NET(net), Inc.

Loss of Credibility by jigordon
May 3, 2008, 9:32 am
Filed under: negotiation

As predicted, Microsoft’s behavior with respects to Yahoo! over the last few weeks was mere posturing.

In negotiation, however, posturing can lead to a loss of credibility, when you can no longer believe that a party will actually do what they say they will do.

So let’s review:

First, Microsoft offers a price. (1/31/2008).

Yahoo! responds. (2/11/2008).

Then, Microsoft says: take the price we’ve by a specified date or we’ll tattle on you to your shareholders. (4/5/2008).

Microsoft affirms that they won’t increase the offered price. (4/24/2008).

The date passed (4/26/2008).

Now it appears that the price has increased.

This is the point, if I was Yahoo!, where I would just sit back and remain silent.

Microsoft is negotiating with themselves to some degree (even if Yahoo! is at the table). By Ballmer’s own admission: “I know exactly what I think Yahoo is worth to me, exactly,” Ballmer told the employees, according to a transcript filed with the Securities and Exchange Commission. “I won’t go a dime above, and I will go to what I think it’s worth if that gets the deal done.”

However this plays out, I hope Yahoo! already realizes that as a result of this behavior, Microsoft (in addition to being the 8,000,000,000 lb gorilla) is eroding any customer/employee/shareholder good will that may have previously existed. Sure, we see power plays like this all the time… but not in public and not on this grand of a scale. Ballmer comes across like a kid throwing a tantrum – and the best thing to do for that situation is to just ignore it.


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