Microsoft's Corporate Development Strategy Changing Daily

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Microsoft Chairman Bill Gates told the press in Tokyo yesterday that the company “isn’t pursuing other deals following the withdrawal of its $47.5 billion takeover bid for Yahoo.” Their experience dealing with Yahoo, apparently, has put them off acquisitions altogether.

But wait. Just Monday Gates said “I wouldn’t rule out some partnerships but we don’t have anything imminent there” following a meeting and dinner with South Korean President Lee Myung-bak. In corporate-speak, that’s a pretty strong statement that Microsoft wants to buy some companies.

Did Microsoft change corporate development strategies from one day to the next? It appears they did. On Monday he says he wouldn’t rule out partnerships. Tuesday, no partnerships and a go it alone strategy.

What’s the real strategy? I can’t help but wonder if their key goal is to convince the market that they really don’t want Yahoo in order to drive their stock price down as far as possible. It’s clear that the markets still anticipate a deal with Microsoft, or possibly Google. It is currently trading at just under $26; analysts think its share price should be closer to $22.

If Gates is out telling the world, as he did on Monday, that they need to acquire other companies to fix their Internet strategy, it doesn’t take very long to figure out that there isn’t another Yahoo out there on the market. Microsoft has a long term problem on its hands, and Yahoo may be the only remedy. So when Gates says Microsoft isn’t pursuing deals, what I translate that to is “We really, really want to buy Yahoo.”

Update: There may be a translation issue here. The exact quote from the Tokyo conference is below, doesn’t seem to be a statement by Gates that they aren’t pursuing deals:

Q6. (Noriaki Tomisaka, ANB): We heard in your speech that Microsoft will go individually regarding the Yahoo!. Since this merger didn’t work out, your goal is to chase the Google by your own accord. Does that affect your strategy from now?
A6. (BillG): Well, Google in many countries has a very high share of search market. We think that there are innovations that will take place in search. We are company with the commitment to breakthrough software technology that can provide some competition. We really make sure that state of the art does get advanced and advertisers have good choices in terms of what they are doing with their interactive advertising. We will have a conference coming up, I think, in next month in Seattle called the “Advance”. We will start to show you the next version of the search. Some of the things are very excited about with that. In courses, we make these advances when we invest in marketing to get word out there so that people try out our product. Fortunately, the search is very easy to type-in new your keywords and try out different product, we will give people that opportunity as we make the advances that will give people great choice there.

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