Yahoo’s Bold Whimper
Michael Arrington
114 comments »
A few well connected reporters said our prediction that Yahoo would make a decision on the Microsoft offer yesterday were off, and that Yahoo would take more time to make it’s move. But it seems that Yahoo did in fact make a decision yesterday. They will reject Microsoft’s offer. A flat and stubborn “No” should be coming on Monday.
This is dramatic stuff. This could be a simple negotiating tactic to try to get Microsoft’s bid up a bit, as many people are speculating. Business Week’s Rob Hof calls it a done deal (as we did last week, but this news makes me hesitate to repeat it). Silicon Alley Insider says it’s basically a polite way to ask for a little more money. Louis Gray agrees.
That may be the case, and there are signals that they are right about this still being a negotiation. The offer “massively undervalues” Yahoo according to an unnamed source. And the board feels that an offer of $40/share is needed to even be considered (this number has been thrown around since February 3).
But it sure does look like Yahoo grew a pair over the last week, and that this “no” may really just be a “no.” Perhaps this ordeal finally jolted Yang out of whatever alternate reality dreamland he was dwelling in. Perhaps the board saw some fire in Yang’s eyes at the meeting yesterday that made them willing to put their personal fortunes on the line and give a collective middle finger to Microsoft (because, yep, they’re going to be sued, and fast, by their stockholders if this deal dies - and the board’s indemnity agreements won’t provide full protection).
Whatever happens, this is great stuff. Yahoo is being bold. It may be a whimper, but it’s a bold whimper. And I’m damned excited to see what happens next.
Oh my, I read this first on arstechnica. Getting sloow
oh yeah, we’re dead last on this story today (even CNET covered it). but that’s cool, it gives me a chance to link to some other sites with good commentary.
If you look at the reasoning, you can tell Yahoo is grasping at straws with contradicting logic:
http://www.techconsumer.com/20.....om-google/
Vastly undervalued….at least they could tell the truth like - let’s get as much overvalued coin as we can!
Ray - Agree. Yahoo’s stock was at $19 when the Microsoft offer hit. $40 is very, very aggressive…
Michael, don’t confuse stupidity for boldness. Wow, Yang is dumber than I thought. Buckle up the seatbelts, folks, because Yahoo is about to crash.
$31 a share “vastly overvalues” Yahoo. MSFT shareholders agree since they’ve been furiously dumping MSFT since even before the deal was publicly announced (but obviously privately leaked).
If MSFT ups their bid, shareholders should be suing Gates & Ballmer.
Report: Yahoo will reject Microsoft bid.
Translation: Yahoo desperately hoping Microsoft will raise bid.
“it’s a bold whimper”
You’re on a roll.
Keep up the great work!
MS should walk far away . . . and watch that house of cards collapse.
You should always ask for more ..
I am sure MIcrosoft expected to raise the bid .
I remember when face book turned Yahoo down .
Its Ok to say NO !! I won’t Bend OVer
Seems like the only one interested in yahoo’s future is MS …
No kidding about the excitement! I wonder if rather than increase the bid, Baller and his team will gang up on Key board members, aka HP buddy, Joshi and force a take over.
it’s good to see some change of pattern in the valley. bold!
the question is, how does Microsoft play it next, if they are 100% confident that Yahoo is just going for more money, they are likely to just go quite for a while and make Yahoo sweat it, Yahoo are likely to come back begging to take the original offer.
Or the Yahoo board could just be deluded…
I completely agree with you Michael, it’s getting even more exciting…
It surely looks like a negotiating tactic, but you never know what might happen
They probably looked at the valuation MS gave to Facebook and aQuantive and did their math.
lovin’ the drama
Don’t confuse shareholders with Yahoo itself.
I think Yahoo the company has no problems going it alone and would rather die slowly than be taken over by Microsoft. Let’s not forget that they were not shopping the company here, Microsoft made the offer out of the blue with perfect market timing. It is the shareholders that are putting the pressure on because they want a cash out.
I bet Jerry wishes that he had the same provisions that Larry and Sergey does for Google with absolute veto power over everything.
Or maybe they just came to the conclusion that they don’t want to be the next AOL. Seriously, why does anyone think this will work? An acquisition isn’t as simple as adding numbers from Column A and Column B or that buying a company and getting it integrated will take about 5 minutes.
They realize than any bump large or small will only push more advertisers to Google. Ballmer needs to take a look at history here. The biggest tech merger that worked out was HP and Compaq and how did Carly make out in that one? If this goes through Ballmer will be out of MS in 2 years max.
Smart move Yahoo, now start innovating and let MS rot away online.
What’s their logic for rejecting besides hot air? You’ve got to give us a plan, guys. They will have next to zero credibility selling it.
I was very pleased to see this, more competition does not mean consolidation. I sincerely hope that Yahoo! finds it’s niche and liquidates all tech where it struggles.
Yahoo! should focus on content creation YUI and Flickr seem to be it’s strengths. Search? Not so much… Also, I know they made a bid for a Facebook takeover. Why don’t they pull the same move Microsoft did with Facebook. Just buy a piece of the pie…
This is not a bold move. This is a retarded move. Microsoft will not pay more than what they offered, they don’t feel any other interested potential buyers are truly a threat unless it’s Google (which won’t happen due to legal issues). Microsoft was just looking for a quick jump in marketshare for several platforms, their overall strategy can still continue without the acquisition of Yahoo.
ej - sometimes just standing up and holding yourself with some dignity is a good plan, at least to start.
It doesn’t matter what anyone sees in Yang’s eyes, even if the fire of failure has lit up. There’s no one in place to take Yahoo anywhere. Microsoft is the only and best option.
I would argue that Microsoft itself is in crux. They are struggling themselves to compete with Apple(Operating Systems) and Google(Search & Office). This could be a make or break moment for MSFT… Good move with the Facebook buyin, but other than that they cannot compete on the 2.0 front.
Mr. Ballmer will up the bid to $80bln and 12 diamond chairs
I agree with the possiblity that “no” really means “no”. There is no doubt that Yang is currently working very hard to reshape the future of Yahoo. Then, in the middle of all this, Microsoft decides to throw its muscle around. Yang wants to, at least, let his vision play out before selling out.
If Yahoo decides to stay independent, maybe the jolt created by this bid can finally wake the sleeping giant.
If (or when?) Yahoo! denies this offer, they certainly won’t get one for $40 a share.
If they are serious that they won’t consider an offer under $40 per share, Yahoo! will slowly fade off the radar and into insignificance. Yahoo, if you commit suicide, no one will care for you!
Does Google seem to be positioned to see some upside from this development?
This is a standard practice in M&A. Yahoo on its own may be worth 19$. But yahoo in microsoft’s hands will be worth a lot more because of synergy. Who gets how much of the gain is the question.
Obviously microsoft thinks so and hence the 31$ bid. Yahoo thinks that it will be worth a lot more and hence wants 40$. Fair point there.
31.00 a share is a fair price for the sites potential. It’s my personal belief that Yahoo fell asleep at the switch, or better yet rested heavily upon its past accomplishments.
Tons of potential and Microsoft will unlock it
http://www.whatshottoday.com
If Yahoo wants to negotiate, I would tell them to kiss my Vista if I were Microsoft. They gave them a life preserver, a more than fair one. Yahoo showed that they have zero clue what they want to do with the company, Yahoo Lifestreaming failure showed that.
Give it a few months, Yahoo will come crawling back. And if I were Microsoft, I’d lower the price even more.
Sue Decker is on her way out within 14-21 days…you heard it here first.
Anyone got any work?
sue decker isn’t the problem.
Keep it up.
Buckler Browser
http://www.jhatak.com/buckler/.....rSetup.zip
Ignore all the noise, MSFT wouldn’t come out of the gate with their best offer. Period. Whether they will up the offer or not obviously remains to be seen, but even if YHOO wants to stay independent, it’s going to be a struggle from very pissed off shareholders, to a board takeover/proxy fight. I simply can’t see Ballmer/MSFT now saying, “Oh well, we really didn’t want you anyway.” They had to expect this. Interesting also how this was released on Saturday afternoon.
Here is a complete archived synopsis of the Yahoo / Microsoft/ Google events as they were being broken and updated
Yahoo remains yahoo and im ya yahooligan for almost 9 years! This is just great News, cause the brand yahoo contrary to what we read is still strong and will be going stronger
Not anyone to take yahoo anywhere??? Well The world is not missing any good CEO, Yang has the vision and it takes time to set the company straight. Im pretty sure rejecting MS will relight their desire to succeed. As said above, content is yahoo’s future… turn yahoo into the real social community site powered by Google search and the formula is there
Yahoo is imploding…just look at the key staff it has lost over the last few months.
I hope Yahoo stands firm. An acquisition by Microsoft would mean the (valued) downfall of Yahoo’s services. Microsoft has a tendency to destroy what it touches. Screw ‘em.
Microsoft offered $31 per share, Yahoo board wants $40.
If they meet halfway, the compromised figure is about $36 per share.
Simple math tells me it is about $7 billion above the $45 billion Microsoft offered.
Microsoft is perfectly capable of coming up with $7 billion more from its coffer.
Great! It was a bad deal for Microsoft anyway - such a waste of money! Yahoo! lacks vision - it turned itself into a fat brainless copycat. All its new stuff is total crap! It shut down so many projects - it’s a total disaster! And by doing such poor jobs, it in fact created huge opportunities for companies like Google, Skype and so many others instead of ruling the market itself! Yahoo! is dying and not dying slowly. Turning down Microsoft was their last and fatal mistake! RIP! The market will punish them harshly on Monday for their poor poker skills!
well they are trading at 29.20 and this announcement wil make it drop like a stone again so they will lose this argument. Its going to end up with a shareholder revolt I think. MS are not going to go to 40.
The worst part is that Microsoft offered $40 last year. That was during the “promise” of panama. You snooze, you lose.
This reminds me of the TV show Deal or No Deal. Here, Jerry Yang is the contestant with 6 cases left. The banker has offered him a six figure amount to sell his case. This offer was less than his last offer, but contestant Yang had a bad round, knocking all of the high value cases out except one. In typical Deal or No Deal fashion, contestant Yang thinks the $1,000,000 is in his case. Of course, there’s only a one in six chance that it is, but he insists it’s in his case. His supporters, played here by Yahoo!’s board, are equally delusional. They tell him “it’s in your case!” and urge him to reject the deal and play on. The crowd, who are the shareholders in this analogy, are screaming “DEAL!”. Contestant Yang says “No Deal!”, shuts the plastic box thingee and waves his arms.
The only problem is that Yang doesn’t likely have $1,000,000 in case. He probably should have taken this deal, just like he should have taken the last deal which was even higher.
“Whatever happens, this is great stuff. Yahoo is being bold. It may be a whimper, but it’s a bold whimper. And I’m damned excited to see what happens next.”
Well said, Mike! Exciting stuffs. If you gotta sell your company, make it so that you can walk out with your head up, at least. Everybody knows Microsoft is willing to go a few bucks higher. But exactly how badly they want Yahoo? We’ll see. Remember, they want to fight Google, not to destroy Yahoo.
#43
This reminds me of Oracle/BEA System deal. It started out with $17/share, then after all the “way undervalue…we want $21/share” and “an impossibly high price…”, we had $19.375/share takeover.
There were a lot of failed takeover attempts also, but it’s still early to go there with this one.
ms doesn’t need yahoo or anything it offers - particularly at these prices. steve will have a shareholder mutiny on his hands if he ups this.
It seems to me like a risky strategy trying to make MS rise their bid.