February 4, 2008: Apple CEO Steve Jobs is reportedly considering buying the search engine Yahoo. Apple is one of several companies interested following reports that Microsoft offered $44.6 billion for the Web portal last week.
In the end, nothing came of it, but Apple’s interest is later confirmed in Jobs’ authorized biography.
Is Apple buying Yahoo?
A report published in Scot (unfortunately no longer available online, though the quote is reproduced here) said: “(Yahoo CEO Jerry Yang) is believed to be particularly open to a rescue offer from Steve Jobs’ Apple Corp, who has in the past openly expressed his admiration for the company. Yang invited Jobs to Yahoo’s headquarters in Sunnyvale last year to give a pep talk to employees.”
At the time, Apple had a relatively meager $16 billion in cash reserves. That means Apple couldn’t compete with Microsoft’s big cash offer.
Microsoft made a hostile bid to buy Yahoo
Still, Yang was in no rush to give in to Microsoft’s “hostile” offer. According to the 2015 book Marissa Mayer and the fight to save Yahoo!Microsoft CEO Steve Ballmer tried to force Yang to sell. He threatened that if Yang did not agree to the deal, Microsoft would tell Yahoo’s investors that it had turned down a major offer.
Consequence? A revolt by Yahoo shareholders could dethrone Yang.
Microsoft’s hostile bid would pay half of the price in Microsoft stock and the other half in cash. Ultimately, Yahoo rejected Microsoft’s offer on February 11, 2008. The following month, on March 18, Yahoo released a presentation to shareholders in which it said the company would double free cash flow within two years and increase revenue to $8.8 billion in 2010.
So where does Apple fit in?
Whether Apple was considering making an offer at this point remains unclear, but Jobs was definitely interested. Book Becoming Steve Jobs tells the story of the Apple co-founder’s friendship with Bob Iger of The Walt Disney Company. Before Jobs’ liver transplant in 2009, they reportedly talked to each other “three or four times a week” and met at Apple headquarters to strategize.
This helps explain exactly how Apple might have planned to compete with Microsoft’s Yahoo offering: by teaming up with Disney.
“We were brainstorming on a whiteboard,” Iger recalled. “We talked about buying companies. We talked about buying Yahoo together.”
Buying Yahoo would give Apple access to a number of patents, web services and other tools in a fiercely competitive sector. Given that Google was entering the Android smartphone space around this time (a move that infuriated Jobs), it’s fascinating to think that Apple could have competed with Google in search as well.
Would it be a smart idea to buy Yahoo? Quite possibly not. Would it be fascinating to watch? Absolutely!
