Top 100 Companies by Market Capitalization

Some fortunes skyrocket like fireworks for the New Year's Eve celebration. Others — those dirty old companies that make things — skulk at home, with no party invitations. I started tracking this in early 1999, when I was convinced the bubble was about to pop. With the benefit of hindsight, it looks like the bubble didn't even get going until we were warming up for the Y2k parties.

It looks like the top of the bubble was probably just about 1 year ago today, March 10, 2000. Unfortunately, I didn't grab a snapshot about then (and even more unfortunately, I didn't sell every stock I owned). The closest I have is Dec. 23, 1999, so we'll go with that. On my page of static tables, you can see the steep slope up during the month of December, 1999, as well as the earliest chart I put on line, in April 1999. (The "Momentum" essay has a Feb.'99 chart as a sidebar.)

Summing the market capitalization (stock price times number of shares outstanding) of the top 100 shows that something major was up last December. From the dip in mid-October 1999, to December 23, 1999, the top 100 companies' market capitalization rocketed north by more than 20% — almost $2,000,000,000,000.

The Dec. 23, 1999 snapshot was motivated by Yahoo! briefly edging out the company I work for, Hewlett-Packard; a hundred billion dollars worth of Yahoo!, think of it.

I hoped a year later was the moment to take a picture of the post-dot-com nadir, but no. There's been another $trillion of gas deflated in the last 3 months, and some folks are saying "no end in sight." The Nasdaq index is off 60% since its peak, and is limping at 2-year-ago levels. (And yes, that seemed high at the time! Scary thought.)

Lucent was number 8 once upon a time; now it's just barely on the list, at #100. Cisco has been #2 and #3, but it's half the size it was, now down at #15. And mighty Microsoft is back in the number 2 slot, after falling down to #5 when its legal fortunes looked bleakest. The nouveau Bush adminstration appears prepared to preside over the antitrust verdict being dismembered.

And General Electric just seems to float above the fray. It has waned some since its visit about the half-$trillion mark, and had to settle for #2 when Microsoft was flying highest. But it's been up at the top all along.

Aside from individual (company) fortunes, the top 100 as a (variable membership!) group has a pretty stable market capitalization. But then that's the Central Limit Theorem for you. The top 10's total capitalization shows the same regression to the mean, and inertia (if you can call going from $9 trillion, to over 11 trillion and then back below 10 trillion "inertia"):

Total Market Capitalization ($billions)
	Top 10	Top 100
April 9, 1999	2,385	9,268
Oct. 15, 1999	2,527	9,160
Dec. 3, 1999	2,932	10,713
Dec. 23, 1999	3,184	11,073
Dec. 21, 2000	2,624	9,956
March 9, 2001	2,626	9,819

I'm now collecting data on a weekly basis, and dumping the sortable tables of top 100 mkt. cap. in an index.

Google calls Microsoft's 'hostile' bid for Yahoo troubling

Posted by Elinor Mills

A Microsoft-Yahoo merger could threaten the openness on which the Internet is based, a Google executive says.

Microsoft's $44.6 billion "hostile" bid "raises troubling questions," writes David Drummond, Google Chief Legal Officer, expresses cynicism in a blog posted on Sunday

"Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC? While the Internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies--and then leverage its dominance into new, adjacent markets," he writes. "Could the acquisition of Yahoo allow Microsoft--despite its legacy of serious legal and regulatory offenses--to extend unfair practices from browsers and operating systems to the Internet?"

Microsoft and Yahoo together have a large share of the e-mail and instant messaging accounts, as well as two of the most popular Web portals. Drummond wonders about the possibility that Microsoft could use its dominance in the PC software market to unfairly limit access to competitors' Web services.

Yahoo said on Saturday that it is evaluating the unsolicited bid.

With SP1 and Yahoo bid, Microsoft becomes the new IBM

Microsoft built its empire by being faster and smarter than the behemoths of the old computing world, notably IBM. Today, with the release of Vista SP1, and the trench warfare in attempting to take over Yahoo, it's clear that Microsoft has become the new IBM. The question is, will it be able to reinvent itself as successfully as did the old Big Iron hardware maker?

Microsoft's entire business strategy, in recent years, resembles nothing so much as IBM's during Big Blue's heyday. Back then, IBM thrived because it was, in essence, a hardware monopoly. Nobody, it was said, was ever fired for buying IBM hardware, and so everyone bought it. IBM got an ongoing revenue stream from service and maintenance contracts, and from hardware upgrades. Innovation wasn't required; the money kept rolling in.

Today, Microsoft's business model is the same. No one gets fired for buying Windows or Office. Microsoft reaps money from continuing upgrades to both cash cows. Innovation isn't required. And the money keeps rolling in.

The release of SP1 is a continuation of that business plan. Whether or not you're a fan of Vista (and I'm one of the few people who is), you have to admit that its acceptance in the marketplace has been rocky at best. SP1 offers no significant new technology. A lot of what it offers could easily have been rolled out as a series of patches, rather than a single, big service pack. But Microsoft needs a big bang to convince corporations to jump onboard. So it rolled them into SP1. SP1 is about fixing a year-old problem --- getting businesses to accept Vista. It's about upgrading an existing product, and trying to keeping the cash rolling in. The fact that Vista took so long to develop, and that it took Microsoft a year to roll out fixes for it, shows that the company has become slow and old, in the same way that IBM had become.

The Yahoo buyout is aimed at a much longer-standing Microsoft problem, its inability to figure out how to succeed online. I've been covering Microsoft's failing attempts to dominate the Internet for years, and the mis-steps have been legion. Rather than riding the wave of the Internet, Microsoft has often been swamped by it. Back in the early days of its fledgling MSN Network, for example, Microsoft devised a bloated, unwieldy, proprietary online service, rather than using HTML. It followed the same IBM business plan --- hook people on something proprietary, and get an ongoing revenue stream.

Microsoft has been playing catch-up online every since.

In fact, you can make the argument that Microsoft still hasn't given up trying to figure out a way to turn the Internet into a proprietary service. The "Live" series of products, to an extent, relies on attempting to get people to use Microsoft for-pay products in concert with online. Microsoft Office Live Workspace, for example, is designed, from the ground up, to work with Microsoft Office. And Microsoft Live OneCare is a downloadable, for-pay product, despite its "Live" branding.

The fact that Microsoft needs to fix the problem by buying Yahoo, rather than being able to do it internally, shows that online at least, it's lost the ability to innovate.

IBM only turned itself around after it gave up manufacturing PC hardware and focused more on selling expertise and services, and less on hardware.

For Microsoft the big question is, how to re-invent itself? Both SP1 and Yahoo aren't reinventions, although Yahoo will certainly help it in its online struggles. Buy paying tens of billions of dollars to buy another company isn't going to solve the problem of Microsoft losing its ability to innovate quickly. To find its future, Microsoft needs to look at the company it knocked off the pinnacle of the computing world -- IBM -- and learn how Big Blue turned itself around.

NEW YORK — Microsoft Corp. (MSFT) is resuming its pursuit of Yahoo Inc. (YHOO) in an attempt to better compete with Web search and advertising leader

Yahoo shares surged more than 17 percent in midday trading.

The New York Post reported Friday that Microsoft has asked Yahoo to enter formal negotiations for an acquisition that could be worth $50 billion. Yahoo's market capitalization was about $38 billion on Thursday.

Microsoft, based in Redmond, Wash., had no immediate comment on the report, spokesman Lou Gellos said Friday. Yahoo spokeswoman Joanna Stevens also declined comment, saying "We don't discuss rumors and speculation."

The Wall Street Journal said executives of the two companies are looking at a merger or some other kind of matchup and said the talks appear to be early-stage discussions. It said the companies explored the idea of combining last year but the talks led nowhere.

The newspaper reports each cited unidentified people familiar with the situation.

Industry analyst Matt Rosoff with Directions on Microsoft in Kirkland, Wash., said a huge takeover is unlikely, noting that it would duplicate services Microsoft's MSN already provides, such as instant messaging and e-mail.

(Story continues below)

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It is possible, Rosoff added, that Microsoft and Yahoo might be talking about a deal involving only online search advertising.

Microsoft is feeling increasing pressure to compete with Google, which plans to beef up its portfolio with a $3.1 billion purchase of online advertising company DoubleClick Inc.

Microsoft currently trails both Yahoo and Google in the lucrative and growing business of Web search.

Google won a search advertising deal with AOL in 2005 that the Post said Microsoft wanted. In addition, Google is developing Web-based software that directly competes with Microsoft Office.

The Post story said Microsoft and Yahoo have held informal talks over the years and said Microsoft's latest approach to Yahoo signals increased urgency.

Earlier this week, Yahoo said it would buy 80 percent of advertising exchange Right Media for $680 million, increasing its stake in that company to full control.

Yahoo shares surged $4.94, or 17.5 percent, to $33.12 in midday trading, while shares of Microsoft fell 51 cents to $30.46.

Microsoft Makes $42B Bid for Yahoo

Friday February 1, 8:27 pm ET
By Michael Liedtke, AP Business Writer

Microsoft Makes $42B Bid for Yahoo; Executives Hope Deal Can Help Them Topple Google

SAN FRANCISCO (AP) -- Unable to topple Google Inc. on its own, Microsoft Corp. is trying to force crippled rival Yahoo Inc. into a shotgun marriage, with a wager worth nearly $42 billion that the two companies together will have a better chance of tackling the Internet search leader.

Microsoft's audacious attempt to buy Yahoo, spelled out in an unsolicited offer announced Friday, shows just how much Google threatens the world's largest software maker's grip on how people interact with computers.

For Yahoo, the bid represents another painful reminder of how missed opportunities and mismanagement combined to open the door for Google to supplant it as the Internet's main gateway, decimating its stock price in the process.

Redmond, Wash.-based Microsoft is trying to avoid a similar fate at Google's hands as more people access services and computer programs online instead of relying on packaged software applications.

Although Microsoft remains the world's most valuable technology company, its position will become more precarious unless it can cultivate a more loyal Internet audience and generate more online ad revenue to subsidize the free services taken for granted on the Internet.

Microsoft is acutely aware of the upheaval that can be caused by a pivotal shift in technology, having been the biggest beneficiary during the 1980s and 1990s of a transition from mainframe computers to personal computers that knocked IBM Corp. off its pedestal.

"Microsoft has to do this deal. It's a battle that Microsoft needs to win," said AMR Research analyst Jonathan Yarmis.

But there's no guarantee that Yahoo will be willing to sell to Microsoft -- or that the deal will win the necessary approvals from antitrust regulators in the United States and Europe if Yahoo capitulates.

Sunnyvale-based Yahoo had little to say Friday beyond a terse statement assuring its shareholders that its board will "carefully and promptly" study the bid.

In a conference call Friday, Microsoft Chief Executive Steve Ballmer indicated he won't take no for an answer after Yahoo rebuffed takeover overtures a year ago.

"This is a decision we have -- and I have -- thought long and hard about," Ballmer said. "We are confident it's the right path for Microsoft and Yahoo."

Yahoo will likely face intense pressure to accept, given its steadily sliding profits and a murky 2008 outlook that caused its stock price to drop to a four-year low earlier this week.

Microsoft's $31-per-share offer -- originally valued at $44.6 billion -- represented a 62 percent premium to Yahoo's closing price late Thursday, although it's below Yahoo's 52-week high of $34.08 reached less than four months ago. On Friday, the total value of the cash-and-stock deal fell to $41.7 billion, or $28.95 per share, because Microsoft's shares declined on the news.

Yahoo shares soared to a split-adjusted high of $118.75 in 2000 before the dot-com bust. That peak coincidentally also was just before Yahoo gave Google its first big break by hiring it to run its search engine.

Search engines are crucial tools because they have become a central hub in hugely profitable ad networks.

Advertisers around the world are expected to double their spending on the Internet during the next three years as more people get their news and entertainment on the Web instead of television, radio, newspapers and magazines. The trend is expected to create an $80 billion online ad market in 2010, up from an estimated $40 billion last year.

After realizing how much money Google was making from search, Yahoo introduced its own technology in 2004, but by then it was too little, too late.

Forrester Research analyst Charlene Li expects Yahoo to resist, predicting the company "will do everything possible to stay independent," even if it means swallowing its pride and rehiring Google to run its search engine and sell ads on its site.

Other analysts still think Yahoo might try to line up a white knight rather than fall into Microsoft's clutches. Analysts mentioned several other potential suitors, including News Corp. and InterActiveCorp.

Dinosaur Securities analyst David Garrity even thinks it's possible that China's search leader, Baidu.com Inc., or Chinese e-commerce conglomerate Alibaba.com Inc. might bid for Yahoo. Alibaba.com is 40 percent owned by Yahoo.

In what most analysts regard as a long shot, there was even some chatter that longtime Microsoft rival Apple Inc. and its CEO, Steve Jobs, might come to Yahoo's rescue.

If push comes to shove, most analysts believe Microsoft will raise its cash-and-stock bid.

Investors appear confident an agreement eventually will be reached. Yahoo shares climbed $9.20, or nearly 48 percent, to $28.38 while Microsoft shares fell $2.15, or 6.6 percent, to $30.45 -- a sign that Wall Street is skeptical about whether the acquisition makes sense.

"It's a classic case of a buyer overbidding to blow any potential competitors out of the water," said James Owers, a Georgia State University professor of corporate finance.

Shortly after Microsoft disclosed its intentions, the U.S. Justice Department said it is "interested" in reviewing antitrust issues. European Union officials declined to comment, but analysts said Microsoft probably will face more challenges getting a Yahoo acquisition approved in Europe than the United States.

Microsoft made its offer a few hours after Yahoo's chairman, Terry Semel, stepped down, removing a potential stumbling block. Semel had rejected Microsoft's takeover overtures a year ago while he was still Yahoo's chief executive, according to a letter released Friday.

Yahoo co-founder Jerry Yang replaced Semel as CEO nearly eight months ago while another Yahoo director, Roy Bostock, is now chairman.

Yang, a billionaire who is one of Yahoo's largest shareholders, isn't believed to have warm and fuzzy feelings about Microsoft. He has openly expressed his admiration for Jobs and last year even invited the Apple CEO to Yahoo's headquarters for a pep talk with employees.

Microsoft believes its technological expertise will be a good fit with Yahoo's knack for providing content and services that keep people coming back to its site. Combined, the two companies would reach a U.S. online audience of 142 million compared with 124 million for Google, according to Nielsen Online.

But Yahoo and Microsoft are so far behind Google in the lucrative search market that they still will have a lot of ground to make up even if they joined forces.

Google already controls 62 percent of the worldwide search market, and has been widening its lead, according to the latest data from comScore Media Metrix. By combining, Microsoft and Yahoo would have a 16 percent share of the worldwide search market, the Web traffic tracking company said.

Google shares fell $48.40, or 8.6 percent, to close at $515.90 Friday, but the downturn appeared to be driven more by a disappointing fourth-quarter earnings report than by Microsoft's bid for Yahoo.

Besides helping to boost its online ad revenue, Microsoft believes it could mine more profit from Yahoo by jettisoning workers and eliminating overlapping operations.

Microsoft said it sees at least $1 billion in cost savings if it buys Yahoo. Microsoft executives deflected questions about how many jobs might be lost, but the company emphasized retention packages will be offered to Yahoo engineers and other key employees, including some executives.

The fate of Yahoo's brand also is unclear if Microsoft takes over. Both Ballmer and Kevin Johnson, president of Microsoft's platforms and services division, hailed Yahoo's strong brand value but did not commit to keeping the name alive.

AP Business Writer Jennifer Malloy in New York and AP Business Writer Jessica Mintz in Seattle contributed to this story.

Microsoft's Market Value Drops $80B

NEW YORK (AP) - Microsoft's dramatic plunge Monday shaved more than $80 billion from its market value.

In the hours ahead of a federal judge's ruling that Microsoft Corp. (NasdaqNM:MSFT - news) violated the Sherman Antitrust Act, ``maintained its monopoly power by anticompetitive means'' and attempted to monopolize the Web browser market, Microsoft stock fell $15.371/2 to $90.871/2 a share.

That knocked Microsoft's market capitalization from roughly $552.9 billion on Friday to $472.5 billion. Co-founder Bill Gates, who holds more than 785 million Microsoft shares, lost about $12.1 billion in the rout.

Market capitalization is determined by multiplying the number of shares outstanding by the current stock price. Last week, Microsoft jostled with Cisco Systems Inc. (NasdaqNM:CSCO - news) for the top ranking, but Monday's technology selloff sent Microsoft into third place behind General Electric Co. and Cisco.

Microsoft, along with chip maker Intel Corp. (NasdaqNM:INTC - news), is included in both the Nasdaq composite index and the Dow Jones industrial average. Because the Nasdaq is a weighted index that gives more significance to its largest companies, Microsoft's slide dragged the index to its worst performance in history - a 349.15-point plunge.

By contrast, the Dow gives equal weight to each of its 30 components. It rose 300 points on Monday as financial, retail and drug stocks soared, wiping out Microsoft's losses.

Google Software Makes It Easier to Share

MOUNTAIN VIEW, Calif. (AP) -- Google Inc. is introducing an online business software package designed to make it easier for people in the same organization to share documents and information.

The free "Team Edition" software, scheduled to debut Thursday, represents the Internet search leader's latest attempt to attract more users to free applications, which poses a potential threat to rival Microsoft Corp.'s highly profitable word processing, spreadsheet, presentation and calendar programs.

The launch marks the second time Google has upgraded a business program this week - a week when Microsoft awaits a response to its bid to buy Yahoo Inc. in an attempt to undermine Google's dominance of Internet search and advertising.

Microsoft's unsolicited bid, initially valued at $44.6 billion, is backed largely by money the company has made selling software.

Google has been giving consumers, students and businesses free access to competing software hosted over the Web in a concept known as "cloud computing."

More than 500,000 businesses have signed up to use Google's applications, according to figures to be released Thursday by the Mountain View-based company. Some businesses pay $50 extra per user for a souped-up version of the applications, but the fees so far account for only a sliver of Google's $16.6 billion in annual revenue.

Google last year collected $181 million for software sales and other services besides online advertising.

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It's Down to Two: Microsoft and Google

If it goes through, Redmond's bid for Yahoo! will reshape the battle for online ad market share

By Jeffrey F. Rayport

updated 7:00 p.m. ET Feb. 5, 2008

If Microsoft's $44 billion acquisition of Yahoo! looks like a big business story, it is -- but not necessarily for the reasons you've been reading about these past few days. Yes, it's a Big Gulp of a deal that will pay a 60%-plus premium on the share price. And yes, it's a transaction that marries two high-profile brands of the technology world.

That's only the beginning.

If the Microsoft-Yahoo deal is consummated, what seemed increasingly to be Google vs. Everyone Else on the Web will become simply Google (GOOG) vs. Microsoft (MSFT). As a standalone brand, AOL won't be around for long, and the list of major online players drops off sharply after that. Without consolidation of massive proportions among the remaining giants of the online world, no one company has a chance at catching Google in the race for online ad dollars -- unless Google were to develop a bad case of "Big Company Disease" and derail its own momentum.

Scale, Features, and Analytics

The new online reality is that scale and features attract online users and the advertisers who want to reach them, and analytics -- the tools that help sites target ads to users more effectively -- build ad-pricing power and therefore margin. Scale is simply the traffic or number of unique visitors a site attracts. Features are the applications and services a particular Web site can deliver. In both cases, more is usually better. But analytics is an area that looks like art but is rapidly becoming science. It's the way sites parse users' profiles and click streams using behavioral targeting, predictive intelligence, and other database manipulations to boost ROI metrics for marketers spending advertising dollars online.

Google has it all: scale [more unique users than any other online site], an endlessly expanding array of features [tools and applications released continuously in beta versions on its site], and clearly superior analytics [which started with search-based advertising and is now expanding into extensive data mining of millions of search patterns and user profiles].

That's why Google has proven pre-eminent when it comes to turning its huge online audiences into its very own cash machine. In the last quarter, Google reported revenues of $4.8 billion, compared with $1.8 billion for Yahoo (YHOO) and $863 million for Microsoft, even though unique visitors for Google and Microsoft are roughly equivalent. [In December, Google registered 125 million unique visitors, and Microsoft 123 million.]

An Unattractive Choice

The fight for scale became clear when four companies -- Google, Yahoo, Time Warner's (TWX) AOL, and Microsoft's MSN -- emerged as the overwhelming winners in the competition for advertising on the Web. Even as the online ad market accelerated at growth rates of 25% to 35% a year, the Big Four search portals and aggregators increased market share, establishing a veritable oligopoly in the online world. Each of these companies could claim more than 100 million unique visitors a month, making them the most-trafficked sites online and paving the way for dramatic growth in online advertising.

By our estimates at Marketspace [an affiliate of Monitor Group], in 2006, the Big Four captured 85% of the U.S. online advertising market as measured in overall ad dollars. The top 10 online sites, including the Big Four and others operated by companies such as News Corp. (NWS) and InterActiveCorp (IACI), captured 99% of overall ad dollars in 2006. That means the remaining 100 million or so sites on the Web outside the top 10, and whose businesses are predicated on online ad revenues, must choose between giving up pricing power by selling through the Big Four [and other major players like them] or selling directly but competing with everyone else for their sliver of the last percentage point of online ad market share. [In the U.S. market, that last percentage was worth about $220 million in 2007.] This unattractive choice applies to just about every major media, content, or entertainment brand doing business online.

Consolidating Traffic

Online advertising is a big business and rapidly getting bigger. Last year, the average major corporation spent 7% of its marketing budget online, while U.S. consumers spent over 30% of their total media consumption time with digital media, according to our analysis. As marketers close this gap between brand budgets and consumer behavior, it's no wonder that the U.S. online ad market in 2007 hit $22 billion, that it will top nearly $30 billion in 2008, and that it's projected to reach $60 billion [and $80 billion worldwide] by 2011. It's also why Steve Ballmer, CEO of Microsoft, observed not long ago that "the future will be ad-funded," at least as far as digital business is concerned.

Which brings us to the question of how Microsoft and Yahoo combined could expect to compete for position with Google's rapidly expanding scale, features, and analytics. By acquiring Yahoo, Microsoft doubles its unique visitors to nearly 240 million, roughly twice Google's [not counting the reach of DoubleClick, its recently acquired ad network]. Even discounting for duplication of visitors, Microsoft gets to mark up its online traffic easily by 50%, to 180 million visitors, which vaults it to the top traffic position on the Web. Combined online revenues last quarter would amount to $2.6 billion, still only half Google's, but nonetheless establishing a powerful No. 2 position. While the aQuantive acquisition helped Microsoft close the competitive gap in online analytics, Yahoo brings traffic and features with the kind of sex appeal Microsoft itself could never achieve.

All that still makes this a long bet. With the acquisition, Microsoft has finally cried 'Uncle,' admitting to the world it cannot not build its way into online dominance, despite billions of dollars spent on online content, search technology, and analytics. Meanwhile, Yahoo has fallen far from its perch as the world's dot-com darling, and, at $31 a share, the acquisition price is only a quarter of its all-time high during the Internet boom.

By Consolidating Players

Now get ready for more consolidation -- from the Big Four to the Big Two. Time Warner has been looking to shed AOL for years, so consolidation of AOL is pretty much a sure thing. Yes, Microsoft needs the Justice Dept. and its European counterparts to sign off on the deal. And, yes, it needs to avoid a bidding war with News Corp. for Yahoo. And if AOL goes to Google [Google has flirted with AOL ever since the former went public], we'll soon see the online world divided between two iconic technology titans. If this really is a scale game, then it's a game only the supersized can play.

Sure, the "creative disruption" for which Silicon Valley is known will undoubtedly change the game at some future date. But, for now, there is an immediate need: More than $400 billion in global advertising is looking to make sense of online media, and no garage-based startup, no matter how visionary, can meet such high-volume needs. For the foreseeable future, it will be the reigning behemoth of the PC operating system vs. the emergent giant of the online world, competing for online consumers with resources of gargantuan proportions.

Who wins? Even with Microsoft's dramatic move, the answer is clear. It's a face-off, for sure, but it's still advantage, Google.

Copyright © 2008 The McGraw-Hill Companies Inc. All rights reserved.

Yahoo CEO says company still exploring alternatives to Microsoft bid

SAN FRANCISCO (AP) - Yahoo Inc. Chief Executive Jerry Yang told employees Wednesday that the struggling Internet pioneer is still examining ways to avoid a takeover by rival Microsoft Corp.

"Our board is thoughtfully evaluating a wide range of potential strategic alternatives in what is a complex and evolving landscape," Yang wrote in an e-mail. He emphasized no decision had been made on Microsoft's six-day-old bid, initially valued at $44.6 billion, or $31 per share.

Yang, who helped conceive Yahoo in 1994, didn't set a timetable for the Sunnyvale-based company's response, writing that the board "is going to take the time it needs to do it right."

Most of Wednesday's e-mail, filed with the Securities and Exchange Commission, tried to cheer up Yahoo's employees, many of whom are likely to lose their jobs in the months ahead, one way or the other.

Yahoo already has drawn up plans to trim 1,000 jobs from a 14,300-employee payroll in an effort to boost its sagging profits. The layoffs are expected to be even more severe if Microsoft devours the company because about $1 billion in expenses would be cut in a takeover. And if Yahoo were to eschew Microsoft in favor of a debt-laden leveraged buyout, about 4,500 employees could be fired, estimated Stifel Nicolaus analyst George Askew.

"We have a lot to be excited about and there's more good news to come," Yang wrote in his e-mail. He cited a shake-up of Yahoo's online music service announced

earlier this week and plans to unveil new products at a mobile conference in Barcelona next week.

If Yahoo rejects Microsoft, most analysts believe the company will have to line up another acquisition offer or make radical changes to satisfy disillusioned shareholders.

But most analysts doubt any other potential suitor will have the financial muscle - or desire - to try to outbid Microsoft, which has $21 billion in cash and a market value of nearly $265 billion.

Yahoo could boost its profits dramatically by turning over the responsibility of running its search engine and an adjoining advertising platform to rival Google Inc., the Internet's most prosperous company.

Google CEO Eric Schmidt reportedly has broached a potential partnership with Yang, but that alliance might be blocked by antitrust regulators worried about the competitive fallout if two of the Internet's biggest ad networks join forces. Antitrust laws almost certainly preclude Google from trumping Microsoft's bid in an attempt to buy Yahoo outright.

Former Yahoo employees who know Yang have no doubt he is exhausting all avenues that might allow his company to escape Microsoft's clutches.

"Jerry bleeds purple and gold (Yahoo's corporate colors)," said Rob Solomon, a former Yahoo executive who spent six years at the company before leaving in 2006. "He always envisioned building a company that would be around for 100 years, not just 14 years."

Yang indicates Yahoo is in no rush

By Elise Ackerman
Mercury News

Article Launched: 02/06/2008 06:05:08 PM PST

Yahoo Chief Executive Jerry Yang signaled to Microsoft Wednesday that he is in no hurry to accept its $44.6 billion take-over offer, saying the company will "take the time it needs to do it right."

His message came as the company was sued by several shareholders criticizing Yang for not working harder to secure a better offer or to improve Yahoo's performance.

In a complaint filed Friday in Superior Court in Santa Clara that came to light Wednesday, shareholders accuse Yang and other members of the board of directors for "failing to negotiate with Microsoft or otherwise give good-faith consideration to its offers" when the Washington State software giant made overtures to Yahoo more than one year ago.

In a letter announcing Microsoft's bid, Microsoft Chief Executive Steve Ballmer said he received a letter in February 2007 from Terry Semel, then Yahoo's chairman and chief executive, saying it wasn't "the right time" to enter into discussions of a deal given the potential benefits of certain changes, such as a company reorganization, that were under way.

At the time the letter was sent, Yahoo's stock was trading around $29 per share; it subsequently fell 34 percent.

"A year has gone by and the competitive situation has not improved," Ballmer wrote.

Shareholders represented by Barrett, Johnston & Parsley, a Nashville, Tenn., law firm, accuse board members of entrenching themselves in power in order to continue

to receive annual compensation that ranged from $588,000 to almost $650,000 for individual directors in stock, options and cash.

A second shareholder lawsuit filed in Superior Court in Santa Clara County by Faruqi & Faruqi, a Los Angeles law firm, characterizes Microsoft's bid, for $31 per share, as "grossly inadequate."

Both suits ask a judge to rule that Yang and other board members have breached their fiduciary duty. Yahoo said it has a policy of not commenting on pending litigation. In his message to employees Wednesday morning, Yang also noted the company had hired "top advisors," including lawyers from Skadden Arps, investment bankers from Goldman Sachs and Lehman Brothers and public relations people from Abernathy McGregor and Robinson Lerer & Montgomery.

Separately, Yahoo launched a new version of Zimbra, its online e-mail and calendar software for businesses.

Google takes aim at Microsoft with corporate e-mail security products

MOUNTAIN VIEW, Calif. - Google Inc. is adding more e-mail security and storage products for businesses, sharpening its aim on a Microsoft Corp. stronghold while the competition between the two rivals also heats up in Internet search and advertising.

The tools to be introduced Tuesday build upon technology that Google acquired last year when it bought e-mail specialist Postini Inc. for $625 million. The package of products are designed to weed out junk mail and potential viruses as well as protect against leaks of confidential information sent through e-mail. Google also is offering to retain e-mail data for longer periods.

Google bought Postini largely to address concerns that its corporate e-mail service lacked adequate security and compliance measures.

All the latest features are compatible with Microsoft Exchange as well as Lotus Notes and Novell Groupwise. Prices will range from $3 per user to $25 per user, depending on how much protection and data retention a customer wants.

Google's push into business software, launched in 2006, looms as a threat to Microsoft, which derives much of its profit from the sale of its more expensive Office suite of software applications as well as its e-mail programs.

Meanwhile, Microsoft hopes to close the gap with Google in the lucrative Internet search and advertising market by buying their common rival, Yahoo Inc., for more than $40 billion.

If Yahoo accepts the unsolicited offer and

the deal is approved by antitrust regulators, Microsoft would increase its share of the worldwide search market to about 16 percent, up from 3 percent currently, according to comScore Media Metrix. Google's share stands at 62 percent.

Without providing a breakdown, Google says hundreds of thousands of businesses, government agencies and schools already use its software applications. That includes users of free programs that are less sophisticated than the ones sold in a subscription package.

Google takes aim at Microsoft with corporate e-mail security products

Associated Press

Article Launched: 02/05/2008 12:35:10 AM PST

MOUNTAIN VIEW, Calif. - Google Inc. is adding more e-mail security and storage products for businesses, sharpening its aim on a Microsoft Corp. stronghold while the competition between the two rivals also heats up in Internet search and advertising.

The tools to be introduced Tuesday build upon technology that Google acquired last year when it bought e-mail specialist Postini Inc. for $625 million. The package of products are designed to weed out junk mail and potential viruses as well as protect against leaks of confidential information sent through e-mail. Google also is offering to retain e-mail data for longer periods.

Google bought Postini largely to address concerns that its corporate e-mail service lacked adequate security and compliance measures.

All the latest features are compatible with Microsoft Exchange as well as Lotus Notes and Novell Groupwise. Prices will range from $3 per user to $25 per user, depending on how much protection and data retention a customer wants.

Google's push into business software, launched in 2006, looms as a threat to Microsoft, which derives much of its profit from the sale of its more expensive Office suite of software applications as well as its e-mail programs.

Meanwhile, Microsoft hopes to close the gap with Google in the lucrative Internet search and advertising market by buying their common rival, Yahoo Inc., for more than $40 billion.

If Yahoo accepts the unsolicited offer and

the deal is approved by antitrust regulators, Microsoft would increase its share of the worldwide search market to about 16 percent, up from 3 percent currently, according to comScore Media Metrix. Google's share stands at 62 percent.

Without providing a breakdown, Google says hundreds of thousands of businesses, government agencies and schools already use its software applications. That includes users of free programs that are less sophisticated than the ones sold in a subscription package.

Google backing science contest

By Patrick May
Mercury News

Article Launched: 02/05/2008 01:34:26 AM PST

They call it the "Olympics of science fairs." And when the International Science and Engineering Fair, or ISEF, returns to San Jose in 2010, it will have an Olympian corporate sponsor to boot.

Google has signed on to lend its name - along with $1.5 million and an additional $500,000 in in-kind support - to the world's largest international pre-college science competition, which is coming to town for the second time in 10 years.

"Having Google involved will ensure that this will be one of the premier science fairs we've ever had," said Dana Ditmore, chairman of the ISEF 2010 Association. "And it's going to be even more exciting for the kids taking part because young people really relate to Google."

ISEF is not your grandmother's science fair. Part competition, part geeky fun, this fair will bring more than 1,500 students from nearly 50 countries to San Jose to show off their independent research projects - many of them mind-boggling and esoteric to the general populace.

Google did not respond to calls. But Ditmore said the company's participation in the May 9-15 event will include hosting an official Web site and a panel on women in technology, as well as welcome events, a breakfast for international students and a dinner for the 1,500 volunteer judges expected to take part.

Prizes to the winners include more than $3 million in awards and scholarships, as well as opportunities for internships and scientific field trips.

D2Hawkeye Announces New Chief Operating Officer; Tom Gernon Named COO To Round out Senior Management Team

D2Hawkeye Announces New Chief Operating Officer; Tom Gernon Named COO To Round out Senior Management Team

WELLESLEY, Mass. --(Business Wire)-- July 9, 2004 -- D2Hawkeye, a health care software and services company, announced that Tom Gernon has joined the company as Chief Operating Officer.

Mr. Gernon brings a diversified business background to the D2Hawkeye team having served in senior management positions at Staples, PerkinElmer, Fidelity, Aetna Health, and most recently J. P. Morgan Chase. Most notably Tom was responsible for delivering Fidelity Investments' Internet web site, the first in the mutual fund industry. He was also instrumental in the transformation of Staples into an E-business company where his efforts contributed to online business-to-business revenue growth of over $1,000,000 per day.

"The addition of Tom adds a layer of senior management that permits me to truly focus on how we can make D2Hawkeye even more valuable in improving health care and controlling health care costs." commented Dr. Chris Kryder, Founder and CEO of D2Hawkeye. "Tom has the breadth of experience at very high levels with major organizations to drive our operations, customer service, sales and marketing."

"In just 3 years, D2Hawkeye has become a true 'player' in the healthcare medical management industry." added Mr. Gernon. "My job is to help keep that momentum going as we go to the next level of growth and expansion. We've got a great product and more companies need to know how great it really is."

About D2Hawkeye

D2Hawkeye is a web-based data-mining and health care intelligence software company. It is privately held and was founded in 2001. D2Hawkeye employs 75 professionals in the United States and Nepal. For more information, please visit www.D2Hawkeye.com.

Microsoft Beats $51 Billion Annual Revenue, Setting Record

Microsoft credited growth to "solid customer acceptance" of Windows Vista and Office 2007 and increasing sales of SQL Server, Windows Server and Visual Studio.

By J. Nicholas Hoover
InformationWeek
July 19, 2007 07:00 PM

Microsoft (NSDQ: MSFT) Thursday reported record annual revenue, crediting growth to "solid customer acceptance" of Windows Vista and Office 2007, along with increasing sales of SQL Server, Windows Server and Visual Studio.

The company reported revenue increased 13% year-over-year to $13.4 billion in the fourth fiscal quarter of 2007, slightly beating analyst expectations for revenue and profit, while net income rose 7.3% to $3.0 billion. Those earnings included a fourth-quarter charge of about $1.1 billion to pay for repairs to Xbox consoles.

Microsoft also saw annual revenue surpass the $50 billion milestone for the fiscal year ending June 30, with revenue of $51.1 billion, a 15% increase over the previous year. "Fiscal '07 was an excellent year from my perspective," Microsoft CFO said on the earnings call with investors. "It's exciting to see [Windows Vista and Office 2007] off to such a strong start."

The company expects to continue its momentum in the coming year. "We have healthy core businesses and are strategically investing in growth opportunities, which will build on our success and contribute to continued double-digit revenue and earnings growth in fiscal year 2008," Liddell said.

That strategic investment in growth opportunities includes the company's online services business, which saw revenues at $688 million, up from $588 million last year. However, due to ongoing investment in data centers, the division lost $239 million. Advertising revenue was up 33%, though growth is expected to be much more modest next quarter. Liddell attributed some of the growth in online services to Live Search Club, a promotion to give prizes to people using Microsoft's search engine. He predicted 10% to 11% growth for online services next quarter, and said to expect better integration between Windows Live services and more data center build-out over that time period.

As to Windows Vista, client revenue saw an increase of 14% in the quarter, which Liddell attributed to continued demand for the new version of Windows. That said, Microsoft lowered guidance for the mix of Vista and XP units sold from 85% Vista, which it predicted in March, to a 78% Vista-XP mix expected in the next fiscal year. Liddell was cagey about Vista Service Pack 1, but said that he didn't expect SP1 to drive adoption as some believe it will. He declined to give investors a time frame for the service pack's release, though a beta version of the update is expected by the end of the year.

Microsoft highlighted strength among enterprise users. "I'm extremely pleased with the traction our sales force is getting with our business customers," Liddell said. Non-annuity licensing was up more than 15%, core bookings in the client, business division and server and tools business up more than 20%, and the company said it saw a 25% increase in volume licensing. Microsoft Business Division beat high-end Microsoft guidance by more than $150 million last quarter, which the company attributed to Office 2007 and especially continued interest in SharePoint. Microsoft also pointed to 85,000 new seats of Dynamics CRM sold during the quarter.

10 Reasons Why HP Revenues Hit $100 Billion

By Craig Zarley, CMP Channel
6:49 PM EST Mon. Nov. 19, 2007
Page 1 of 2

Hewlett-Packard (NYSE:HPQ)'s 2007 annual revenues shot past the $100 billion mark for the first time with sales reaching $104.3 billion for the year ending Oct. 31. Here are 10 factors that helped make HP a $100 billion baby.

1. Hired Carly Fiorina as CEO. What's this you say? One of the most controversial industry CEOs in recent memory, Fiorina never figured out the HP Way and her tenure was marked by internal struggles. But she did engineer the takeover of Compaq. Only Fiorina, the consummate corporate politician, could have fought the Hewlett family and widespread shareholder and employee dissent to garner enough votes to swing the $87 billion merger. That merger transformed HP into the industry standard server powerhouse and wrestled the lead in the PC industry away from Dell (NSDQ:Dell).

2. Fired Carly Fiorina. She honchoed the deal through, but she couldn't get the Compaq and HP people on the same page. The two cultures clashed between the volume Compaq mentality and the value HP mindset. Nowhere was that more evident than on the channel side of the business. HP value players couldn't stomach the pump up the volume music foisted upon them by former Compaq folks thrust into key channel positions. Thankfully, the HP board finally said enough to this infighting and gave Fiorina the golden parachute.

3. Refused to break up the company. Many shareholders, analysts and industry pundits felt that the HP crown jewel was its printing and imaging business. Spinning that out into a separate company, they reasoned, offered the best hope to recoup the value on what they maintained was an ill plunge into the low-margin PC business via the Compaq merger. As it turns out, HP now has the most complete product portfolio with which to go after the coveted SMB market.

4. Enlisted the channel as a strategic ally. What good is the best SMB product portfolio without an army of solution providers to attack the market? Dell's newfound channel religion shows the limitations of a direct strategy. And IBM's sale of its PC business shows the danger of getting out of what it deemed to be a low-margin market segment. Sure the margins are low. But IBM lost contact with SMB solution providers as a result of the PC sale and HP was more than happy to fill the void.

5. Hired Mark Hurd. HP needed an outsider with operational experience and no agenda. He eliminated many redundancies and quelled much of the infighting. Hurd too takes the time and effort to meet with and listen to solution providers. Most high-profile CEOs view the channel as a faceless, amorphous beast. Hurd's taken the time to learn that the channel is human—good, bad and ugly. Under his guidance, HP's tried to embrace the good, and it's paid off. As one solution provider said Monday after hearing HP cracked the $100 billion barrier, "Hurd's the man."

Next: Conflict Resolution, Profitability, Channel Marketing All Make A Difference

10 Reasons Why HP Revenues Hit $100 Billion

By Craig Zarley, CMP Channel
6:49 PM EST Mon. Nov. 19, 2007
Page 2 of 2

6. Focused on reducing direct versus indirect conflicts. You can have rules of engagement, well-crafted channel programs and named direct accounts, but it's all a charade unless compensation plans back them up. Hurd's given his sales people quotas that are impossible to meet without strong collaboration from solution providers that add sales coverage and expertise not available insideHP (NYSE: HPQ).

7. Made HP products profitable for solution providers to sell. Of course product margins aren't anything to shout about, but at least HP is trying. They've come up with the Attach Plus program that allows solution providers to gain more margin by bundling more HP products into a solution. Competitors simply don't have the product portfolio to offer anything comparable. In an informal online CMP poll this week, for example, 45 percent of the respondents said they make the most money partnering with HP compared to 15 percent for IBM and 13 percent for Dell.

8. Makes products that don't burst into flames. HP by and large dodged the burning laptop adventures earlier this year. The company actually spends money on R & D with the intent of building better products and solutions. In 2007, HP's research budget topped $3.6 billion. Dell's R & D budget, by contrast, seems to consist of gaining technical expertise by buying up hot companies.

9. Buying hot companies. Okay, so HP does it too. Mercury Interactive was the big one this year, which gave HP a much needed boost in its software business. HP in fact closed 10 acquisitions during its last fiscal year. The key here is that HP has a balance between R & D and acquisition that many of competitors seem to lack.

10. Markets the channel to enduser customers. IBM (NYSE:IBM), for example, too often treats business partners as the crazy uncle no one wants to talk about. Rarely if ever do they mention business partners on analyst or earnings calls, despite the channel contributing more than a third of IBM's product sales. Not so with HP. Hurd, for one, often tells midmarket CIOs that the channel is HP's face to the SMB. If you've got a weapon as powerful as the channel, why not shout it to the world, as Hurd did Monday after the vendor passed the $100 billion revenue mark. "This is as much their [the channel's] victory as it is HP's," he said.

10 Reasons Why HP Revenues Hit $100 Billion

By Craig Zarley, CMP Channel
6:49 PM EST Mon. Nov. 19, 2007
Page 1 of 2

Hewlett-Packard (NYSE:HPQ)'s 2007 annual revenues shot past the $100 billion mark for the first time with sales reaching $104.3 billion for the year ending Oct. 31. Here are 10 factors that helped make HP a $100 billion baby.

1. Hired Carly Fiorina as CEO. What's this you say? One of the most controversial industry CEOs in recent memory, Fiorina never figured out the HP Way and her tenure was marked by internal struggles. But she did engineer the takeover of Compaq. Only Fiorina, the consummate corporate politician, could have fought the Hewlett family and widespread shareholder and employee dissent to garner enough votes to swing the $87 billion merger. That merger transformed HP into the industry standard server powerhouse and wrestled the lead in the PC industry away from Dell (NSDQ:Dell).

2. Fired Carly Fiorina. She honchoed the deal through, but she couldn't get the Compaq and HP people on the same page. The two cultures clashed between the volume Compaq mentality and the value HP mindset. Nowhere was that more evident than on the channel side of the business. HP value players couldn't stomach the pump up the volume music foisted upon them by former Compaq folks thrust into key channel positions. Thankfully, the HP board finally said enough to this infighting and gave Fiorina the golden parachute.

3. Refused to break up the company. Many shareholders, analysts and industry pundits felt that the HP crown jewel was its printing and imaging business. Spinning that out into a separate company, they reasoned, offered the best hope to recoup the value on what they maintained was an ill plunge into the low-margin PC business via the Compaq merger. As it turns out, HP now has the most complete product portfolio with which to go after the coveted SMB market.

4. Enlisted the channel as a strategic ally. What good is the best SMB product portfolio without an army of solution providers to attack the market? Dell's newfound channel religion shows the limitations of a direct strategy. And IBM's sale of its PC business shows the danger of getting out of what it deemed to be a low-margin market segment. Sure the margins are low. But IBM lost contact with SMB solution providers as a result of the PC sale and HP was more than happy to fill the void.

5. Hired Mark Hurd. HP needed an outsider with operational experience and no agenda. He eliminated many redundancies and quelled much of the infighting. Hurd too takes the time and effort to meet with and listen to solution providers. Most high-profile CEOs view the channel as a faceless, amorphous beast. Hurd's taken the time to learn that the channel is human—good, bad and ugly. Under his guidance, HP's tried to embrace the good, and it's paid off. As one solution provider said Monday after hearing HP cracked the $100 billion barrier, "Hurd's the man."

Next: Conflict Resolution, Profitability, Channel Marketing All Make A Difference