Microsoft and Yahoo! entered into a landmark search deal in late July and many observers credited Steve Ballmer with a major strategic victory, particularly given the richer terms of his prior offers to acquire Yahoo! in early 2008. While the arrangement does appear to give Microsoft much of what it wanted from Yahoo! without the massive costs of an outright acquisition, Yahoo! may have captured the best deal they could have under the circumstances. After all, as Yahoo! CEO Carol Bartz points out in the CNBC interview shown below, one cannot go back to the conditions that prevailed in early to mid 2008 and decisions have to be made based on current realities.
Hindsight is indeed always 20/20. Regardless, through luck or due to skill, Microsoft shareholders are obviously better off under the current arrangement than they would have been if Yahoo’s prior management accepted the takeover bid in 2008.
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Disclosure: The author owns shares of Microsoft.