Yesterday after the Microsoft and Yahoo! deal was announced, Yahoo!’s market cap dropped about $2.9 billion and Microsoft’s market cap jumped about $2.9 billion.  The coincidence of this occurence taking place was uncanny.  Even Ballmer was shocked that Yahoo!’s stock took a hit.  ”Nobody gets it,” stated Ballmer when talking to financial analysts at Microsoft headquarters yesterday.

Microsoft and Yahoo! announced a pact on Wednesday that would last 10 years.  This deal is considered to be a blow to Google because Yahoo! will be focusing less on search technology.  Instead Microsoft will handle the advertising revenue and search technology on behalf of themselves and Yahoo!  Google on the other hand will have less competition to worry about.

Yahoo!’s homepage and their various other properties will be powered by Microsoft search engine Bing.com.  Yahoo! will be keeping the majority of the revenue earned by ads on the Yahoo! websites.  “I was myself kind of surprised by the market reaction,” stated Ballmer. “It’s a win-win deal.”

[via NYT]

I still remember the day Microsoft made a bid to buy out Yahoo! and the day Yahoo! rejected the offer like it was yesterday.  Today marks the day that the two companies resolved their differences and have made a partnership agreement.

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This past May, Yahoo! CEO Carol Bartz said that the search engine company is open to a deal with Microsoft as long as it involves “boatloads of money.”  This is probably what Microsoft decided to pay because the media is going wild about a deal that the companies are planning to announce later today.  Through the agreement, Microsoft search engine Bing will become the default search engine on the Yahoo! homepage.

Yahoo! currently has about 30% marketshare for search while Google has about 65%.  However Yahoo! is the #2 most visited website in the world because of all the services they offer which include Fantasy Sports, News, Video, Music, etc.  The deal will give Yahoo! the chance to get out of the search-advertising technology platform business and focus more on its media properties.  Microsoft will manage the inventory of advertising through their AdCenter platform.

It seems like many advertising companies support a Microsoft-Yahoo! partnership because they believe that they are a less monopolistic search-advertising business combined than a combined Google-Yahoo! partnership.  The deal would still have to clear the Department of Justice.  Microsoft was highly critical of the Google-Yahoo! partnership to the government when Yahoo! rejected an acquisition bid from the software giant.

More news on this story as it develops.

First we saw “developers, developers, developers.”  Then we saw “advertising, advertising, advertising.”  Today at the Microsoft Worldwide Partner Conference Steve Ballmer decided to up the ante in the terms he uses to repeat in triples.

“We are going to keep the same old Microsoft approach – long-term, tenacious and partner-centric,” stated Ballmer. “Long-term, long-term, long-term.”  Ballmer added: ”We don’t go home. We just keep coming and coming and coming. Tenacious, tenacious, tenacious.”

R&D: At the press conference today, Ballmer was as fired up about the company he runs as he ever has been.  When questioned about falling behind in search and cloud computing, Ballmer said that the company is spending $9.5 billion in R&D every year.

Bing: “If ever there was evidence for that, it is the Bing itself,” stated Ballmer. “Man, oh, man, have we taken a lot of abuse. But, man, we have a little mojo. We will just keep going and going and going.”

Chrome OS: Ballmer was asked to give his opinion about the upcoming Google Chrome OS too.  “First of all, I will be respectful,” said Ballmer. “Who knows what this thing is. To me, the Chrome OS thing is highly interesting (in) that it won’t happen for a year and a half and they already announced an operating system.”  Ballmer added that he does not understand why Google has two separate operating systems- Chrome and Android.

The EU: To avoid further scrutiny from the European Commission, Microsoft said that they are planning to ship Windows without IE in Europe.  The EU is investigating Microsoft to determine whether they are violating antitrust laws.

I’m A PC: Ballmer said that the I’m A PC ad campaign is working and the company doesn’t plan to stop running the ads.

Microsoft Bing search market share has increased to about 12% since it launched.  This is exciting for Microsoft considering Live.com didn’t do as well in fighting Google’s market share.

At a luncheon in Chicago last week, Steve Ballmer said that he was willing to spend 5%-10% of the company’s operating income over the next 5 years.

Microsoft’s operating income in 2008 was $22 billion.  That means that Microsoft would end up spending as high as $5.5-$11 billion over the next 5 years.  ”We invested in Xbox for years and now it generates nice economic returns for us,” added Ballmer.

[via Reuters]

As much as I like President Barack Obama, I must say that I agree with Microsoft Corporation CEO Steve Ballmer about his opinion on a new plan to impose higher taxes on companies with foreign profits.  Last month, President Obama proposed a plan to restrict $190 billion in tax breaks for offshore companies.

From a simple macroeconomics standpoint, I believe that punishing companies that offshore “grunt work” hinders the expansion of the production possibilities curve for the United States.  The proposed plan “makes U.S. jobs more expensive,” according to Ballmer.  “We’re better off taking lots of people and moving them out of the U.S. as opposed to keeping them inside the U.S.”

The current U.S. tax rules for overseas profits is that companies can defer corporate rates as high as 35%, assuming that these profits remain invested overseas.  President Obama believes that ending these incentives will promote companies to invest more in domestic jobs.  The President also has a valid point.

Microsoft employs 95,029 individuals across the globe.  About 56,552 are based in the United States. Due to the economy, the software giant had to lay off about 5,000.

What is your opinion on this situation?  It’d be interesting to see what sort of discussion comes out of Ballmer’s opinion on the economy.  Leave a comment when you have some spare time.

[via Bloomberg]

The Air Force will be getting the most secure version of Windows XP.  Critical security patches could be installed on the Air Force computers within 72 hours rather than the average 57 days it usually takes.  Steve Ballmer was persuaded to provide the Air Force with the secure version of XP in order for them to save about $100 million in contract costs.

Many government agencies have the power to convince vendors to create higher security products, but most of the time they take what they are given.  The Air Force took exception with the case of the more secure version of XP.  Making things more secure for the government and then to consumers later on is called a “trickle down approach.”

When the Air Force met with Microsoft CEO Steve Ballmer, they specifically requested a more secure version of XP which would require less time for administrators to reconfigure and maintain patches.  Ballmer himself agreed and became personally involved with the implementation.

“He has half-a-dozen clients that he personally gets involved with, and he saw that this just made a lot of sense,” stated former Air Force CIO John Gilligan. “They had already done preliminary work themselves trying to identify what would be a more secure configuration. So we fine-tuned and added to that.”

[via Wired]

Microsoft CEO Steve Ballmer once again reflected upon what he thinks of the cost of Apple hardware.  Back in January 2007, Steve Ballmer laughed off the iPhone and then started talking about the Microsoft strategy.

“Right now we’re selling millions and millions and millions of phone a year, Apple is selling zero phones a year.  In six months they’ll have the most expensive phone by far ever in the marketplace and… let’s see.. you know… what’s the expression?  Let’s see how the competition goes,” stated Ballmer in 2007.  Today Apple has sold over 30 million iPhones and iPod Touch units.

At the McGraw-Hill Media Summit New York conference this past Thursday, Ballmer was interviewed over a webcast by BusinessWeek’s Stephen Adler.  Ballmer offered a reason why Mac sales dropped about 16% in February.  The stats were put together by NPD Group.

“The economy is helpful. Paying an extra $500 for a computer in this environment — same piece of hardware — paying $500 more to get a logo on it? I think that’s a more challenging proposition for the average person than it used to be,” stated Ballmer.

I agree with Ballmer to a certain extent.  Low cost netbooks seem to be selling by the millions right now and people are not as willing to buy Macs.  Right now Apple has enough money to charge as much as they want for Macs.  When iPhones and iPod Touch sales slow down, then maybe it would make sense to lower the cost of Macs.  As long as the prices stay high, the people that are willing to pay a premium will do so.  When they want to lower their standards to a lower income demographic, they will do so.

Microsoft CEO Steve Ballmer indicated that he is interested in working with Yahoo! in a search deal when talking to analysts today.  Ballmer had a hard time working with Jerry Yang, who kept demanding more money from Microsoft to be acquired.  But now he’ll have an even harder time working out a deal with new CEO Carol Bartz.  Bartz said even at one point that she did not join Yahoo! to have it be sold.

Ballmer said he was willing to engage in a discussion with Yahoo! again, but he has been “rebuffed and ignored” by Bartz according to a CNBC reporter.  Yahoo! is currently running without an M&A executive since Gerald Horkan departed.  Horkan spent most of last year working on the failed bid for Microsoft to buy out the search engine company.  Horkan left several weeks ago and has not yet been replaced.

Bartz joined Yahoo! last month.

[via CNET]

Microsoft Corporation (NASDAQ:MSFT) Steve Ballmer and Yahoo! Inc. (NASDAQ:YHOO) Chairman Roy Bostock were spotted meeting at the Time Warner Center yesterday.  This took place two days after Yahoo! named a new CEO, Carol Bartz.

According to a tipster at Valleywag:
“On my way down the elevator, I was stopped on the 5th floor and in walk Roy Bostock and Steve Ballmer. Kind hellos were exchanged. As we entered the lobby they both walked out and seemingly proceeded to lunch together.”

Valleywag came up with several plausible conclusions out of the meeting here.  The first is that Microsoft is still interested in buying Yahoo!’s search business, but Bartz said that she wasn’t interested in getting to that right away.  Another possible reason is that Ballmer said he was ready to come back to the negotiation table when Yahoo! got a new CEO and both executives may have been in New York around the same time.

Given that they were meeting in the Time Warner building, my guess is that executives there may have wanted to arrange a deal between AOL, Yahoo!, and Microsoft.   Time Warner clearly wants to unload AOL somehow and Microsoft has a big enough wallet to take possession of AOL.  You never know what could happen when you put these three outfits in the same room.  More details as this story unfolds.

[via Valleywag]

“Hahaha $500 fully subsidized with a plan, I said that is the most expensive phone in the world!” stated CEO of Microsoft, Steve Ballmer in an interview. Engadget mentioned that Ballmer couldn’t be further from the truth, but also points out that “Apple is looking to take advantage of those willing to shell out half a grand to have the hottest gizmo out.’

Ballmer also mentioned that the iPhone is not suitable for business purposes because of its lack of a keyboard and that the Motorola Q is available for $99. Steve Jobs, undoubtedly captured a lot of attention with the new products coming out at MacWorld, but it seems that Microsoft is not quite yet intimidated.

The much awaited Windows Vista is on its way and will be available in 12 days. People would be able to purchase and download Vista directly from the Windows Marketplace website if they’re not interested in going to Best Buy or Circuit City to buy the software. And since Vista specs requirements have increased quite a bit since Microsoft XP Service Pack 2, we may see a ramp in computer demand from HP, Dell, etc.