In an unexpected move, Starbucks is getting rid of its lame T-Mobile pay-as-you-go Wi-Fi service and will instead offer free AT&T Wi-Fi service across its 7,000 owned-and-operated and 100,000 partner-affiliated locations in the U.S. For many people, perhaps the majority of Starbucks customers, the coffee shops have become gathering places for work, study and just hanging out. Increasingly, the ability to access the Internet via laptops has become part and parcel of all these activities.
But the T-Mobile Wi-Fi service is a big pain to use...and costly too at $6 per hour or $10 per day. Moreover, Starbucks' rivals, including the increasingly attractive local mom-and-pop coffee shops, often offer no-charge Wi-Fi.
The service will be free to Starbucks store card holders as well 12 million qualifying AT&T broadband and AT&T U-verse Internet customers. AT&T says it will extend the complimentary Wi-Fi option to its mobile phone customers soon, a double bonus for iPhone owners (who, if they're like me, are frustrated and confused by the current Wi-Fi connection to iTunes that Starbucks offers in the wake of its deal with Apple.)
For folks who don't have any of these things (and I think a Starbucks card is pretty easy to get...just like a gift card), the service will be available on a premium basis. A two-hour connection will be priced at $3.99, $2 less than the T-Mobile service, with monthly subscriptions available for $19.99.
Posted by Cynthia Brumfield at 12:15 PM | Print | Comments (0)It's official: Yahoo! has formally rejected Microsoft's unsolicited buyout bid. Reports surfaced over the weekend that the ailing Internet giant would reject the stock and cash offer, which had been worth $44.6 billion when announced but has slipped by a good deal since then given the knock-down Microsoft's stock has experienced.
Yahoo!'s board issued a statement this morning (PDF here) saying that the offer undervalues Yahoo!
After careful evaluation, the Board believes that Microsoft's proposal substantially undervalues Yahoo! including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as our substantial unconsolidated investments.
This refusal is fine as a negotiating tactic to get Microsoft to up its payment price, but for Yahoo!'s sake, I hope it doesn't really believe that it is a prized asset worth a lot more than what Microsoft offered. It's probably true that Microsoft it trying to buy Yahoo! on the cheap -- why wouldn't it? It's definitely true that Google and a host of other Internet titans would hate to see Microsoft get its hands on Yahoo!.
But, who else out there will offer a higher bid for Yahoo! given the declining asset that it is? Who else wants to tackle the seemingly irreversible disarray afflicting Yahoo!'s confused snarl of businesses? The Financial Times reports today that Yahoo! is trying to jumpstart merger talks with AOL, of all companies.
Oh brother. A merger of AOL with Yahoo! would be, to torture a metaphor, like the one-eyed merging with the blind and would create a truly hopeless enterprise. No other company in the Internet sector has sunk faster or lower than Yahoo! except for AOL, which is the perpetual stone in Time Warner's shoe. Unless newly installed Time Warner CEO Jeff Bewkes is an idiot, and I don't think he is, Time Warner is going to take a pass on that idea.
So, who else is left? Google can't really buy it because the search giant has already raised a ruckus over the antitrust implications of a Microsoft-Yahoo! merger. Besides, I doubt Google would even want Yahoo!. Google doesn't want Yahoo! It just doesn't want Microsoft to have it either.
Yahoo!'s choices then are to create tie-ups with Google, AOL and other online companies that make it difficult for a Microsoft bid to go through and that give Yahoo! some hope for growth in the future. But they'd have to be some pretty good alliances to turn Yahoo!'s ship around and I doubt that any kind of revenue-sharing, co-branding, joint operating deals could redress the deep organizational and strategic problems that afflict Yahoo!.
Microsoft, then, might be Yahoo!'s last best chance to get out of its declining business before it's too late. The worst-case scenario for Yahoo! now: no other bidder comes along and Microsoft doesn't up the offer enough for Yahoo! to save face. If Microsoft decides that a brutal shareholder fight isn't worth it (one very real possibility according to the executive leading Microsoft's hostile bid), then Yahoo! will be left alone to face a future of dwindling revenues, profits and relevance.
At that point, a $44.6 billion offer would, in retrospect, look pretty good to Yahoo! and its shareholders and they might seek to get a buyout deal going again. But like home owners that price their houses too high for sale, Yahoo! might end up "chasing the bottom" and ironically wind up with far less than the company is truly worth, an outcome that Yahoo! claims it is avoiding by rejecting Microsoft's bid.
Posted by Cynthia Brumfield at 9:54 AM | Print | Comments (0)
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