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Article

Title: A Defining Test for Ballmer

Author: Guth, Robert A Article Type: Product Analysis
Source: Wall Street Journal, v251 n27 pA4(1) Publication Date: Feb 2, 2008
  ISSN: 0193-2241
URL of Publication: http://www.wsj.com

For Microsoft chief executive Steve Ballmer, the decision to buy Yahoo! for $45 billion may be the defining moment of his 28 years at Microsoft. The unsolicited bid itself marks an unprecedented change in Microsoft's corporate culture, which has previously avoided hostile takeovers, and indeed has depended on in-house development of its technology rather than acquisitions as the heart of its industry strategy. It will be the largest financial deal in Microsoft's history, and will require integrating Yahoo!'s 14,000 employees into a Microsoft work force of 80,000. Most fundamentally, however, the bid underlines Microsoft's so far unsuccessful efforts to come to grips with the Internet--an effort pushed by cofounder Bill Gates, and with markedly less enthusiasm by Ballmer. The company has invested billions in its online efforts, with little market share to show for them. Indeed, Microsoft is struggling on the consumer side of the industry; its X-box game technology has established itself in the marketplace, for example, but after heavy expenditure will only begin to show a profit this year. In contrast, Microsoft's business-oriented market continues to thrive, with Windows, Office, and other tools maintaining their dominance. To continue growing, however, Ballmer clearly believes that Microsoft must renew its efforts to secure a place in the Internet market. In recent years, the company has been relying to a greater degree than formerly on talent brought in from the outside, and a Yahoo! merger is likely to enlarge the responsibilities of Brian McAndrews, who came to Microsoft last year when it acquired aQuantive Inc. A number of other personnel changes are reported, but Microsoft would not comment on them.

Companies:
aQuantive Inc Microsoft Corp
Yahoo! Inc

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