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The executives at Yahoo lash out again making more bad blood

In the latest chapter in the Yahoo-Microsoft "soap opera", as some sarcastically refer to the merger talks, Yahoo released a statement Saturday blasting Microsoft and billionaire Carl Icahn, which it believes are conspiring against it

Mr. Icahn is in the processing of carrying out a hostile takeover of Yahoo's board in which he hopes to oust the board and Yahoo's cofounder and chief executive, Jerry Yang, at the August 1 yearly shareholder meeting if a comprise is not reached before hand.

According to Yahoo, Microsoft and Icahn approached it with a newly packaged version of a bid for its search businesses. Microsoft previously sought to buy only Yahoo's search businesses for a large premium, but was rebuffed. 

Yahoo claims that the proposal blindsided it, when delivered Friday, and claims that the pair unfairly gave it less than 24 hours to reply.  Using that as its justification, Yahoo's leadership lashed out at Microsoft and Icahn in a harshly worded statement that is sure to only elevate conflict between the pair.

In the statement, Yahoo Chairman Roy Bostock writes, "It is ludicrous to think that our board could accept such a proposal.  While this type of erratic and unpredictable behavior is consistent with what we have come to expect from Microsoft, we will not be bludgeoned into a transaction that is not in the best interests of our stockholders."

Mr. Bostock also revealed that Microsoft is now unwilling to commit to anymore talks with Yahoo's senior management or board, a stance which he labels as "completely absurd and irresponsible".  His statement and the allegation it relates to are yet another indication of the bad blood seething between Microsoft and Yahoo.

Microsoft and Icahn politely declined to comment on Mr. Bostock's diatribe.

Yahoo indicated that it asked Microsoft to purchase the entire company at $47.5B USD, or $33 per share, a price Microsoft claims Steve Ballmer verbally offered in previous talks.  At the time, CEO Jerry Yang had demand $37 a share.  Now Microsoft is uninterested in buying the entire company, considering it not worth the investment and trouble.  Sunnyvale-based Yahoo has yet to explain its logic in trying to pursue the offering price it previously rejected, but it appears to be acknowledgment by the company's leadership of its own devaluation and/or a move motivated by fear of deposition by Mr. Icahn.

Fortune’s Adam Lashinsky points out, "That’s a price it easily could have gotten in February but one that Microsoft doesn’t appear willing to pay today."

In May, Microsoft offered to buy Yahoo's search engine business for $1B USD and for another $8B USD acquire a 16 percent stake in Yahoo's remaining operations.  Yahoo continues to insist that Microsoft's new proposal, though even sweeter, isn't good enough.

Yahoo has gone to great lengths to remain in control of its destiny, including allying itself with arch-nemesis Google, who has been steadily stealing market share from it.  It has also shaken up its senior management, thanks in part to a need to change and part to numerous departures by Yahoo managers who insist they aren't leaving merely because "the ship is sinking."



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From what I can see...
By killerroach on 7/17/2008 9:27:56 AM , Rating: 4
...from Yahoo! Finance no less, YHOO is currently being traded at $22.48 a share.

Sounds like, by rejecting $33 a share, Yahoo isn't being bludgeoned by Microsoft and Icahn, but rather by their own stock price.




RE: From what I can see...
By TomZ on 7/17/2008 12:11:15 PM , Rating: 4
It's kind of ironic that Yahoo keeps repeating the phrase "in the best interests of its shareholders," but then keeps rejecting offers that are 50% or more above the market price for shares, i.e., the value set by current and prospective shareholders.


RE: From what I can see...
By ghost101 on 7/18/2008 4:58:58 AM , Rating: 2
Well remember that price is only at the margin. The very process of attempting to buy all the shares drives up the price. With Microsoft's possible aquisition, the very possibility of it happening drove up the price. Imagine what would happen if Microsoft actually tried to buy the shares without a shareholder consensus.


Conspiracy?
By mikefarinha on 7/17/2008 10:34:59 AM , Rating: 3
Has anyone seen this, rather long-winded, conspiracy theory of why MS wants Yahoo!?
http://techuser.net/microsoft-yahoo.html

Long story short is that it says Yahoo! bought a company called Overture Services which had the patent for paid-search. Yahoo! in turn brokered a sweet deal for Google, who was currently fighting the patent, to be able to use paid-search but refused to give just a good a deal to Microsoft. Now Microsoft wants the patent to pilfer Google.

I'm not sure if I buy into this theory but either way, on the surface, Yahoo! isn't worth $33/share.




RE: Conspiracy?
By Obujuwami on 7/17/2008 12:26:26 PM , Rating: 2
That's the old Macrosoft I remember! If you can't beat them.... EAT them .

I doubt that the conspiracy is that trivial. IF Yahoo was smart, they would broker a deal with M$ and make it a per year agreement so they can slowly bleed Microsoft. Besides principal, can anyone come up with a reason why not to broker a deal with M$?

Ps. I mean other than the fact that it is M$.


RE: Conspiracy?
By Solandri on 7/17/2008 1:44:44 PM , Rating: 3
I doubt it's that simple. If it were, all they'd have to do is spin the patent off into a separate company, and have that company license the patent back. Kinda like Palm / Palm OS did (albeit for different reasons).

I agree YHOO isn't worth $33/share, but I can understand Yang and their board's reasoning. They're not like a new business which is at $22 and would probably need to grow their operations 50% to hit $33. They have enormous mindshare and name recognition. If they were to come up with / stumble upon a great new service, their shares could easily skyrocket to $50 or $60 in a matter of weeks. The trick is in figuring out that great new service. The market is betting that they can't.


They Know Wassup LOL
By rasmith260 on 7/17/2008 12:11:18 PM , Rating: 1
It sounds to me like they know exactly what their doing. They’ve been screwing around Microsoft for the better part of a year and yet Microsoft keeps coming back for more after they swore they were done trying. In the end I believe Microsoft will get Yahoo, but they’ll pay a helluva lot more than they wanted to because of their fear of Google and the future as yet unknown and in the long run the purchase will have turned out to be a waste of resources since the internet and the future is something that no one company (not even Google) can truly control.




RE: They Know Wassup LOL
By baseball43v3r on 7/17/2008 12:21:16 PM , Rating: 2
you definitely have it backwards, look at how yahoo stock plummented, Microsoft will definitely get Yahoo for far less then they initially offer. The partnership with Google is merely a farce and only increased their value short term. Not only has the board lost all its trust from its members but they've also shown themselves to react erraddicatly, which equals a lower price for microsoft.


RE: They Know Wassup LOL
By mindless1 on 7/18/2008 2:29:04 PM , Rating: 2
There's nothing definite about it. There's been quite a bit of time and talk since then, if it were so definite it would have happened.

The matter is now in Yahoo's hands, if they can turn their business around, stay where they are, or sink further. It's really anybody's game at this point because Yahoo still has such a huge share of internet traffic that any good idea could pay off bigtime for them, or any bad idea would cause them loss of an opportunity they need to regain stockholder confidence.


If I was a Yahoo shareholder I'd be ripped
By Delegator on 7/17/08, Rating: 0
By baseball43v3r on 7/17/2008 12:18:19 PM , Rating: 2
Ballmer botched the acquistion attempt? hardly. these are great moves by Microsoft because it is lowering the end value of the company which means in the end they will be able to buy it for much less. before when MS wanted to buy the company Yahoo traded for 33/share, now they trade for 23/share, a price substantially lower when microsoft comes back to buy them out. in the end it will cost microsoft several billion less then what they previously were offering. This situation is putting all the pressure on Yahoo, allowing MS to really underbuy, when before they were willing to way overbuy.


By ChristopherO on 7/17/2008 7:31:24 PM , Rating: 2
You *do* realize Microsoft initially set aside 1.5 Billion for retaining employees...

That works out to a six-figure number if divided evenly. Now obviously it wouldn't be, however we're talking paying for the college educations of most of their kids.

The shareholders were royally hosed by Yahoo's decision making, but the employees are even worse off (seeing as how they've made it layoff and resignation-city over there).

All I can say is that I hope the employees will get a similar deal the second time around, since obviously the assets will go for a sale-price and the shareholders will be worse-off.

MSFT also has one of the best working environments I've seen of *any* company. Maybe Google is "fun", but MSFT has had their culture for decades and they aren't about to go anywhere.


Where does Yahoo make money besides search?
By Staples on 7/17/2008 11:25:56 AM , Rating: 2
I am not sure Yahoo even makes any money on anything besides search similar to MS with Windows and Office. If MS got to buy their only profitable division for 1/47th of the price, that would be a hellava deal.




By mindless1 on 7/18/2008 2:53:17 PM , Rating: 2
Are you kidding? Have you ever been to yahoo's home page? Did you notice ads already, and lots of links to info and services besides the small search box at the top?

I am not sure you even know anything about yahoo. Why in the world would they sell their "only profitable division"? Why would anyone? That's insane.


Way to go, Yahoo.
By Creig on 7/17/2008 11:56:18 AM , Rating: 2
So not only do you look incompetent for rejecting Microsoft's initial $33/share bid offer, now you look paranoid as well with your conspiracy allegations.




RE: Way to go, Yahoo.
By mindless1 on 7/18/2008 2:33:24 PM , Rating: 2
There's nothing paranoid about realizing that two entities that could stand to profit (or at least believe it to be in their interests) might formulate plans to do so.

Way to ignore reality though, that in your kind of argument anyone who ever says any two will cause loss to another must be paranoid - instead of recognizing something happening before the end result.

For example, if someone said a couple years ago that there'd be a conspiracy to drive up gas prices, is it paranoia, since it really did happen? Depends quite a lot on the basis for it.


Hey
By Alias1431 on 7/17/2008 12:09:08 PM , Rating: 2
"Mr. Icahn is in the processing of carrying out" ...?




RE: Hey
By plinkplonk on 7/17/2008 12:27:52 PM , Rating: 2
yeah i know its a shame, mick should spend more time proof reading his articles instead of coming up with sensationalism in all of his others.


if a comprise
By omnicronx on 7/17/2008 3:25:36 PM , Rating: 2
quote:
if a comprise is not reached before hand.
if a compromise is not reached before hand.




Yahoo?
By murphyslabrat on 7/17/08, Rating: 0
Keeping up the good fight
By wordsworm on 7/17/08, Rating: -1
By Rodney McNaggerton on 7/17/2008 10:04:11 AM , Rating: 1
LOL WUT?


RE: Keeping up the good fight
By thebrown13 on 7/17/2008 10:12:36 AM , Rating: 2
*eyeroll*


RE: Keeping up the good fight
By Spivonious on 7/17/2008 10:43:25 AM , Rating: 2
Because everything "M$" touches turns to coal? Grow up.


RE: Keeping up the good fight
By Master Kenobi (blog) on 7/17/2008 11:13:59 AM , Rating: 2
Coal is our leading export so thats not such a bad thing :)


RE: Keeping up the good fight
By Motoman on 7/17/2008 12:05:05 PM , Rating: 2
...so I should feel guilty about decreasing our exports when I get coal in my stocking at Christmas?


RE: Keeping up the good fight
By JustTom on 7/17/2008 12:10:09 PM , Rating: 2
Coal is no where near America's leading export. America is not even the leading exporter of coal, Australia is. Coal exports are dwarfed by semiconductors, aircraft, and pharmaceuticals. Heck, the US even exports more household appliances and diamonds than it does coal.

http://www.census.gov/foreign-trade/Press-Release/...


RE: Keeping up the good fight
By wordsworm on 7/18/08, Rating: 0
RE: Keeping up the good fight
By Spivonious on 7/18/2008 9:13:30 AM , Rating: 2
Your comment implied that Microsoft would ruin Yahoo if they merged. That implication is extremely juvenile and you have yet to back it up with any solid argument other than "big companies are evil."

Of course Yahoo has a better service than MS. Why do you think MS wants to buy it? The days of evil Bill Gates swallowing up all of his competition are over, and have been for quite some time.


RE: Keeping up the good fight
By wordsworm on 7/18/2008 9:39:44 AM , Rating: 1
It's pretty easy to prove. A lot of what Yahoo does results in user enhancements or innovations. A lot what MS is simply to kill competition or make profits. I don't know if the founders of Yahoo are so altruistic. However, it appears that way.

Google and Yahoo are good competitors. Google does good things, aside from its search engine - Google Earth and Sketchup are two awesome products. I can't think of a single thing that MS has done that's really great. The closest thing is that attempt they made awhile ago to do a Google Earth with the universe. Everything else they've done has been a copy or purchase of something that was out there, and usually it's been inferior.

The thought of MS taking over my favorite Internet portal irks me. They would ruin Yahoo. Hopefully we can argue over this ad infinitum and I can keep getting dinged for cheering for the founders of Yahoo.


RE: Keeping up the good fight
By mindless1 on 7/18/2008 2:40:12 PM , Rating: 2
Don't be ridiculous. We can say MS might ruin Yahoo because MS wants to take control of something they have already demonstrated time and time again, that THEY CAN'T DO AS WELL AS YAHOO CAN.

The only reason the days of Bill G swallowing up competition might be over is if there were no competition left, but that was in the software market. MS wants more power and money in the search business and here we are, seeing them try to takeover the only company they can manage too that's worth having, since Google is in too good a position to flinch.

Lastly, please spare us the nonsense about something you don't agree with being juvenile. That in itself is more juvenile than whatever disagreement you might've had. Use arguments instead of name calling if you want to fein being adult-minded.


RE: Keeping up the good fight
By Spivonious on 7/21/2008 9:20:50 AM , Rating: 2
MS wants in on the search business because it sees how much money Google is making, not because they somehow want to stifle all search competition.

MS only has control in one market, and that is office software. Apple gains more and more marketshare every day in the OS market, and I'm hard pressed to find another example of MS domination.

Your opinion is childish because you're basing it off the notion that MS is evil and always has some ulterior motive geared towards taking over the world and forcing everyone to use their products. I think the idea of a company trying to make as much money as they can is the very basis of capitalism.


RE: Keeping up the good fight
By INeedCache on 7/18/2008 3:24:22 AM , Rating: 1
Yahoo sure has the right name, as they are a bunch of yahoos.


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