Sunday, February 10, 2008
Microsoft Challenges in acquiring Yahoo!
Microsoft's $44.1B bid for Yahoo! has been the hot news for the internet community for past few days. Though there are lot of rosy things in for Microsoft in acquiring Yahoo!, there are lot of challenges involved to make it successful. Here, I try to list few challenges involved.
The price for acquisition is huge and by the Yahoo's reaction it seems like it might fetch around 40$ per share. This would mean P/E of 85. Though this might be still be far lower than the Oracle's acquisition of BEA Systems with P/E of around 270, the size of the acquisition and the given the growth of the Yahoo! in past 2 years make it a costly acquisition. As the history proves that only 20% of M&A's are actually successful, it remains uncertain how much time it would take for Microsoft reap the benefits. The acquisition would add huge amount of goodwill to Microsoft's balance sheet to already huge 10.3B$ of goodwill present. Also, Microsoft needs to borrow huge debt for the first time, leading to increased interest payments. This acquisition could prevent Microsoft from making other big acquisitions for some time giving an edge to Google to acquire relevant startups avoiding huge competitive bidding.
The other challenge lies in the anti-trust issues. It could take more than a year to complete the acquisition as Google would try hard to push the approval from regulatory to buy time to come up with adequate strategy to fight the combined forces. Also, this could lead to spinning of some of the business of both Yahoo! and Microsoft though not the core search and advertising business.
Coming to the positive side of the things, the combined forces of Yahoo and Microsoft would be able to attract advertisers. As per the current situation there are rarely any advertisers who advertise only with Microsoft and Yahoo!. All of them choose them after advertising with Google. With combined forces, this may change and they may be able to attract big advertisers like AOL for exclusive advertisement which make huge chunk of Google's revenue today.
Perhaps the biggest challenge lies in the integration of technology. Yahoo! and Microsoft use different technologies. Microsoft has been traditionally inclined to using its own softwares be it operating system, database (MSSQL) or .NET, ASP platforms. In contrast Yahoo! uses lot of open source softwares and non Microsoft's softwares like UNIX, JSP etc.. Integrating them would involve huge effort and pain to the engineers of both the companies which might not be a job they would like. Adding to it is the difference in culture of the companies where fun loving humor culture of Yahoo! might not be there at Microsoft. This might lead to many employees of Yahoo! and even Microsoft quitting to join startups or perhaps Google. To avoid the situation Microsoft needs to compensate them which might add further to the burden of Yahoo!.
Overall, it might take at least three years or perhaps more to get some benefits of acquisition and thereafter some more time to make the search engine as effective as Google. This is sufficient time for Google to make it more strong and taking it into new standards. Also, the question remains whether Microsoft would Kill Yahoo! or would keep it both of which have their own pros and cons.
In short, I would suggest Yahoo! share holders to sell the stock to benefit from upturn, and avoid Microsoft stock and Google shareholders to hold on to it. Also, it might be good opportunity to grab Google stock.
The price for acquisition is huge and by the Yahoo's reaction it seems like it might fetch around 40$ per share. This would mean P/E of 85. Though this might be still be far lower than the Oracle's acquisition of BEA Systems with P/E of around 270, the size of the acquisition and the given the growth of the Yahoo! in past 2 years make it a costly acquisition. As the history proves that only 20% of M&A's are actually successful, it remains uncertain how much time it would take for Microsoft reap the benefits. The acquisition would add huge amount of goodwill to Microsoft's balance sheet to already huge 10.3B$ of goodwill present. Also, Microsoft needs to borrow huge debt for the first time, leading to increased interest payments. This acquisition could prevent Microsoft from making other big acquisitions for some time giving an edge to Google to acquire relevant startups avoiding huge competitive bidding.
The other challenge lies in the anti-trust issues. It could take more than a year to complete the acquisition as Google would try hard to push the approval from regulatory to buy time to come up with adequate strategy to fight the combined forces. Also, this could lead to spinning of some of the business of both Yahoo! and Microsoft though not the core search and advertising business.
Coming to the positive side of the things, the combined forces of Yahoo and Microsoft would be able to attract advertisers. As per the current situation there are rarely any advertisers who advertise only with Microsoft and Yahoo!. All of them choose them after advertising with Google. With combined forces, this may change and they may be able to attract big advertisers like AOL for exclusive advertisement which make huge chunk of Google's revenue today.
Perhaps the biggest challenge lies in the integration of technology. Yahoo! and Microsoft use different technologies. Microsoft has been traditionally inclined to using its own softwares be it operating system, database (MSSQL) or .NET, ASP platforms. In contrast Yahoo! uses lot of open source softwares and non Microsoft's softwares like UNIX, JSP etc.. Integrating them would involve huge effort and pain to the engineers of both the companies which might not be a job they would like. Adding to it is the difference in culture of the companies where fun loving humor culture of Yahoo! might not be there at Microsoft. This might lead to many employees of Yahoo! and even Microsoft quitting to join startups or perhaps Google. To avoid the situation Microsoft needs to compensate them which might add further to the burden of Yahoo!.
Overall, it might take at least three years or perhaps more to get some benefits of acquisition and thereafter some more time to make the search engine as effective as Google. This is sufficient time for Google to make it more strong and taking it into new standards. Also, the question remains whether Microsoft would Kill Yahoo! or would keep it both of which have their own pros and cons.
In short, I would suggest Yahoo! share holders to sell the stock to benefit from upturn, and avoid Microsoft stock and Google shareholders to hold on to it. Also, it might be good opportunity to grab Google stock.
Labels: Microsoft - Yahoo - Google
Wednesday, May 30, 2007
E-Filing of Income Tax Returns
In a step towards e-governance, Income tax department of India has launched e-filing of Income tax returns. Government has also permitted corporates to issue digitally signed Form-16 to its employees. So, this year you need not attach your Form-16 and stand in a large queue to file your returns. Also, it is said that e-filing will enable you claim your refund more easily and quickly. There are different ways to e-file your return. But, I feel PDF is the best way to do the same as it is difficult for layman to understand XML files etc..
More details can be found here.
For simplicity, I am posting the steps for e-filing.
More details can be found here.
For simplicity, I am posting the steps for e-filing.
 | Download Return Preparation Software |
| | Fill your return offline and generate a XML/PDF file. |
| | Register and create an user id/password |
| | Login and click on relevant form on left panel and select "Submit Your Returns" |
| | Browse to select XML file and click on "Upload" button. In case of PDF simply fill the fields and submit. |
| | On successful upload acknowledgement details would be displayed. Click on "Print" to generate printout of acknowledgement |
| | Incase the return is digitally signed, then the "Provisional Acknowledgement" number is the final acknowledgement number. Take printout of the return for your records |
| | Incase the return is not digitally signed, take a printout of the return and file it with the Income Tax Department along with the printout of the acknowledgement |
| | For any assistance in filing the paper copy of the return please contact the Public Relations Officer of the local Income Tax Office |
Tuesday, May 08, 2007
F1 VISA Interview
I had got admit from Kelley School of Business, Indiana, USA. I had no idea of the VISA interview process. I went through the US embassy website regarding the process. I came to know that for F-1 VISA I need to get the Form I-20 from the university. Then, I paid the SEVIS fess of 100$ (only for student VISA). Then, I deposited close to 5k in HDFC Bank and got the receipt. I scheduled the interview through the website and got the forms DS-156, 157 and 158.
Now I came to know that I need to show proof of funds. I deposited the amount slightly more than 1 yr fess in my father's a/c (borrowing temporarily from different sources) in a bank a/c and got the bank certificate for the same. I also took another certificate from bank saying that he has assets which can be liquidated to cover 2 years expenses.
I went to VISA interview carrying all the financial documents, IT returns, property papers, marks cards, transcripts etc.. When I was waiting for my turn, I saw few F-1 visas being rejected. I got little tense. My turn came and the interviewer looked at my marks sheets, asked about my degree aggregate %. He asked me when I would return and I told immediately after completion. he did not even ask for any financial documents and approved my VISA. All my effort of collecting so many financial documents was wasted. But, I would suggest everybody to carry all financial docs they can to have high chances of approval.
Now I came to know that I need to show proof of funds. I deposited the amount slightly more than 1 yr fess in my father's a/c (borrowing temporarily from different sources) in a bank a/c and got the bank certificate for the same. I also took another certificate from bank saying that he has assets which can be liquidated to cover 2 years expenses.
I went to VISA interview carrying all the financial documents, IT returns, property papers, marks cards, transcripts etc.. When I was waiting for my turn, I saw few F-1 visas being rejected. I got little tense. My turn came and the interviewer looked at my marks sheets, asked about my degree aggregate %. He asked me when I would return and I told immediately after completion. he did not even ask for any financial documents and approved my VISA. All my effort of collecting so many financial documents was wasted. But, I would suggest everybody to carry all financial docs they can to have high chances of approval.
Labels: F1 VISA
Wednesday, March 29, 2006
About Myself
I am a First year MBA student at Kelley School of Business, Indiana University. I was a software Engineer located at Bangalore, India working for Adobe Systems.
Free Jung Personality Test (similar to Myers-Briggs/MBTI)
| ISTP - "Engineer". Values freedom of action and following interests and impulses. Independent, concise in speech, master of tools. 5.4% of total population. |
