I caught the Microsoft acquisition of Yahoo! news on CNBC earlier this morning, where one analyst had just listened to the conference call and saying that Microsoft had been "long on vision, short on details."
The deal is estimated to be worth $44.6B, a 62% premium over yesterday's closing price of $31 per share.
The Microsoft press release announcing the deal related the following:
"The combination will create a more efficient company with synergies in four areas: scale economics driven by audience critical mass and increased value for advertisers; combined engineering talent to accelerate innovation; operational efficiencies through elimination of redundant cost; and the ability to innovate in emerging user experiences such as video and mobile. Microsoft believes these four areas will generate at least $1 billion in annual synergy for the combined entity."
It also stated that "Today this market is increasingly dominated by one player. Together, Microsoft and Yahoo! can offer a competitive choice while better fulfilling the needs of customers and partners."
I can't imagine which "one player" they could possibly be talking about.
Challenges abound for an integration this size, including those of technology and infrastructure, brands (MSN, Windows Live, Office Live, etc.), human resource (~12K Yahoo employees), systems and applications...the list goes on and on and on.
I've no doubt McCann Erickson and other Microsoft agency partners of both they and Yahoo will be some of the busiest beavers of the deal figuring out the brand and advertising implications of the deal.
Makes my head hurt just thinking about it.
But it's on the advertising back-end where things could get most interesting, remembering that Microsoft recently bought adserving network aQuantive for $6B, and Yahoo has struggled with its Panama ad delivery system (and whose bumpy clickstream was said to contribute to former CEO Terry Semel's exit).
Will 1 + 1 = 3 or 1.5?
A SearchIgnite study from this week says that Project Panama is on the decline, reports AdWeek, although a -0.9 4Q market share dip doesn't exactly set off the ad click fire alarm.
Yahoo can only hope that life is better with the butterfly.