So Many Reasons Why Deutsche Telekom Won't Buy Sprint

from the pin-drop dept

There's a rumor going around that Deutsche Telekom is thinking about buying Sprint. This is a bad idea for any number of reasons. Deutsche Telekom owns T-Mobile, which competes with Sprint, and which has certainly fallen way behind AT&T, Verizon Wireless and Sprint in terms of coverage and next generation network deployments. At the same time Sprint has definitely faced some tough times recently that have weighed heavily on the stock. So, you could see why Deutsche might initially think about it. T-Mobile is behind in the game, and merging with Sprint could (emphasis on could) jumpstart the business a bit. Plus, it's reasonable to think that Sprint may be undervalued these days. But... it's still a bad idea. T-Mobile and Sprint use totally different network technologies. Sprint is still dealing with the mess of trying to integrate Nextel's iDen system into its own CDMA-based system (which is part of the reason the company has been in trouble lately), and dumping a third totally incompatible technology into the mix doesn't seem wise. You could (again, emphasis on could) argue that Sprint now has some experience merging totally incompatible networks, but so far it's not exactly good experience. All in all, this seems like someone tossing out a suggestion. It's hard to see this as a legitimate possibility.

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A Hostile Microsoft Bid For Yahoo! Would Likely Be A Pyrrhic Victory

from the culture-clash dept

Marc Andreessen has an interesting post looking at the consequences if Microsoft officially goes hostile in its bid for Yahoo! Thus far, the two firms have been engaged in a careful dance where each side has left the door open for a negotiated settlement. But with neither side showing any sign of backing down, it's looking increasingly likely that Microsoft will be forced to make an overt bid for control of Yahoo's shares. There are two basic strategies Microsoft could pursue. One would be a tender offer, in which Microsoft attempts to purchase a majority of Yahoo!'s stock. The other would be a proxy fight, in which Microsoft nominates a competing slate to Yahoo!'s board of directors, on the understanding that the new slate would accept Microsoft's existing offer. Either of these options would spark litigation from the losing party. Then, it would have to clear regulatory hurdles, and after that would come the hard work of actually integrating the two companies, something that will be made more difficult if Yahoo's senior management is still bearing grudges from the takeover fight. I've pointed out before that culture is extremely important in high tech firms. Companies need to attract the best talent, and talented programmers want to work where the most innovative work is being done. Right now, Google already has an edge over Yahoo! and Microsoft on that front, and the gap is only going to widen if they spend the next two years beating each others' brains out. It's not at all clear that the Microsoft-Yahoo merger would make sense even if it were done with the support of Yahoo's current management; it's a doubly bad idea if it involves all the nastiness that would come with a hostile takeover.

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

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