Qi Lu is Microsoft’s Chosen One

Microsoft announced today that Qi Lu will join the company as the President of Online Services Group. Steve Ballmer tapped Lu to oversee all efforts in search, advertising, and online information and communcations.  Qi comes to Microsoft after 10 years at Yahoo, where he most recently served as executive vice president of engineering for all Yahoo’s search and advertising development efforts. He has a dotorate in computer science from Carnegie Mellon and holds over 20 U.S. patents.

There was a lot of speculation on who Microsoft would hire for this top position. Lu is an interesting choice because he has fundmentally been an R&D guy. About coming to Microsoft, Lu says “I am genuinely excited about the opportunities ahead for Microsoft to make an enormous impact on the online industry.”  Here is the email Ballmer sent to employees following the announcement. Read more

$20 Billion Yahoo Search Deal Total Fiction

The Yahoo/Microsoft soap opera continues. The Times broke a story that Microsoft was going to buy the Yahoo search business for $20 billion. The deal also included a shake up in management. It is thought that Jonathan Miller, ex-chairman and chief executive of AOL, and Ross Levinsohn, a former president of Fox Interactive Media, have been lined up to lead the new management team.

This entire story was discredited by Kara Swisher when she said Ross Levinsohn was quoted on the record saying this is “total fiction”. This whole thing seems to be cooked up with someone with a good imagination. Paying $20 billion for one piece of a company that only has an entire market cap of $16 billion seems to be pretty odd. Even compared to the original search deal highlighted by TechCrunch, Microsoft would pay over double the price for the business and guarantee double the money, all in a down economy. I think Uncle Carl is spreading rumors trying to prop up Yahoo’s poor stock price.

Carl Icahn Doubles Down on Yahoo

Caril Icahn bought another 7 million shares of Yahoo (YHOO) according to regulatory filings. Icahn snapped up about $67 million worth of shares over the past three days for an average price of $9.92, bring his total stake at 75 million shares or nearly 5.5% of the company.

Perhaps he thinks they are going to find some superstar CEO to save the company. But the outlook seems to be pretty grim. 

Last week Steve Ballmer, at the Microsoft shareholder meeting reiterated that he was “done” with an acquistion. In October Kirk Kerkorian sold his entire stake in Ford and lost over a half a billion dollars. Carl must be feeling a little luckier than Kirk.

Jerry Yang Steps Down

Jerry Yang’s return to Yahoo has been an utter failure. When Jerry assumed the reins in June 2007 it was hyped as the return of the “chief” Yahoo. The savior had returned, the one that bleeds purple would restore the company back to prominence. Boy were they wrong.

Unfortunately, the hype came and went. Jerry spent months trying to just figure out what Yahoo had become in the post Semel era. Is Yahoo a media company? or Is Yahoo a search and advertising company? I don’t think Jerry ever figured it out.

The botched Microsoft deal will go down in history as the worst played Texas Hold’em game ever played. Yang tried to bluff Microsoft to go all in for the low price of $47 billion. If Yang would have truly understood his business, he would have realized he had really no other options. Yahoo was/is being pinched by two titans with deep pockets and they are right in the middle. In the the high scale, multi billion dollar fixed cost business of search you are either fully committed or you are not in the game. Microsoft knew that Yahoo could not afford to get into an arms race with Google. Read more