Yahoo coupling than some of the more breathless commentaries I've seen today have been suggesting.

A lot can go wrong when you attempt to merge disparate sorts of personalities -- whether you're talking about individuals or corporations.

This remains true whether you're in a boardroom gunning for Google, or just trying to wrangle yourself the Rootin Tootin Diamond.


Posted by Lauren at February 1, 2008 09:21 PM | Permalink
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