Wednesday, May 14, 2008

Scenes from an Annual Meeting

First we go back in time, to May 3, 2008:

It is 3:30 p.m., Central Standard Time—1:30 p.m. Pacific Standard Time—and the giant exhibition hall in the Omaha Qwest Center is filled with dozens of Berkshire Hathaway companies selling their wares to thousands of Berkshire shareholders.

Nothing is free here—not the Ginzu knives or the Fruit of the Loom t-shirts with Warren and Charlie stenciled on them—except some Wrigley gum being given away to celebrate the recently-announced Berkshire-financed Wrigley buyout by Mars Company. (Thanks, Warren!)

Still, the place is packed—and not just with shareholders.

Suddenly there is a rustle of unusual activity, and Bill Gates goes by, surrounded by autograph-seekers and television cameras, smiling and looking like he has not a care in the world.

Now Sue Decker—the President of Yahoo—comes along. She is walking with her family and friends, heading over to the dirt-floored rodeo ring near the Justin Boots sales floor, where two huge long-horned steers are motionless as statues.

She is smiling, relaxed. In brief, she looks like Bill Gates, her fellow Berkshire board member, just did: on top of the world....

Sharp-eyed readers will note the time highlighted above. They will also recall what happened later that day, as reported in the Wall Street Journal:

In a subsequent telephone conversation with Mr. Ballmer, the Microsoft CEO told Mr. Yang that Microsoft was ending its pursuit of Yahoo. Mr. Ballmer sent his letter to Mr. Yang around 4 p.m. Pacific Time Saturday officially withdrawing Microsoft's offer.

If Bill Gates and Sue Decker were involved in the minute-by-minute details of Microsoft’s bid for Yahoo—and Steve Ballmer’s subsequent withdrawal of that bid, announced an hour and a half after their paths more or less crossed in the Qwest exhibition hall—it didn’t show at the Berkshire meeting.

Still, anybody who expected Microsoft to randomly jack up its offer for Yahoo just for the sake of making a few vocal Yahoo shareholders happy clearly does not understand the profound impact Warren Buffett has had on Bill Gates.

And Warren Buffett never pays up for anything.

Jeff Matthews
I Am Not Making This Up

© 2008 Not Making This Up LLC

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews' recommendations. The commentary in this blog in no way constitutes a solicitation of business or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author.


Randy said...

If you assume that Buffett has had an impact on Bill Gates, why would they make the original offer for Yahoo? They have a money losing sub they've poured resources into, and the answer is to pay 35x earnings for a market laggard whose growth is slowing and margins are declining?

Maybe Bill understands what Warren tells him, but it seems like Steve Balmer is out of the loop. $10B poured into the Xbox hole, and more to come when this console gets old and dated. Zune, anyone?

For all the good Warren has provided Bill, intelligent capital allocation tips never made it to Steve's ear.

eeeeeekonjohn said...

jeff, please tell warren i just had my first stick of wrigley's gum in...i dunno, 10 years. juicy fruit. Awful. nothing like it was. it's yellow now, instead of putty colored. the flavor is kinda tweaked. cringeworthy.

HoosierDaddy said...

My take on the various initiatives (Internet Explorer, MSN, Xbox, Zune, etc) is to have a dagger pointed any potential threat to the core OS monopoly business. As such I'd wager the goal is not so much to get them profitable but rather to 1)avoid losing too much money and 2)establish a beachhead that M$ can use to launch all out war on a threat. IE served its purpose well and bankrupted Netscape (but on the downside brought the antitrust hordes of hell down upon the company). The others, not so much.