Yahoo's board and executives rejected Microsoft's buyout
offer, and have tried
to fight off Microsoft's hostile takeover bid. They tried to partner
with competitor Google, but were met with apathy. Yahoo then decided
video advertising and content provider Maven to try to strengthen its
advertising revenue. It even launched a new
homepage customization service that was relatively well received.
Still, reality appears to be about to catch up to Yahoo, as analysts
predict that it will post another disappointing quarter, likely leading
shareholders to approve of a buyout. Alternatives, such as a Yahoo buyout
of AOL seem unlikely, particularly as AOL is conducting its own
campaign of perhaps futile acquisitions. Matt Rosoff, an analyst at
independent research firm Directions, says Microsoft appears ready to stay the
course, stating, "I don't think they have any intention of backing
Yahoo previously considered being acquired by Rupert Murdoch, owner of Myspace
and its parent company News Corp. Murdoch, however, stated that there was
no possibility such a deal would occur, stating that News Corp. was "not
going to get into a fight with Microsoft."
Yahoo tried to push back the date for nominating directors, as it fears
Microsoft will be able to push in directors in favor of the acquisition.
Jeffrey Lindsay, a Sanford C. Bernstein & Co. analyst, states, "In
short we think Yahoo has bought itself another month or so, but at this
juncture do not see any reasonably viable alternatives other than the remote
possibility of Google re-entering the fray."
Some fear that Microsoft may withdraw and lower its bid as Yahoo struggles
further. In a move that perhaps signals Yahoo coming to grips with its
inevitable fate, Yahoo Inc. and Microsoft Corp. executives met, so that
Microsoft could present its vision for the partnership. The meeting was
considered a major breakthrough as Yahoo's executives had been relatively
silent to Microsoft since their rejection of the offer last month.
According to inside sources, Yahoo executives mostly listened to what Microsoft
had to say.
It was unannounced whether Yahoo Chief Executive Officer Jerry Yang and
Microsoft CEO Steve Ballmer participated in the meeting. Ballmer has been
a vocal advocate of the merger, most recently plugging
it at MIX08. Microsoft has maintained a friendly attitude with Yahoo,
stating that it has plenty
of jobs for Yahoo employees at a time when Yahoo may otherwise be looking
off more employees.
Microsoft's stock price has fallen since the deal was first broached, dropping
its value from $44.6B USD to $41.9B USD.