Dear Bill Gates: Remember BT-MCI

Bill Gates sort of opaquely signaled that Microsoft doesn't plan to increase its offer for Yahoo -- even though the offer price has declined by a few billion dollars because of a drop in Microsoft's stock price since the deal was announced.

Microsoft and everyone else now seems to assume that Microsoft will take over Yahoo unimpeded. Other industry players such as Time Warner and News Corp. have had time to consider what's happening and have neglected to make any counter-offers.

But in the world of big mergers, it ain't over till it's over -- and exhibit A is what happened to MCI in 1996-97. British Telecom cut a deal to buy MCI in 1996. But the closing dragged on, and the value of the deal dipped. For months and months, no one else took a shot at MCI. Then, all of the sudden, an offer came in from GTE. Soon after, Worldcom trumped them all, forcing MCI to accept an offer from a company it really didn't want to merge with.

Proxy fights, public chess games, and other dance routines only increase the odds that something bizarre can happen. No one expected Worldcom to make that offer. But it profoundly changed the state of telecom. The Yahoo situation could still get very interesting.

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