Further Tales of Microhoo Incompetence

The WSJ reports today not only that some kind of Microsoft-Yahoo deal might be on again, but also that:

In mid-May -- weeks after Microsoft withdrew its bid -- Yahoo offered to sell itself to Microsoft for about $33 a share, a price Yahoo had earlier rejected, say people familiar with the talks. Microsoft rebuffed the advance.

Could this whole episode get any more Keystone Kops? Oh yes it could, the minute you read the details of exactly what happened, where it seems that more attention was paid to color signals than to price signals:

Microsoft took pains to ensure that the meeting remained a secret. It instructed Mr. Yang and his coterie of advisers to drive to the back of the building, where a woman holding a closed red umbrella would be waiting...
The two sides met at the airport, in a conference room overlooking the runway. The Yahoo camp was encouraged that Mr. Ballmer had donned a polo shirt in purple, Yahoo's color.

And could the principals here be any more delusional? Here's a description of a later meeting:

No bankers were present. Early in the discussion, Messrs. Bostock and Ballmer lamented the bankers' influence on the negotiations, with Mr. Ballmer concluding that bankers had "screwed everything up." He said that Microsoft wasn't there to reopen its bid...

Why have a meeting without bankers, in which you explicitly blame the absent bankers for screwing everything up, if you don't then try to capitalize on the bankers' absence by coming to some kind of agreement without them?

Both sides displayed astonishing amounts of incompetence in this deal, which obviously reflects badly on Microsoft and Yahoo. But there might be something else going on, too: big M&A deals in the technology space are so uncommon that to this day no one really knows how to get them done, absent a force of nature like Larry Ellison. Microsoft's new plans to bring in other partners, like Time Warner and News Corp, will only complicate things further and be even less likely to come to fruition. Simply put, there's only one conceivable winner here: Google.

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