Microsoft and Yahoo deal is over. Who wins and who loses?

Microsoft and Yahoo deal is over. Microsoft has withdrawn its bid as Yahoo did not accept the offer of $33 per share.

TechCrunch was the first to report the break in negotiations - I wonder how Mike can know so fast… or do they edit the posting time? Just kidding… -. Mike’s post was updated to include the letter of Steve Ballmer to Yahoo CEO Jerry Yang. TechCrunch also publishes the email of Steve Ballmer to his employees.

There is already plenty of analysis from the blogsphere, including suggestions of what to do with the $50 billion that Microsoft hasn’t spent in the deal. One interesting reading comes from GigaOM. In his view Steve Ballmer has played a Machiavellian move that leaves Yahoo is a worst situation than before the bid.  Not only Yahoo lost credit by looking for other merging partners and by agreeing to place Google ads, shareholders will also be angry to see shares fall after Microsoft withdrawal.

So, who wins? Mainly Yahoo and Flickr users, many of which are anti-Microsoft co-religionaries.

Who loses? Yahoo investors. They are the collateral damage of this story, specially those who took positions considering the bid would succeed. Yahoo management will feel more than ever the pressure of shareholders to demonstrate that Yahoo by its own is worth more than the $33 per share offered by Microsoft.

As for Microsoft, now that the story is over, they’d better focus their investment in delivering – Vista among others - and improving marketing and image, rather that acquire new companies. As read in a wise comment: “[...] how many people know what URL to enter for Microsoft Search? I don’t even know if it’s called Microsoft Search, Live Search or MSN Search…”