April 06, 2008

QUICK INDUSTRY NEWS (04/06/08)

Yahoo drags, Ballmer irked
It has now been more than two months since we made our proposal to acquire Yahoo! at a 62% premium to its closing price on January 31, 2008, the day prior to our announcement. Our goal in making such a generous offer was to create the basis for a speedy and ultimately friendly transaction. Despite this, the pace of the last two months has been anything but speedy.

t seems that Steve Ballmer is showing his claws as Microsoft loses its patiences with Yahoo. April 26, 2008 is the day we will all be waiting for. If Yahoo has not answered (favorably), Microsoft will take its offer to the shareholders at what I would guess would be a reduced purchase price. For Yahoo, I am still curious as to why they think they can hold out for better? They were not doing doing well before the offer nor were they strategically placed to challenge Google. This Microsoft bid was the best thing that might have happened for the board, who will be able to leave semi-gracefully, before getting clobbered further by their competition.

What I am sure has become a major concern for Microsoft is the new anti-monopoly law being put into place by Beijing. Yahoo is quite invested in Alibaba and since a major factor behind the Microsoft/Yahoo merger is the Chinese Market, I wouldn't be surprised to hear further aggressive statements coming from Microsoft, as they work to complete this merger expediently.

The end of 1 year multiple entry visas to China?
I received a call today from a friend in HK complaining about the new regulations being imposed on foreign businessmen in China. He read an article stating that 1 year, multiple entry visas would no longer be issued. Aside from being a major revenue boost for China, it also minimizes the number of foreigners that enter the country (they have been at this for a few years). This is going to hit a lot of businesses, specifically the small and mid sized entrepreneurs. Business in todays world necessitates travel. China requires a greater attention to relationship building than most. I am sure many of us old China hands have our own little stories of how weak local relationships have led to missing shipments, delayed licenses and similar “irritations.” Worded in a more direct manner-- you want to do business on the mainland, you make sure you are there to eat and drink with the local government, sing songs with the company management, and pace the floors with the factory workers, or you may be in for quite a ride. Guanxi and restricted visas do not go well together.

6 comments:

Anonymous said...

well obviously the hopeful party here is Yahoo! Can't blame them if they are still trying to get a better offer. Yeah yeah, it may be too idealistic but hey, i guess being on that side of the fence isn't too fun that's why they are being desperate to get the best deal that they can.

Anonymous said...

"It seems that Steve Ballmer is showing his claws as Microsoft looses its patiences with Yahoo" - shouldn't this be loses instead of looses?! :)

Anonymous said...

JJS,
The chinese government's restriction is quite understandable. You have all of these dodgy characters posing as businessmen getting multiple visa's in quite an alarming number.It may seem like an unecessary move by the chinese government but im all for it, just to keep those dodgy characters at bay. I remember beijing and being introduced to this so called filipino "scion" to a shipping fortune. What a dodgy character...
Sourpuss

The Jolly Jetsetter said...

Regarding Yahoo and Microsoft, let us not forget that Yahoo being a public company can very easily find itself in a situation where the company is being purchased at less than what is presently being offered. Since this deal was made public, Yahoo has lost a lot of good people. Worse, shareholders who have seen the declining value of the company both in worth and in terms of long term strategy, are eager to "cash out." They cannot hold out too long... as for the spelling error, thanks-- being revised!

The Jolly Jetsetter said...

Dear Sourpuss
It is difficult to judge which businessmen have merit and which do not. At the end of the day what the government cares about is that these businessmen can positively affect the economy. In this respect a tightening on visas will be counter effective. What I often find in China, is that the government would rather take a hard, one for all policy-- over flexibility.

Anonymous said...

JJS,
I agree with what your saying but you have to remember that most of these senior chinese government officials were born at a time where in "flexibility" wasn't even an option, so it will be a long time coming. As i always say when dealing with china "patience is a virtue" you litterally have to wait for a generation to die off first in order to see change in some of their hardcore policies.
Sourpuss