Cringley on MicroHoo

Bob Cringley has a great article on the real motivation behind the potential Microsoft-Yahoo meger:

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.

Think of it like the generational change in command of an organized crime family. Tony Soprano wants the best both for his gang and for his son A.J., but does Tony really think he can count on Anthony Jr.'s ability to put a cap in some future rival? Not likely. So Tony will push A.J toward investment banking and away from loan-sharking.

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.