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Microsoft discusses alternatives to a full buyout with Yahoo

Yahoo is currently under a lot of scrutiny following the breakdown of takeover talks with Microsoft.  After Yahoo CEO Jerry Yang failed to assuage the fears of its shareholders, the shareholders struck back, led by billionaire investor Carl Icahn.  Icahn bought up a large stake in Yahoo last week and proceeded to push forward a new slate of directors, which if elected, could guarantee a sale to Microsoft.

Microsoft, however, insisted that it did not want to deal with Yahoo anymore and looked to achieve independent success.  However, the giant also would be foolish to let this opportunity pass, and is now softening its previous stance slightly.

It announced that it is talks with Yahoo about alternatives to a complete buyout.  A statement from Microsoft describes:

In light of developments since the withdrawal of the Microsoft proposal to acquire Yahoo! Inc., Microsoft announced that it is continuing to explore and pursue its alternatives to improve and expand its online services and advertising business.  Microsoft is considering and has raised with Yahoo! an alternative that would involve a transaction with Yahoo! but not an acquisition of all of Yahoo!  Microsoft is not proposing to make a new bid to acquire all of Yahoo! at this time, but reserves the right to reconsider that alternative depending on future developments and discussions that may take place with Yahoo! or discussions with shareholders of Yahoo! or Microsoft or with other third parties.

The last sentence serves dually as a disclaimer and as a warning to Yahoo, as it seems to allude to the shareholder drama with Icahn.  Barring a complete sale, though, what options does Microsoft have?  It could either work out a partial acquisition, much like its stake acquisition in Facebook, only on a much bigger scale.  Yahoo and Microsoft could also work out some sort of joint online venture deal, in which they shared services.

Microsoft, however, was quick to warn in its statement that nothing is set in stone and that discussions may be dropped at any time.

When negotiations between Microsoft and Yahoo initially ended, Microsoft was offering a maximum price of $33 per share, while Yahoo said the offer significantly undervalued the company, and would not accept less than $37 per share.  Yahoo stock has seen rollercoaster action over the last couple weeks and is currently at $28.00 per share.

Analysts generally agree that Microsoft desperately needs to acquire Yahoo or make other major changes to succeed online, and avoid getting trampled by ever-energized competitor Google.  To date, since 2005, Microsoft's online operations have lost more than $1.5B USD.  Kevin Johnson, the head of Microsoft's online division acknowledges these problems, stating in a corporate email to employees, "The fact is that we are not where we want to be in this business yet and we've been in this position longer than we'd all like."

A big date for the Yahoo and Microsoft drama could come July 3, at the annual Yahoo shareholder meeting.  If a deal is not made before then, Icahn will likely try to get shareholders to vote on the challenger board slate.  If he succeeds, it would certainly dramatically alter the picture of negotiations.

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It's about the search, stupid.
By arazok on 5/19/2008 11:20:41 AM , Rating: 1
The reason why Microsoft hasn't gotten the market share it needs, and why Yahoo lost the throne years ago, is because their engines don't return relevant results. Microsoft can buy all the engines in the world. They will continue to erode market share as long as Google leads the pack in relevant searches.

I also refuse to invest in Google for this reason. They are only top dog so long as their technology isn't made obsolete by some new competitor. It's a house of cards.

RE: It's about the search, stupid.
By theapparition on 5/19/2008 11:28:39 AM , Rating: 5
I've been a big fan of the Google search engine for a long time.

However, lately I've been getting more relevant search results from MS live search. In only a short amount of time, companies that are entirely devoted to providing services can find themselves without customers overnight......just ask AOL. That's why you hear of so much talk about a Google OS and the Google PC. They need to diversify.

RE: It's about the search, stupid.
By arazok on 5/19/2008 11:38:42 AM , Rating: 1
My boss has been claiming superior results from MSN as well. I refused to believe it. Perhaps it's time to give them a shot.

and so it begins....

RE: It's about the search, stupid.
By JonnyDough on 5/19/2008 5:43:32 PM , Rating: 2
I'll be using the search engine that provides solid results AND doesn't data mine me/profile me, AND doesn't spam me with tons of ads. To use a search engine ONLY because of results is silly. One must also consider other things such as page load times and simplicity of use.

By ThePooBurner on 5/20/2008 4:36:53 AM , Rating: 3
If you allow cookies to be stored, then yes, google is tracking everything you have ever searched for from that browser. Might want to look into that before you lift them to high for not doing something they do.

By Cobra Commander on 5/19/2008 11:50:35 AM , Rating: 2
I still loathe MS Live Search.
AOL's writing was on the walls when broadband was deployed - many years ago - nothing happened overnight there.

RE: It's about the search, stupid.
By npoe1 on 5/19/2008 12:17:47 PM , Rating: 2
I've been getting better results from MSN when is about local information, but when I need a definition I get better results from Google.

For images, MSN is superior than Google.

RE: It's about the search, stupid.
By afkrotch on 5/19/2008 1:18:37 PM , Rating: 3
Hell ya, the image page rocks.

RE: It's about the search, stupid.
By GlassHouse69 on 5/19/2008 2:46:10 PM , Rating: 2
if you are retarded and enjoy learning from a bunch of fellow retards.

aka: wikipedia

whenever I search I use "whatever" -wiki

i get almost NOTHING from google if you negate wikipedia.

Google used to be effective for real academic things, now they are pathetic.

i will try msn now.

Ask jeeves used to be really great.

RE: It's about the search, stupid.
By Hare on 5/19/2008 4:09:32 PM , Rating: 3
Google used to be effective for real academic things, now they are pathetic.

I disagree. Don't use the normal google search. Instead use their scholar engine which is made for that exact purpose.

By AlphaVirus on 5/19/2008 5:48:26 PM , Rating: 2
Wonderful link, although still in BETA it does provide meaningfull sites. I feel like I can finally see the light. I get tired of looking something up and Wikipedia being the only sort of intelligence.

See this is why DT is great, the users are so insightful.

By Omega215D on 5/19/2008 1:10:58 PM , Rating: 3
Since I'm in NYC I find Yahoo maps to be better for the simple fact that it shows any nearby subway stations. I also find the find local search pretty good for finding stores where I live.

RE: It's about the search, stupid.
By afkrotch on 5/19/2008 1:16:52 PM , Rating: 3
Maybe you should try it first. Use Microsoft's Live Search and you'll find it returns the same exact crap as Google. Yahoo? Same exactly crap.

The only reason Google happens to be on top is advertising placement. How many movies have you see that shows someone using Google?

RE: It's about the search, stupid.
By arazok on 5/19/2008 8:34:13 PM , Rating: 2
Although I haven't tried Microsoft in some time, I do try Yahoo from time to time. It consistently disappoints.

And if you think Google is top dog because of some well placed movie snippets, I have a bridge to sell you.

RE: It's about the search, stupid.
By Staples on 5/19/2008 1:28:19 PM , Rating: 2
Yahoo has its hits and its misses depending on what you are searching for. I have not used Live search much so I can't compare. But as I have always said, I think Google's biggest asset is their name. If suddenly used the Yahoo engine, I doubt very many people would even notice because most people use Google because they have been conditioned to type in and not because it is a better search engine.

By Master Kenobi on 5/19/2008 11:18:14 AM , Rating: 3
Yahoo is completely screwed at this point. Jerry is going to be removed, along with several other board members. Microsoft will end up buying the entire company for likely $30/share. Any way you want to slice it, Yahoo is a sinking ship and share holders will fight tooth and nail to sell to Microsoft rather than lose truckloads of cash watching it go the way of AOL.

RE: Screwed
By Locutus465 on 5/19/2008 11:39:50 AM , Rating: 2
Pretty much, though unlike AOL I'm actually kind of supprised yahoo is in this position... I know a fair number of people that continued using their search engine primarly, and they had some fairly popular tools. Yahoo never dropped the ball completely like AOL did.

RE: Screwed
By afkrotch on 5/19/2008 1:20:20 PM , Rating: 3
Yahoo Auctions in Asia is extremely popular. Ebay can't compete there.

RE: Screwed
By GlassHouse69 on 5/19/2008 2:50:34 PM , Rating: 2
that's interesting.

yeah people think that the US is the only place to cash out.

RE: Screwed
By Omega215D on 5/19/2008 1:16:51 PM , Rating: 2
Aha! Icahn is a mole for MS to get the price of obtaining Yahoo lower! Too bad this conspiracy doesn't require a tin foil hat

Google success
By deanx0r on 5/19/2008 11:51:13 AM , Rating: 2
Google is successful because the majority of Americans can't spell.

RE: Google success
By FITCamaro on 5/19/2008 11:58:31 AM , Rating: 5
I dont no what your talking about.

RE: Google success
By amanojaku on 5/19/2008 12:03:08 PM , Rating: 2
I dont no what your talking about.

Tsk tsk, FIT. Dont u no how to speel yur? Hoo tawt u grammer?

Please Don't Go!
By murphyslabrat on 5/19/2008 11:17:21 AM , Rating: 2
This whole debacle is like a late-morning soap-opera.

RE: Please Don't Go!
By peritusONE on 5/19/2008 12:11:49 PM , Rating: 5
Just wait until Microsoft marries Yahoo, then Yahoo sleeps around and has Google's baby. After that, it turns out the DNA test was switched at the hospital, all the while an aging, dying AOL, whom nobody thought was fertile anymore, turns out to be the father. If you don't believe any of this will happen, just ask jeeves.

Or stradegy?
By Locutus465 on 5/19/2008 11:38:19 AM , Rating: 2
Microsoft knew they were in a position of power, and they were probably pretty confident that eventually Yahoo would come around.... So why talk when Yahoo is thumping their chest and trying to get as much money out of MS as they can? Just walk away (like they did) let yahoo panic and realize exactly how bad a position they're in (like they did) and wait for yahoo to reinitiate talks on microsoft's terms (like what seems to be happening).

RE: Or stradegy?
By FITCamaro on 5/19/2008 11:56:59 AM , Rating: 2
I hope your spelling of strategy is a joke.

RE: Or stradegy?
By itlnstln on 5/19/2008 3:26:27 PM , Rating: 2
It would have been a lot funnier had it been "stragedy."

By TimberJon on 5/19/2008 11:23:34 AM , Rating: 2
Time to get all your clients' websites off Yahoo hosting and onto Google. Google would be smart to prepare for the refugees by developing the fastest streamlined solution to switching over for web hosting & email.

Scary thought. Will they have to re-brand all the servers? Rolling data blackouts? downtime? partial data loss? complete data loss? Screwed up advertising ranks because M$ may try to push its own services?

What are the odds that the company will just let Yahoo technical staff work on as if nothing happened?

By griff10 on 5/21/2008 11:08:12 AM , Rating: 2

"The Space Elevator will be built about 50 years after everyone stops laughing" -- Sir Arthur C. Clarke

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