PRESENTATION ON

MICROSOFT BIDS FOR YAHOO

“A TUG OF WAR TO RULE

THE INTERNET”
 PREFACE

As per the syllabus of MBA-2 SEM, research methodology is an important subject

included in it. Theoretical study is important but along with theoretical study practical
study is also important because that experience helps in corporate world at future date.
So, the research conducted by us gave us experience of how theoretical aspects of
research are applied practically and let me specify that it was a great experience.
 ACKNOWLEDGEMENT
It was a pleasure conducting research on such global topic. We got an opportunity of
learning different attitude of people and their behavior. We would like to thank Prof. Jay
Badiyani for giving us this opportunity. We would also like to thank the Professors and
the IT companies who are our respondents for their cooperation. And lastly, we would
like to thank all those who directly or indirectly helped in our research.
 CONTENTS
1. Introduction
1.1. Microsoft + Yahoo
1.2. Yahoo + Google
2. Research Methodology
2.1. Objective
2.2. Problem
2.3. Type of research
2.4. Research design
2.5. Data collection
2.5.1. Primary
2.5.2. Secondary
2.6. Population considered for research
2.6.1. Regional segmentation
2.6.2. Occupational segmentation
2.7. Sampling frame
3. Data Analysis

4. Findings
5. Limitations

6. Conclusion
7. Recommendations
8. Questionnaire
9. Annexure
1. INTRODUCTION
1.1. Microsoft + Yahoo
Microsoft has offered to buy the search engine company Yahoo for $44.6bn
(22.4bn) in cash and shares. In its response, Yahoo called the Microsoft bid
"unsolicited". The offer, which is contained in a letter to Yahoo’s board,
amounts to $31 a share and represents a 62 percent premium over Yahoo's
closing price. Microsoft tries to achieve the main goals of the $41 billion deal,
provided it concentrated on not disrupting the experience of Internet users and
advertisers, rather than on racing to get all the financial and other benefits from
a consolidation of the two companies' operations.

The deal would be huge. It's got to happen. There are five reasons why
Microsoft must and will succeed in snapping up Yahoo!

 2 + 3 is still less than 1

The latest batch of Nielsen Online data is sobering. Google continues to
grow its market share at the expense of Yahoo! and Microsoft. It's not even
close, really. Yahoo! and Microsoft now account for less than 30% of the
country's search requests. Another few monthly slips and Yahoo! and Mr.
Softy combined will command just half of Google's search traffic.
 There is just no conceivable way for Microsoft or Yahoo! to catch up with
Google, but a combination would force advertisers to consider Microhoo as
more than just a second-tier outlet for generating leads.

 Turn a bleeder into a leader

Despite the hubbub over the chunky margins to be had in cyberspace, one of
the biggest industry shockers is that Microsoft's online arm is actually
posting operating losses. That may change after the recent acquisition of the
profitable quantities, but snapping up Yahoo! would definitely get MSN out
of the red.

Right now, running its online business at a loss is no big deal for Microsoft.
It is carving out fat margins in its software stronghold, enough to more than
offset any shortcomings in its online and Xbox subsidiaries. Why is that
important? It brings us to the third reason for rushing a shotgun wedding.

 Microsoft needs to wean itself off the software cash cow

As the world's largest software company, Microsoft has been feasting for
decades on sales of its industry standard operating system and applications
software. There are reasons to be fearful there. Everyone from Google to
Sun Microsystems has Web-based apps that compete directly with Microsoft
Office.

Heck, even Adobe got into the game with its recent buy of the developers
behind Buzzword. And now that the cloud computing revolution is sending
more desktop applications online, will premium operating systems be as
relevant in the future? It is true Microsoft has the leading Web browser, but
that will become a more leveled playing field now that so many browser-
agnostic gadgets with Web-surfing capability are hitting the market.
 Microsoft's dominance in software isn't going away overnight, of course.
However, Microsoft may as well snap up Yahoo! to make sure it's not
carrying all of its eggs in a software-tethered basket.

 Yahoo! is a ticket to the East

MSN China has struggled. Microsoft's battles against piracy in the East have
been well documented. This comes at a time when some of Yahoo!'s best
investments — stakes in Yahoo! Japan, Alibaba, and Gmarket — find
Yahoo! sometimes holding up as a better brand abroad than it is closer to
home. We live in a global marketplace. Microsoft knows this, but Yahoo! is
a good friend to have in its corner as it tackles faster-growing markets
overseas.

 Get in under the regulatory cutoff

Microsoft may have cheered when the European Commission decided to
take a closer look at Google's pending purchase of DoubleClick, but it's
really more of a last call for the dot-com barflies. Microsoft has been busy
lately with smaller Internet buys, but it may as well land the barfly that it
truly wants to take home for the night — Yahoo! — before regulators cut
both Microsoft and Google off from the dot-com watering hole.
Ultimately, the deal should help Microsoft become profitable in online
advertising.

1.2. Yahoo + Google

The deal comes as Microsoft and Yahoo have both struggled to compete against
Google. Because Yahoo has been struggling to compete with Google, which has
also been a competitor to Microsoft. Microsoft didn't mention Google by name
in its announcement, but it did indicate that its acquisition bid was aimed
squarely at its rival.
Microsoft also pointed to the intense investments needed in data centers and
technology needed to compete with Google. Google has said it finds Microsoft's
$44.6bn (£22.65bn) bid to buy rival Yahoo "troubling" and wants regulators to
scrutinize the proposed deal. In a blog, Google said the tie-up could unfairly
limit the ability of consumers to freely access competitors' email and instant
messaging services.

It said Microsoft had previously sought "to establish proprietary monopolies".

Microsoft made an unsolicited offer for Yahoo on Friday, and Yahoo has said it
is considering the proposal. Google's clearly got a dominant position. They've
got about 75% of paid search worldwide.

Reports said Yahoo would consider an alliance with Google as one way to fend
off Microsoft's bid. The Wall Street Journal reported on Sunday that Google's
chief executive Eric Schmidt called his counterpart at Yahoo, Jerry Yang, to
offer his company's help in any efforts to rebuff Microsoft.

Time Warner, News Corporation, AT&T and Comcast are some of the firms that
are often named prospective suitors for Yahoo. But, according to the New York
Times, none of these companies have begun work on any rival bids. Microsoft
shares began Monday's trading session up slightly. At 1510 GMT it was up 8
cents at $30.53.

 What do top executives at Google think about this deal?

“Microsoft's hostile bid for Yahoo raises troubling questions," said David
Drummond, Google's senior vice president for corporate development and
chief legal officer”.
 "The Committee will hear from experts who will weigh in on whether this
proposed consolidation works to further or undermine the fundamental
principles of a competitive Internet".- A joint statement by Congress
Judiciary Committee members Congressmen John Conyers and Lamar
Smith.

"This is about more than simply a financial transaction, one company taking
over another. It's about preserving the underlying principles of the internet:
openness and innovation," Analyst Evan Stewart of Zuckerman said in a
company blog.

2. RESEARCH METHODOLOGY

2.1. Research objectives

• “The king of internet”- Our primary objective for conducting the research
was to find out that ultimately who is the leading the internet. Because if we
see today then Google is number in search engine and social network, while
Yahoo is the famous for its e-mail service. And Microsoft has not been able
to build a strong position in the world of internet. Thus, we tried to find out
ultimately who is at the top.

• “Microsoft bids for Yahoo”- The second objective was to find out that why a
pioneer competitor technology wanted to purchase Yahoo. Basically, if we
see then, Microsoft has not been able to cover a market share in internet.
Though it purchased “Hotmail” in 40 crore $, it has not helped Microsoft
much in standing against Yahoo and Google. So, the bid was an attempt to
merge with Yahoo and strengthen its position in internet world.
 • “Impact of this issue on the majority of the internet users”- And the last
objective was that if any such deal takes place then what would be its impact
on the internet users.

2.2. Research problem

On 1st Feb 2008, there were headlines that software superpower Microsoft bids
for Yahoo and the amount of bid was 44.6 Billion $. The chief executive of
Microsoft Steve Baulmor said that they wanted to merge with Yahoo so as to
complete effectively in online market. While on the other side, Google offered a
hand of help and displayed their wish to merge with Yahoo. So our research
main problem is to find out of this triangle of giants i.e. Microsoft, Yahoo and
Google who will posses the major control over the internet.

2.3. Type of research

“Exploratory research”- It is also termed as formulative research study. The
main purpose of such study is that of formulating a problem for more precise
investigation. The major emphasis in such study is on discovery of ideas and
insights. Our project is more of an exploratory research with more of qualitative
analysis than quantitative. As our research design is flexible enough to provide
opportunity for considering the aspect of problem of research, it can be called as
exploratory research.

2.4. Research design

• Universe:- Ahmedabad and Bhavnagar
The data collection method for this project begins with finding a
sample of the population. The population for this project was
Bhavnagar and Ahmedabad.
• Sample size:- 50
 • Sample design: - Purposive, Convenience
Our sampling method is purposive because it involves deliberate
selection of particular units of the universe i.e. Ahmedabad and
Bahvnagar for constituting a sample which represents the universe.
In our practical research population elements are selected for
inclusion in the sample based on the ease of access, it can be called
convenience sampling also.

2.5. Data collection

The research methodology adopted for collecting the data was both Primary
research and Secondary research. The instrument for data collection was a
structured questionnaire targeted towards people who have deep involvement in
this article which was published. This questionnaire was designed to know the
psyche of a person as they have vast influence due to the issue of merger of two
giants of internet.

2.5.1. Primary
Primary data was collected to study the investment psyche of a person, their
practice on saving, investment options available and the need of financial
planners to manage individual’s wealth. Questionnaire was designed and
Interviews both direct and through telephone were undertaken, to ascertain the
investor’s behavior as well as to depict the future prospects and growth
momentum of the wealth management industry, on which the hypothesis was
tested.

2.5.2. Secondary
Secondary data was collected through various means such as magazines,
journals, newspapers and websites. The secondary data was collected just to get
a broader view and clarity about the issue.
2.6 Population considered for research
50 people belonging to Ahmedabad and Bhavnagar cities were asked to fill the
questionnaire, on the basis of which an attempt is made to study the prospects of
Position of these three pioneers in the internet market. The sample unit consists
of those people who have either corporate or academic profiles as they can give
the accurate information about this issue. A sampling frame has been developed
so that everyone in the target population has an equal chance of being sampled.

2.6.1. Regional segmentation

Majority of our respondents were from Ahmedabad and followed by
Bahvnagar. The no. of respondents from the respective cities is shown in
figure.2.1

City No. of Percentage

respondents

Ahmedabad 30 60%

Bhavnagar 20 40%

Figure 2.1 Graphical representation of regional segmentation

40%
Ahmedabad
Bhavnagar
60%
 2.6.2. Occupational segmentation
Samples include responses from academic and professional classes of
service as to include their perception and awareness. The percentage
distribution of this type of segmentation of respondents is shown in
figure 2.2.

Occupation No. of respondents Percentage

Academic 10 20%

Professional 40 80%

20%

80%

Academics Professionals

Figure 2.2 Graphical representation of occupational segmentation

2.7. Sampling frame

The sample design adopted for the purpose of research was purposive and convenience
sampling. Since we had selected only professors and IT companies as our respondents it
became purposive sampling and after selecting them purposively we resorted to
convenient sampling.
3. DATA ANALYSIS
3.1. Which one has the maximum coverage over internet according to
search engine as well as social interaction by net?
As this question can be difficult to answer, but the following table data shows that the
Google is running far away from Yahoo in each area i.e. revenues, net profits, market
share etc.

Yahoo Google
Revenues $7B $16,6B
Gross Profits $4.1B $9.9B
Operating Expenses $3.4B $11.5B
Net Profits $660M $ 4.2B
Headcount 14,300 (-1000) 16,805
Market Cap $25.6B $176B
U.S. Search Market Share 22.9% 58.4%

In our research, 90% of our respondents agreed with above statement. The graphical
Representation of this analyzed data is shown in figure 3.1 and bar graph is shown in
figure 3.2.

Search engine No. of %

10%
& respondents
social network
Google 45 90%
90%
Yahoo 5 10%
100 100
100 95
100 100
90 100 95
google yahoo
80 90
70
70 80
Figure 3.1 70
70
60
60 Google
50
50 Google
40 yahoo
40 30 yahoo
30 30
30
20 20
10 10 5 5
0 0
Profetional
Profetional Academic
Academic total
total
Figure 3.2 Bar graph that shows the cross correlation between two variables

3.2. Why Microsoft is bidding for Yahoo?

Microsoft’s $31 a share offer for Yahoo is made possible by Yahoo’s slumping shares
(Yahoo’s stock was trading at about $31 a year ago). The real impact to Microsoft,
though, is not visible in these numbers because Yahoo represents a new growth
opportunity for Microsoft in advertising revenues and online services. During the last
four quarters, Microsoft’s revenues for its online services (MSN, Windows Live, etc.)
were $2.8 billion and it lost $949 million. So just combining Yahoo with that
business, you get revenues of $9.8 billion, but Microsoft would still be showing a net
loss for that business of $289 million.

By analysis we
could figure out
four basic reasons of our respondents for this bidding of Microsoft. The percentage
allocation to these four reasons is shown in below table and figure 3.3.

1. For defeating Google’s market

2. For expanding the network and getting long term profit & growth
3. Make the use of advertisement through business of internet
4. To compete with Google this is threatening Microsoft position

Reasons No. of views Percentage

1 16 20%

2 13 17%

3 36 45%

4 15 18%

Figure 3.3 Representation to the four basic reasons of respondents

18% 20%
1
2
3
17%
4
45%
3.3. Should Yahoo accept the offer? Why?
Microsoft obviously wants this badly considering the high price it is prepared to
pay. Microsoft is losing to Google on the search and other services battle and the
only people this will benefit are Microsoft in the end. Yahoo is a human edited
directory which is slow and archaic. It will see a turn around in some of the
technology it uses but it also suspect that the real reason is to bring the Yahoo
customers away from Google and into the Microsoft arena.

Our 46% respondents are agreed for accepting the offer of Microsoft by Yahoo. The
reason basic reason which could be find out for saying no by most of the
respondents is that the Yahoo will loose its image as it happened in the case of
“Hutch-Vodafone”. 4% said that Yahoo should wait for few months for this offer of
Microsoft because it has its own user.

No. of respondents Percentage

Yes 23 46%
No 25 50%
Wait for few months 2 4%
 Figure 3.3 Representation of above table

60%
50%
40%
30%
20%
10%
0%
Yes No Wait for few
months
3.4. If yes, what would be the impact on common man and internet?
There are three main views of the respondents who are agreed with merger of
Microsoft and Yahoo described as follows:
 Both competitors will enhance the quality of service
 Users have to pay extra for the services
 No impact on internet and common man
Out of 46% of respondents 57% are agreed with the view 1 and 26% are agreed
with view 2.

Impacts No. of respondents Percentage

1 13 57%
2 6 26%
3 4 17%

57%
60%

40%
26%
17%
20%

0%
1 2 3

Figure 3.4 Graphical representation of impact on common man of “Microsoft +

Yahoo”
3.5. Will the merger of Yahoo and Microsoft be able to take over the
traffic of Google?
Here are some numbers on the combined traffic reach of Yahoo and MSN
properties. Together, they have a 15.6 percent market share of Internet traffic in the
U.S., compared to 7.7 percent for Google properties. But Google still has double teh
market share in search of both Yahoo and Microsoft combined.

As shown in the below analyzed table, it is clearly shown that 35 respondents said
that “Microhoo” can not be able to take the area of Google over internet. Figure 3.5
shows pie representation of this analyzed data.
No. of respondents Percentage

Yes 15 30%

No 35 70%

30%

Figure 3.5 yes

no
70%
3.6. If no, should Yahoo merge with Google? Why?
The merger, if allowed by investors not to mention regulators, would be colossal. It
had been searched mergers before, but never between two players that command
such a large share of the search market. Combined, the two would control
something like 70 percent of the "natural" search results that people see and nearly
all of the paid listings out there. The biggest stumbling block in all this has been
over management issues. In the months following the IPO, they've both become
largely tired. In an amazing reversal, both are stepping down from executive duty.

As per the ideas of our respondents the two basic reasons was ignited about the
merger of Yahoo and Google implied as under.
 Yes – Opportunity for yahoo to expand Delicio, Flicker etc.
 No – Slight change in web designing, yahoo can be better web designer over
internet.
60% respondents are agreed with the merger of Google and Yahoo with above
specified reason and rest of the respondents said no in response to this merger.

No. of respondents Percentage

Yes 15 60%
No 10 40%

Figure 3.6 Pie and bar chart of views of respondents for “Google + Yahoo”

120
100 100
100

80 75

40% 57 yes
yes 60
43 no
no
60% 40
25
20

0
Profetional Academic total
3.7. Will Yahoo be able to stick to its image after merging with
Microsoft?
While the tech world waits to see whether Yahoo will accept Microsoft’s $44.6
billion takeover bid, Microsoft and Yahoo employees sleep restlessly at the prospect
of massive staff cuts if the takeover goes ahead. There’s a lot of duplication between
Yahoo and Microsoft’s internet arms and services will shut and/ or be downsized as
content and services from each cross-pollinate across the merged entity. Here’s
some upcoming clashes and which side/ service may continue into the future.

After analyzing the data of this question, we could find out that the condition of
“Microhoo” arises; Yahoo will be remains as it is in the market of internet i.e. in
games, mail, mapping, Q&A, widgets, IM etc.

No. of respondents Percentage

Yes 33 66%
No 17 34%
Figure 3.7 Cross tabulation of the analyzed data in response about the image of Yahoo

120
100 100
100

80
68
34% 60 yes
yes 60
no
no 40
66% 40 32

20

0
Profetional Academic total

3.8. Ultimately who do you think will rule the internet?

Yahoo, Google, Microsoft are three of the worlds largest IT Companies. If these
companies will merge, then the traffic on internet will go unthinkable way. The
bandwidth may go at higher to get proper result. The Future is really bright with the
merging but they have to be on proper solution so common man have to suffer all
these stuffs. So, lastly as to figure out the coverage after the issues of “Mocrohoo”
and “Hoogle”, most of respondents are expressed their views in favor of Google.

No. of respondents Percentage

Google 25 50%
Can’t say 10 20%
Google +Yahoo 15 30%
 60%

50%

40%

30% Series1

20%

10%

0%
Google Can't say Google+Yahoo

4. FINDINGS
 Google has the maximum coverage over internet in terms of social interaction and
search engine.
 Yahoo should not accept the offer of Microsoft.
 Yahoo + Microsoft cannot takeover the traffic of Google.
 If Yahoo accepts the offer of Microsoft it will definitely affect its image.
 Right now it is Google who is at the top. If we combine e-mail, search and instant
message, the traffic of Yahoo is 15.6 million users while that of Google is 15.9
million users.

5. LIMITATIONS
 Limited sample size
The numbers of respondents selected for the research were 50 which is quite
small sample size as it does not result in accurate generalizations.

 Subjective bias
As the questionnaires were sent through mail to different IT companies there are
chances of subjective bias.

 All open ended questions

 The questionnaire was designed with all open ended questions because the topic
of research was such where we needed a broad and clear view of the respondents
for accurate analysis.

6. RECOMMENDATIONS
 Yahoo should not merge with Microsoft because yahoo will not benefit from this
merger.
 New ideas and constant innovation is required if Yahoo and Google want to
survive in the competition.
 Still the scope needs to be wider. There are countries where still Yahoo & Google
are not popular. So steps should be taken in this regard.

7. CONCLUSION
A merger might give Google some extra competition, but it wouldn't unseat it as the
top search provider, and it would take some time to convince advertisers that they
would do better on a Microsoft-Yahoo platform over Google's highly successful ad
business. Whatever be the outcome the consumers or the internet users are the ones
who will be at maximum benefit.
8. QUESTIONNAIRE

Research Conducted
On
“Microsoft bids for Yahoo-A tug of war to rule over internet”

Respected Sir/Madam,

We are students of 2nd semester of M.B.A. studying in Department of Business

Administration-Bhavnagar University, Bhavnagar. We are conducting a research
on the topic mentioned above as part of our subject named “Research
Methodology”.
For completing the primary data a list of questionnaire has been prepared that
attached below. We plan to collect the views of different employees of prestigious
companies. Your views regarding to the questionnaire of the topic will helpful in
expanding our knowledge and also in making the report. It will be our pleasure if
you share your ideas and views with us. Kindly, Specify your name and
designation at the end of this document.
 Thanking You,

Nirav Jadav (nirav18_jadav@yahoo.co.in)

Neha Upadhyay
(nehaupadhyay_n@yahoo.co.in)
Hitesh Sapariya (hitus07@yahoo.co.in)
1. Which one has the maximum coverage over internet according to search
engine as well as social interaction by net?
View:

2. Why Microsoft is bidding for Yahoo?

View:

3. Should Yahoo accept the offer? Why?

View:
4. If yes, what would be the impact on common man and internet?
View:

5. Will the merger of Yahoo and Microsoft be able to take over the traffic of
Google?
View:
6. If no, should Yahoo merge with Google? Why?
View:

7. Will Yahoo be able to stick to its image after merging with Microsoft?
View:

8. Ultimately who do you think will rule the internet?

View:

Information of person
Name:
Designation:
Comp. Name:
City:

Signature

Thank You
9. Annexure: Bibliography
The following companies and association’s web sites were referred while collecting
information used in the research.

1) Internet Source

 http://www.msnbc.msn.com/id/22612225
 http://news.bbc.co.uk/2/hi/business/7222114.stm
 http://news.bbc.co.uk/2/hi/business/7222199.stm
 http://newsforums.bbc.co.uk/nol/thread.jspa?sortBy=1&forumID=4212&
start=15&tstart=0&edition=2&ttl=20080311135202#paginator

 http://news.bbc.co.uk/2/hi/business/7224890.stm
 http://www.pocket-lint.co.uk/news/news.phtml/12611/13635/google-
statement-microsoft-buying-yahoo.phtml

 http://www.news.com/Microsoft-bids-44.6-billion-for-Yahoo/2100-1014_3-
6228705.html
  http://news.bbc.co.uk/2/hi/business/7222431.stm
 http://news.bbc.co.uk/2/hi/business/7225599.stm

 http://www.pocket-lint.co.uk/news/news.phtml/13337/14361/Microsoft-
CEO-challenges-Google-dominance.phtml

2) Times Of India
3) Business World
4) Harvard Business Review