Sunday, July 20, 2008

Nintendo keeps on leading

The Nintendo Wii seems like magic. Good user design and usability considerations along with a great word of mouth publicity has done what no amount of marketing push and technical specifications could have done; for the past considerable period of time, it has kept on pushing both the PlayStation 3 and the Xbox360 by the side, and kept on generating a huge amount of buzz for itself. If you look at these figures, you can see why both Microsoft and Sony are despairing:

Nintendo DS topped the selling hardware chart with 783,000 units sold, followed by Wii (666,700 units), PlayStation3 (405,000 units), PlayStation Portable (337,400 units), Xbox 360 (219,000 units) and PlayStation 2 (188,000 units). Nintendo maintained strong top 10 positions in terms of software sales, for DS and Wii: Guitar Hero On Tour at number 2, Wii Fit with Board at number 4 (372,700 units), Wii Play with Remote at number 5 (359,000 units), Mario Kart Wii with Wheel at number 7 (322,400 units), Lego Indiana Jones: The Original Adventures for Wii (294,000 units) and DS (267,800 units) at number 8 and 9.

Both Microsoft and Sony are trying every trick in the trade, whether that means reducing the price of the unit (Microsoft) or releasing upgraded versions for the same prize (Sony). Both of them are more or less clueless right now as to how to catch up with Nintendo; the Wii is way ahead in terms of customer perception.

Yahoo proxy fight comes closer to resolution

It's almost like a soap opera in the financial sense. The fight between a Microsoft looking for ammunition in its battle against Google, and a Yahoo that is fighting a losing battle in front of a rampaging Google and a fighting Microsoft seems to be approaching a point where Yahoo is still struggling to stay afloat as an independent entity. In the end, it comes down to a point where the shareholders of Yahoo (institutional shareholders) have to decide whether to stay independent or to join up with Microsoft in order to get a better price for their shares:

It looks like the bar room tete-a-tete in Sun Valley, Idaho last week may have helped one of Yahoo Inc.'s biggest institutional shareholders make up his mind.
Friday's news from Bill Miller, chairman and chief investment officer of Legg Mason, that he intends to support Yahoo management in its proxy fight with activist investor Carl Icahn was a big coup for embattled Jerry Yang & Co.
Now that Miller has indicated which way he is voting Legg Mason's 4.4% stake in Yahoo, all eyes will be on other institutions with large holdings in the Internet portal. Perhaps one of the most influential is Gordon Crawford, a portfolio manager at Capital Research Global Investors. Its parent company, Capital Group Cos. has at least three funds with a combined stake of nearly 17% in Yahoo, making it the largest institutional holder. Some pundits have speculated large institutional shareholders do not typically lead activist campaigns. But Miller coming out with a statement in support of Yahoo management two weeks ahead of the much-anticipated shareholder meeting scheduled for August 1 could inspire other funds to try and persuade other investors to take their side.

If it comes to a resolution where the shareholders back Yahoo, then the issue does not get resolved. It is a fact that Yahoo is losing in the fight, and unless this gets resolved, shareholders of Yahoo will not be able to see the value of their shares rising.

Tuesday, July 8, 2008

Microsoft teams up with Icahn for a Yahoo bid

After the bid by Microsoft died, there was a lot of resentment against the cussedness of Yahoo in refusing this bid. Many institutional holders of Yahoo stock were thoroughly frustrated by the refusal of the Yahoo management to agree to the Microsoft offer, since that would have meant that they would have been able to get a higher return than what the market was offering. One result of that was that the stock raider, Carl Icahn made a bid to acquire control of Yahoo through hostile action. And now Microsoft has teamed up with Icahn:

A statement by Microsoft Corp. (MSFT) that it remains interested in acquiring some or all of Yahoo Inc. (YHOO) has increased the likelihood activist shareholder Carl Icahn may gain control of the Internet company's board in a proxy fight next month. Microsoft confirmed on Monday that Chief Executive Steve Ballmer had met with Icahn recently to discuss the prospects of resuming its bid for Yahoo in order to bolster its Internet presence.
The blog said Gordon Crawford of Capital Research Global Investors, Yahoo's second largest shareholder with a 6.5% stake, told Yang and other board members that he was seriously considering voting against Yahoo. Some analysts said discussions between Icahn and Microsoft may allow the activist to push through his nominees. "This is enough to sway Yahoo shareholders," said Clayton Moran, an analyst at Stanford Group.

This whole Microsoft effort to gain control of Yahoo is now going on for many months, and does not look likely to go away anytime soon. They have support of quite a few shareholders, but at what point will a majority of shareholders decide that Yahoo just does not have it anymore to remain independent and switch over to a Icahn-Microsoft bid ?