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 browseragnostic 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 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. Congress Judiciary Committee members Congressmen John Conyers and Lamar

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 respondents

Percentage

Ahmedabad Bhavnagar

30 20

60% 40%

Figure 2.1 Graphical representation of regional segmentation

40% 60%

Ahmedabad Bhavnagar

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 Professional

10 40

20% 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 $7B $4.1B $3.4B $660M 14,300 (-1000) $25.6B 22.9% Google $16,6B $9.9B $11.5B $ 4.2B 16,805 $176B 58.4%

Revenues Gross Profits Operating Expenses Net Profits Headcount Market Cap U.S. Search Market Share

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
10%

No. of respondents 45 5

%

& social network Google
90%

90% 10%

100
google

95
yahoo

100 100
95

Yahoo
100 100

90 100 80 90 60 50 40 30
70 60 50 40 30

Figure80 70 3.1

70
70

Google
Google

30

yahoo
yahoo

30

20 20 10 10 0
0

5 5 total total

Profetional Profetional Academic Academic

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 could

analysis we 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 1 2 3 4 No. of views 16 13 36 15 Percentage 20% 17% 45% 18%

Figure 3.3 Representation to the four basic reasons of respondents

18%

20% 1 2 17% 3 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 Yes No Wait for few months 23 25 2 Percentage 46% 50% 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 1 2 3 No. of respondents 13 6 4 Percentage 57% 26% 17%

60% 40% 20% 0%

57%

26% 17%

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 No

15 35

30% 70%

30%

Figure 3.5
70%

yes no

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 Yes No 15 10 Percentage 60% 40%

Figure 3.6 Pie and bar chart of views of respondents for “Google + Yahoo”
120 100 80 40% 60% yes no 60 40 20 0 Profetional Academic total 57 43 25 75 yes no 100 100

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 Yes No 33 17 Percentage 66% 34%

Figure 3.7 Cross tabulation of the analyzed data in response about the image of Yahoo
120 100 80 68 100 100

34% yes no 66%
60 40 20 0

60 40

yes no 32

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

60% 50% 40% 30% 20% 10% 0% Google Can't say Google+Yahoo Series1

4.
search engine.  Yahoo should not accept the offer of Microsoft.  Yahoo + Microsoft cannot takeover the traffic of Google.

FINDINGS
 Google has the maximum coverage over internet in terms of social interaction and

 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/googlestatement-microsoft-buying-yahoo.phtml

 http://www.news.com/Microsoft-bids-44.6-billion-for-Yahoo/2100-1014_36228705.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/MicrosoftCEO-challenges-Google-dominance.phtml

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