For all I can tell, news of the latest off moment in Microsoft's on-and-off, sometimes contentious courtship of Yahoo! is good news, not bad.
The kabuki drama that is merger reporting in the business media would be silly if it weren't so blindly evident of deja vu, all over again. Here are a couple of different ways to look at the story:
- Mergers are generally bad ideas. Seriously. Name a merger that was successful in the past decade or so. Even if you could, there's not a pundit or manager who has been able to bottle the recipe. So it's fair to say, at best, that successes are few, and usually highly circumstantial. The real news in the mergers business hasn't been so much the marriages as the divorces (Daimler-Chrysler) or rumored separations (Sprint-Nextel, according to the news this week). So why isn't the starting point for coverage of the Microsoft-Yahoo! deal all about why it's likely a bad idea?
- The romance of courtship is deceiving. Like other mergers, this deal has been described as having something to do with Internet search, online presence, ubiquitous software, brands, experience, life, the future of business, and life in the universe. By giving us the play-by-play color commentary, the media accept prima facie declarations that would be utter nonsense if anybody actually considered them for a nanosecond.
- What's the secret sauce? Ok, let's assume that mergers can work, and that there are dependable reasons why. What are those qualities within Microsoft and/or Yahoo!? These factors would need to be expressed as complete sentences, with nouns and action verbs. The details of how this will specifically and literally produce that outcome. Failing to find this clarity is one main reason why mergers fail, whether in business or in love.
- Clarify the downside. Most merger dances, like romances in general, never even get off the ground (look at all the serial dating going on in the airline business). The proposed Microsoft-Yahoo! deal is no panacea for the problems they're facing as stand-alone business; perhaps more exploration of how they’re going to address those issues independently might shed some light on what/how a combined business might operate. But think about it...neither of those companies have such a strategy, or at least ones that are known to the uninitiated. This should be warning sign about, oh, 12.
- Stock value vs. brand value. The lingua franca of mergers is stock price, and the media coverage has centered on this measure of value (or cost, or opportunity, or however you want to spin it). Yet this is a disconnect between most of the subjective language used to describe the merits of such transactions (see "deceiving romance" above); you can't measure brand with stock price, nor can you reliably commit to future performance based on branding. So what's the value of a merger? Nobody really knows.
- Inertia has its merits. Innovation and load-shoot-aim are parts of the politically-correct blather by which businesses are supposed to operate in our 24/7, real-time global economy. But doing dumb things is still, well, dumb, and Occam's razor remains a useful tool for determining the veracity, if not downright possibility, of a variety of answers. So when you think about a combined Microsoft-Yahoo!, does a knowing smile break out across your face, along with a nod of understanding and approval? If not, maybe there's something fundamentally, systemically wrong with the idea?
My suspicion is that this story is far from over. I can't quite tell whether or not Microsoft and Yahoo! might be better off if they stay separate, or eventually get together.
Is it too dim of me to hope that the muddled story-telling will get clearer?