Filed this morning with the SEC (as expected):
YAHOO! BOARD OF DIRECTORS SAYS MICROSOFT’S PROPOSAL SUBSTANTIALLY UNDERVALUES YAHOO!
Sunnyvale, Calif., February 11, 2008 — Yahoo! Inc. (Nasdaq: YHOO), a leading global Internet company, today said the Yahoo! Board of Directors has carefully reviewed Microsoft’s unsolicited proposal with Yahoo!’s management team and financial and legal advisors and has unanimously concluded that the proposal is not in the best interests of Yahoo! and our stockholders.
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. The Board of Directors is continually evaluating all of its strategic options in the context of the rapidly evolving industry environment and we remain committed to pursuing initiatives that maximize value for all stockholders.
Goldman, Sachs & Co., Lehman Brothers and Moelis & Company are acting as financial advisors to Yahoo!. Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor to Yahoo!, and Munger Tolles & Olson LLP is acting as counsel to the outside directors of Yahoo!.
Now it’s Microsoft’s move. Let the shareholder lobbying begin.
Nice.. and there’s still time to create better value for the shareholders!!
they should wait a year, let yahoo flounder, then buy at 15 billion.
They remind me of somebody at my college - he used to argue that teachers ‘undervalued’ his ability. They should give him an ‘A’, because although his work was rubbish, this was only because he wasn’t trying hard enough.
Perhaps when Yahoo tries a bit harder, they might actually be worth 40 billion dollars, instead of 40 billion credits for Second Life, or whatever ridiculous valuation us techies are putting on them.
Not really much of a surprise. So what is next for Yahoo? Maybe Google!!
hi im new here and Im just cofused what is happening right now with this people.. Why would yahoo do that?
sorry for the questions.. Im just new here
Now it starts to become interesting to see if the real entrepreneurs stand up
As Garlinghouse probably said —
Its simple, Microsoft was only valuing the peanut butter part, not the jelly.
@reborn_25
Well, I guess it depends on who you talk to.
From Yahoo!’s press release, it is because the proposal “undervalues” Yahoo.
My advice to Microsoft (not that they’re asking for it): don’t blink. Yahoo are the mouse in the corner and Microsoft is the cat playing with it. The mouse can be certain of three things: 1) it isn’t going anywhere, 2) because it isn’t going anywhere, the cat is no great hurry, 3) notwithstanding the fact that it’s in no hurry, pretty soon the cat is going to finish it off.
Microsoft may be tempted to offer more for the sake of an easy life and to save Yahoo’s face. This isn’t about Yahoo’s board burning the midnight oil over the weekend to do a careful analysis of the business and work out “well, if you do the sums and take into account future growth prospects and the economic climate, we’re actually worth $35 a share, so let’s reject this $31 offer”. This is about a primitive need to be seen to display some control over their destiny which they don’t have by negotiating. Pretty much any deal contains an element of the trades unionist’s negotiating tactic in Yes Minister - “We’re asking for 40%, Minister, we’ll settle for 30% and give you the credit for beating us down” - only slightly more subtle.
Microsoft may respect the egos of their fellow businessmen - they never know, one day they may be in need of an ego-stroke, and these things tend to be karmic - or they may be hard-headed. An extra $4 is not going to bankrupt Microsoft and is not going to turn a good deal into a bad one or vice versa, whichever you think it is at the moment.
They are crazy take it and run! Yahoo has been strugging company for 8 years already.
Bold move in trying to bargain for atleast the $31 per share MS were offering. But they should be careful because anything more than $35 per share MS might walk away and considering the options they got Yang & co might want to put ego & pride aside and put the company first…and i think there wont be a hostile takeover as other people are saying for i believe MS truly wanna work with Yahoo…
This is all a negotiation tactics. Mircosoft expected them to reject their first offer and already have the second offer and third offer planned. Both sides need to have face and the deal with go through.
#9 makes a good point here. This is Yang’s ego talking as much as anything. The best for our stockholders? Bull - I am sure that most of them would like some guaranteed return for their investment, rather than the constant floundering from Yahoo in recent times.
There will be pillowfights and ice cream over in flickr groups today.
It was nice knowing you, dear Yahoo.
They need money and their need is fast. So, maybe but unlikely, Microsoft will bid again over 8 months. But this could be too late.
Anyway Yahoo’s shareholders should thank Microsoft for the new stock price.
Does ANYBODY (besides Yang) think Yahoo will turn the co. around on their own?? I don’t foresee Yahoo doing anything that will add more value than Microsoft brings to the table - though we know Yahoo is good at talking about it (Panama!). Class action suit by shareholders coming up? That would be fun to throw into the mix.
#2 Most reasonable people would do that. But when you have a CEO that throws chairs around as an argument what can you expect? $40 a share.
If i was Microsoft i would now put in a final offer of $29 a share - take it or we walk away.
Play hard ball. Microsoft dont need Yahoo, Yahoo needs someone and the only viable player is Microsoft.
Make them pay for their insolence and knock off a few billion for the the initial rejection. Then watch the fireworks go off when the 2nd offer is less, not more than the first.
Those lawsuits would be flying so fast…
Might make Micheal spit out some popcorn!
Microsoft will go to Lehman Bros. and Capital Research and get them on-board.
Then they’ll go back to Yahoo with possibly a slightly higher offer and 20% of the outstanding shares under their wings and the board will have to take it.
It could very well be something to do with the compensation packages offered to Yahoo’s execs. Remember the MCI/Verizon/Qwest merger fight? MCI execs got a sweeter personal deal from Verizon, and took that, over a higher bid from Qwest.
MCI’s execs basically said “screw the shareholders, I want MINE” and ended up with taking Verizon, whose stock proceeded to crumble for the next year and a half, while Qwest’s stock more than doubled.
Needless to say, MCI’s shareholders were left holding the bag.
does yahoo has any social network?
So the blind (AOL) and the partially sighted (Yahoo) want to merge. Yahoo!’s anyone but Microsoft approach is indeed their ego’s talking. Shareholders hopefully won’t fly with the AOL merger.
Turn up the heat Ballmer! Respond to Google’s dominance with a reaction that is at least as hostile. At least!
Support Yahho! Help the underdog! Maybe they need to get their act together, but we can sure help them!
Save Yahoo Facebook Group: http://www.facebook.com/group.php?gid=21616665091
#21: Y! IS a social network. It’s the biggest one out there. Once they figure out how to get it profitable for the largest and most profitable market sector out there (ie: no one who reads TC), then they’re back. And they’re working on it.
Y! is not dead. Just pigheaded tech people who can’t say beyond their own blinkers think so. It’s still the #1 most visited website, still the consistent #2 in search, and it’s got all the earmarks of the next huge social thing.
So, the giant keeps growing up to become a beast that eats what finds on his way and every one aplauds while millions of dollars are being donated for pro abortion causes. Please wake up world !
Free cash flow and earnings potential, as well as our substantial unconsolidated investments… it´s a good point.
Yahoo does not need money. They were not shopping. They are not in debt. Their traffic is still growing (on an absolute basis, not market share basis). They are still profitable. They still have tons of talent. Their problems are focus and marketing/branding, which Microsoft will not solve.
Best time to buy a >1 beta stock? In a recession.
Glad Yahoo was smart enough to know they are just at a cyclical low.
If they wait a few more weeks, perhaps Facebook can buy them
What do you think Arrington?
Keen to see what Yahoo!’s next move will be.
Maybe Brad Greenspan will buy Yahoo.
Tom is right on… people are acting like Y! is dead because it lost the search war with GOOG. Um, excuse me, by any rational measure Y! is a profitable company. Sure, the stock is beaten down, but then, look at GOOG for the past few weeks. And yeah, the stock market is a rational way to determine how a company is doing… just look at Enron.
Anyhow, Y! definitely needs a good management shakeup, and one can hope that this will be a wakeup call to the board (possibly unlikely given past behavior), but the funeral is being scheduled a bit prematurely.
They are still profitable. They still have tons of talent.
23 (Hater-best name ever), 26 and 31 are right.
YOU != the world’s web users.
Before you peeps say Y! is dead and needs MS.
A. Do your homework and look at the financials.
B. Do your homework and look at Comscore and other metrics.
Yes, Y! may never catch Google in search, BUT THEY DON’T HAVE TO!
You can be a profitable and good company being #2 in Search and #1 in various areas.
Why is Y over-valued when you prop up Facebook and other startups who are losing money?
You know what’s the most embarrassing thing we’ve learned from this saga?
Its that Wall St. and Shareholders actually know less than TC posters.
Yahoo has the better advisors in this M&A battle, in my opinion.
Skadden, Arps, Slate, Meagher & Flom has legend dating back to the junk bond fueled M&A days and Goldman is the biggest dealmaker of them all according to league tables.
Of course, money talks in the end in hostile takeovers, so no matter what advisors Yahoo uses, Microsoft will take their case directly to the shareholders.
Sounds like Jerry is putting on his poker face…
http://racetalk.wordpress.com/.....nications/
Microsoft Responds to Yahoo! Announcement
It is unfortunate that Yahoo! has not embraced our full and fair proposal
to combine our companies. Based on conversations with stakeholders of both
companies, we are confident that moving forward promptly to consummate a
transaction is in the best interests of all parties.
We are offering shareholders superior value and the opportunity to
participate in the upside of the combined company. The combination also
offers an increasingly exciting set of solutions for consumers, publishers
and advertisers while becoming better positioned to compete in the online
services market.
A Microsoft-Yahoo! combination will create a more effective company that
would provide greater value and service to our customers. Furthermore, the
combination will create a more competitive marketplace by establishing a
compelling number two competitor for Internet search and online
advertising.
The Yahoo! response does not change our belief in the strategic and
financial merits of our proposal. As we have said previously, Microsoft
reserves the right to pursue all necessary steps to ensure that Yahoo!’s
shareholders are provided with the opportunity to realize the value
inherent in our proposal.
http://biz.yahoo.com/prnews/08......html?.v=2
Seems like Microsoft will go over it again
This is great.I hate this buying business.M$ should invest their billions in developing their own Yahoo type of company.
@34: “Good” is not good enough if you’re a publicly traded tech company. Its shareholders certainly aren’t paying what they’re paying for the shares because of the dividends (does Yahoo even pay them?), they’re buying in the expectation of future growth. Either Yahoo has to grow enough to satisfy its shareholders, which won’t happen, or it has to sell at a premium, which Microsoft is giving it a chance to - the best chance it has.
It’s interesting that you claim Wall St knows more than we do. Microsoft are offering a ~60% premium on Yahoo’s share price, so if they’re undervaluing it, Wall St are undervaluing it by 60% more than Microsoft. That would mean they know 60% less than Microsoft and the majority of us who think Yahoo should say ‘Deal’.
Interesting to watch MS next move.