Goodbye Microsoft Yahoo!, hello local iPhone

Microsoft has walked away from a Yahoo! deal for now, while the iPhone steps closer to official presence in the region

  • E-Mail
By  Mark Sutton Published  May 6, 2008

Good news for Google then, as despite analyst expectations, Microsoft didn't man the harpoons to try and land the Yahoo! whale, but decided to walk away from the deal that could have created a credible rival to Google.

Both Yahoo! and Microsoft are showing signs of hurt feelings, and insisting that they have other plans for online business up their sleeves, but it is Yahoo! that will have to prove it first. A relatively good run in the first quarter of this year has been reversed by the inevitable stock market reaction to the rejection of the offer, with 15% knocked off its value in trading on Monday.

Yahoo! CEO Jerry Yang should certainly be worried. According to a report from the BBC, Yahoo!'s two largest shareholders were happy to accept just $1 more per share than Microsoft's revised weekend offer of $33, but Yang and his board stuck out for $37 per share. Investors aren't happy at losing that value, and a shareholder meeting set for 3rd July looks set to be a showdown.

While Yahoo! is thought to still be talking over a possible deal with Time Warner to take on its AOL business, the shareholders are clearly upset. Analysts think it unlikely that shareholders would throw out the whole board, especially without a deal on the table anymore, but they may choose to punish Yang. Microsoft claimed that it was put off the idea of a proxy fight over fears of a ‘scorched earth' policy by the Yahoo! board, and as a founder of the company, it's easy to see Yang's decision to reject the deal as not just a desire to preserve shareholder value, but a rather a petulant attempt to retain ‘his' company.

With a change in directors and a lower share price, Microsoft could well sneak back in. The company is clearly intent on getting into the online services business, and while areas such as mobile web and the Silverlight media player give Microsoft more open potential for competition, the key sectors such as online advertising, services and search are already dominated by Google. Microsoft could attempt to grow its presence in these areas organically, or add to its existing small acquisitions in the online space to cobble together a raft of services, but a single big purchase would be a much quicker, less risky way to gain mass against.

Ballmer might have seen his whale slip away this time, but like Captain Ahab, I wouldn't be surprised if he's heading back out to sea soon.

Finally some news on the iPhone officially making its way to the Middle East region, albeit just in Egypt at the moment. UK telecoms giant Vodafone has landed the rights to sell the iPhone in ten new markets , including Egypt, Turkey and India - which if nothing else will make grey market imports easier and hopefully officially bring Arabic language to the device.

There's no news on a possible Gulf launch yet, although Vodafone is the majority shareholder in Qatar's second mobile licence, which is due to start operations some time this year, and the company has links to Zain in Bahrain and Kuwait, so maybe.

There has been some suggestion that the deal has been cut to allow Apple to dump stocks of its current 2.5G iPhone ahead of the anticipated launch of a second 3G version in June, but this doesn't seem likely.

While some of the ten countries don't have 3G, and in fact, as a Vodafone spokesperson pointed out to me, haven't even announced any plans for 3G licences, the iPhone has been too popular for there to be that much excess stock floating about - unless the several million iPhones that have ‘disappeared' from official operators weren't really sold and unlocked, but instead have been sitting around gathering dust all year?

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code