Is Yahoo! that fountain of youth for Microsoft? Very astute (and intriguing) angle re: generational transitions - argued in the article below - especially given the departure of long-time Microsoft leadership recently.
If Microsoft was willing to use Yahoo! as a mechanism to culturally transform itself rather than simply absorbing Yahoo! and dissolving it at some point down the road, this deal might turn into something much different. A "Yahoo! DNA infusion" would bring onboard people who would not be locked into pre-conceived notions of the world around them and the role of technology (e.g., "Fortress Windows"). Such out-of-the-box thinking might unleash some compelling marketplace dynamics.
The same could be said of other traditional enterprise vendors that perhaps look at the competitive landscape through a mirror more reflective of past experiences than future possibilities. In addition to Microsoft, are other "captains of industry" (e.g., Cisco, IBM, and Oracle) capable of transforming their own respective organization as generational transitions ripple across so many societal, economic, political and market trends?
What we have here at Microsoft is a generational transition like we've seen in many other industries as leading companies go from robber barons to industry stalwarts. Look at railroads and oil in U.S. business history and you'll see the same thing. And just as in those industries, Gates and Ballmer know that Microsoft's style has to change with the times, but even more importantly to them Microsoft has to change because they simply lack confidence that any successor can do as well at playing hardball as Gates and Ballmer did.
Same for Microsoft, which with its Yahoo acquisition will quite consciously try to convert itself into the next General Electric, a company that uses its sheer economic power to make most of its money. All those golf games with Jack Welch were for a purpose. That's why Microsoft is assuming debt to buy Yahoo. It is a logical thing to do and will be accepted by Wall Street much more easily than if Ballmer explained that Microsoft was restructuring and acquiring debt to make it possible for the company to not just pay $44.6 billion for Yahoo, but probably another $100 billion for the other acquisitions that will shortly happen to position Microsoft in the GE space, where it will be protected from bad guesses on technology shifts.
Bill Gates is no fool. His company's pirate days are waning and a bold move is required to prove that to the world. Yahoo has no choice at all and can do little but quibble over price. Notice, too, that an all-cash deal gives Yang and Filo no stake in the combined company. They are gone.