Yahoo’s Tumbling House Of Cards

Based on WSJ article it looks like Yahoo’s attitude was the problem, not the pricing or the negotiations. I’m sure if Yahoo had the right attitude, MSFT would have tried to negotiate and might have settled slightly above 33, say at 34 or so.

yo mike…

not to rain on your parade…

but i think you’re wrong. not wrong in that there aren’t shareholders who wanted the deal to go through. of course there are. just as there were/are shareholders who want yahoo to remain free. i think you’re wrong in that i don’t think yahoo needs microsoft.

the thought process you go through assumes that google will remain dominant in the ad game, which is what everyone assumes. but ask yourself ,what happens if the ad game shifts. if google gets hist by 5-10% on the ad side, the share price of google drops like a rock. if that happens, yahoo will be much more valuable, given that yahoo has a number of different revenue generating strategies.

now, don’t get me wrong. the thesis that i put forth isn’t going to happen tomorrow (ir ever) but my point is to try to get people to realize that there are potential (somewhat realistic) possibilities for yahoo’s future that don’t involve them being acquired.

peace…

Maybe we should give them (Yahoo) more time but it’s hard to believe Yang couldn’t see the fallout coming…

Now it appears Yahoo is in so much of a weaker position that it’s hard to see how they save face.

No deal will happen unless Yang steps down…

Unfortunately shareholders not always see the long term picture. Not that they should. But you have to tip your hat to the Yahoo! folks since they pretty much new the pain they were putting themselves through if they turned the offer down.

I remain bullish that Yahoo! has to remain independent. Focus on innovation and execution.

Shut the fuck up Arrington. So your dumb startup tanked and you need a boost in cash? Why on earth do you think Microsoft at the helm of Yahoo would make things better? Microsoft is a tired company riddled with one bad decision after another. All the cash in the world (and lord knows they sit on a huge pot of it) hasn’t helped them acquire the right talent or lead in the right directions. It would be a disaster if they took Yahoo over.

Jerry Yang’s initiative to leverage the huge amount of traffic Yahoo gets on its various product (and enough flogging search advertising already - does Facebook or any other of the sites you lick ass to do search?) is definitely worth a shot. Institutional investors are as stupid as you are, and having lost money on all sorts of dumb ventures like Edgio they’re now trying to collect some. Their liquidity problems isn’t a reason for Yahoo to spread cheeks for Microsoft.

Sure Google is a tough adversary - they only make money from one product so they invest heavily in it. Yahoo can start worrying less about search advertising and more about leveraging eyeballs. You and other moron analysts have pumped up Facebook, and this is no different a move.

The three day limit is awesome.

Hey Ballzack, I agree with you wholeheartedly.

Arrington is a moron but he is bringing in thousands of dollars in payperpost from M$ to make Yahoo look bad (or you thought he didn’t have an agenda?)

He doesn’t realize that someday he will lose all credibility (for me he doesn’t have any left) and his cash cow will die a sudden death.

Till that day, I just come here to learn about new startups and ignore any other payperpost. You’ll learn how to identify them for sure.

I vote for the 3 day limit too! (ballzack… calm down!!)

I was actually surprised to see that Microsoft wasn’t going to go aggressive on this.

If the lashback is really that strong from shareholders, could this have been a part of Microsoft’s plan? Pull out, create havok and then come back in after the executive team and board is ruffled?

It is interesting to watch, but so damn messy - I can’t think that this is doing anything other than helping Google?

- Mystery CEO

“Focus on innovation and execution.”

While I remain very skeptical of MSFT’s ability to successfully integrate such a large acquisition for cultural reasons Yahoo! has shown no ability to do either of these in this century.

Yang’s toast. Ballmer will get his deal and then he will be Carlyed.

Bending to sharehodlers wims just because they want to make quick cash is no way to run a business. I think the people doing the work at yahoo are the only ones that matter in these decisions.

“Yahoo’s board would have very little standing at this point to oppose it, with their stockholders making their position so clear.”

Uh…I think they can just say they don’t think it’s a good idea. Lawyer? What?

You know the thing I don’t understand is that MSFT wants yhoo for search… if you put to bad search companies together- do you get a good one? I don’t think so. I think you get 2 crappy search technologies trying to converge while Goog just eats your lunch. Anyone agree/ disagree?

Seems like there are some shareholders that are applauding the decision? Weird considering everything I read seems to be anti-Yahoo!

I don’t think people have understood the magnitude of Microsoft’s move yet, and I’m surprised. By withdrawing the offer, Microsoft doesn’t need to engage themselves in a Proxy fight for control of the Yahoo! board - their own shareholder’s will do this for them, without costing Microsoft a dime. This new board will be more than happy to signal to Microsoft that they want a deal. Clearly, with the drop in Yahoo! share price, it is not worth $33/share or even $35/share that Yahoo! wanted, and now that Microsoft and the market has clearly seen this, Microsoft’s best position would be to play the waiting game and let Yahoo’s shares slide. I am inclined to believe that Yahoo’s shares will be less than $20/share over the next several months once the excitement from the potential synergies has been priced out. At that point, they’ll be compelled to take any offer that Microsoft makes, which I would suspect, be less than even the $31/share offer.

It’s irrelevant if Yahoo needs Microsoft, or not (and no where in this posting does it say that). The board’s responsibility it to protect shareholder value and that’s what the lawsuits are all about. Yang and the board can all be replaced if the shareholders want them out. All Arrington is saying is that if MS wants Yahoo, they now have the leverage to get it.

>I’m sure if Yahoo had the right attitude, MSFT would have tried to negotiate >and might have settled slightly above 33, say at 34 or so.

What’s the right attitude? Let me just bend over and get that soap for you?

@13 - “seems like there are some shareholders that are applauding the decision?” - Yes, but those are MS shareholders.

My respect for Yahoo! has increased tenfold. I applaud the move. In my eyes Yahoo! has a brighter future than Microsoft. The properties and technologies that they have are far more forward thinking than any of the tired, copycat technologies of MS.

Go Yahoo! Fight the good fight!

@16 - that is funny!! You made my day.

As I previously said, I thought an IAC-Microsoft-AOL deal made a huge amount of sense. But after thinking about it, Microsoft has simpler option that is as good/better than Yahoo.

Microsoft could acquire AOL (valued at $20 billion?) instead of Yahoo for $50 billion. AOL is the 4th most popular web property company with 109 million uniques to Yahoo’s 138 million.

And the best part of a Microsoft/AOL is that Microsoft can break the AOL-Google alliance. According to FCC documents, Google derives approximately 10% of its revenue from its AOL partnership.

Strategically timed, this would be a major blow to their #1 competitor while also being a partnership with ongoing synergies and fewer merger redundancies to manage than MS/Yahoo.

Jared

Why don’t they just settle the dust with $35 a share period.

“What’s the right attitude? Let me just bend over and get that soap for you?”

Steveb : That’d be a good start

If Yahoo! insists on hanging itself with the velvet “lifeline” Google handed it, why should Microsoft stop it.

It says a lot about the management of Yahoo! that they felt it was a win when their employees and shareholders lose money. Regardless of whether they high fived, no one honestly believes that they were undervalued at $31, let alone $33…if Yahoo! is so undervalued, Yahoo! should institute a stock buyback.

Has anyone run the numbers on other potential options for Microsoft, like doing a spin-off of its online division (perhaps seeding it with a few billion to match what’s in Google’s coffers). A spun off online division could combine with Myspace/AOL and could do a lot of things that Microsoft couldn’t, including attract top talent with more potential upside on the stock, take advantage of the same open source and other tools used by the competition, join open social, make applications for android and the iPhone, etc. Microsoft Corp could focus its efforts on Windows 7 and moving its applications to the cloud, still printing plenty of money…its stock might get quite a lift.

whatever.

there are two tensions here that likely can’t be amicably amended:

- employees and some users don’t want yahoo to be part of microsoft. this is understandable. from this perspective, the deal falling through is a positive.

- shareholders only know years of “just give us two more quarters!!” on the conf call, no real uptake on panama, and $33 on the table that has now turned in $24. from their perspective, this is just more bad news from a company that has consistently disappointed and now arrogantly laughs at shareholder concerns.

yahoo is a public company, shareholder concerns trump employees’. its worth noting that yahoo employees also have less money in their pockets today. jerry never promised a retention package, only a poison pill. that pill does employees no good now. no more money goes into employee pockets - just more “earned” bonuses (i.e., the bonus you were promised is not the one you will be paid), perpetually delayed wage increases, and 401k matching reminiscent of 7-11 or strawberry picking jobs.

and now jerry is saying he is “open to a deal”???? astounding.

i appreciate yahoo for fighting against the evil empire.
ballmer thinks he can just get anything by throwing money. well jerry has taught him a good lesson and killed ballmer’s ego. while jerry itself is in much worse position than ballmer with lawsuits etc coming, i thkink jerry has put up a good fight

rumor has it that MSFT made a move for Ask last fall when IAC was negotiating its syndication deal with Google/Yahoo/MSN. Diller said no then…but who knows what the future holds.

bye bye Mr Jerry Yang… you are screwed

All those commenting about good for Yahoo sticking up for itself - if they want to have that right they shouldn’t have floated on the stock market. Essentially Jerry Yang wants to have his cake (get lots of money by selling off huge parts of the company) and eat it to (still have complete control over that company despite investors having PAID for it). Shares are literally a “piece” of the company (which soo many naive investors fail to understand).

I realise many of you hate Microsoft - its cliche from the blogger crowd; but your personal feelings about whether you think Yahoo is better off with or without are irrelevant. By selling the company you are obliged to act in the other holders best interests. THIS is why Yahoo has suits cropping up against it.

Now that aside….
Microsoft does not *need* Yahoo. They are making many more billions than they know what to do with and despite the hype about their main platform (Windows) being on the way out - it still combined accounts for more than 85% of the market. It is a strategic decision in further boosting their profitability - but don’t be so naive to think that Microsoft is on the verge of collapsing and this is a desperate ploy to stay afloat. The Apple and Linux crowd (Personally I’m one of the linux crowd!) have been cooing about their downfall for the last decade and still haven’t managed to breach 10% market share.

“Sure Google is a tough adversary - they only make money from one product so they invest heavily in it. Yahoo can start worrying less about search advertising and more about leveraging eyeballs. ”

It already been played on the last bubble. Same old shits won’t get you anywhere even if you have more eyeballs than Google.

Better to let Yahoo “twist in the wind” for a few months. Then maybe strike with a $20-25 offer. Payback is a bitch.

why pay $33, when they could just stand pat at $31? in fact, at this point why not wait a few more weeks and maybe only pay $27?

they’ve already waited long enough to frustrate everyone involved; at this point might as well optimize for best price.

regardless, i agree this story is far from over… and Yahoo / Yang look very weak at the moment.

The natives are getting restless! Take the money and ‘run’, Mr. Yang. It’s good to negotiate, and play hard-ball, and all that business stuff. . .but the time is really now for you to sit down with Microsoft and get down to the ‘nitty-gritty’. You guys could blow Googles out of the water,if you got together; even in my day, the phrase ‘two heads are better than one!’,really does work!

Flock Yahoo, may Jerry Yang go down in history as the dumb ass that he is.

Yahoo should focus on their core competency, what they do best, what they started doing, which is content and services, not search. Yahoo is a media company, not a search company. Drop search and ads, outsource them to Google. Double ad revenues, while cutting labor costs maintaining a losing ad network and search engine.

I don’t understand the focus at TechCrunch on continually lobbying for Y! to get bought by MSFT or to maintain a separate search/ad network. It’s clear it’s not Y!’s core competency, nor is it Microsoft’s, so the combination isn’t going to work any better, it will just be a many headed monstrosity without focus.

Does Michael have Y! stock that he needs to sell or something? The continual drumbeat here is strange. Y! can continue to exist without MSFT, although it does need to refocus and decide what it wants to do. This “stick a fork in them” talk is hyperbole. Had the MSFT offer never materialized, half the people making dire predictions would have much calmer.

Masterful move by Microsoft - one of the oldest negotiating tricks in the book. They’ll let the folks (and shareholders) at Yahoo sweat a little more, then snatch em up with little or no resistance.

Except for the fact that $33 / share is just too much for Yahoo! A more reasonable bid would be around $28.

@33. Wow somebody’s been having day dreams of being the CEO of a multibillion dollar corporations again. So in that dream were you polishing your bald noggin’ and rubbing your hands evilly muttering ‘muhuhuhaha, payback’s a bitch’.

You’re a pathetic failure and you can’t even see it.

Why do we insist on looking for a partner or Yahoo. Yahoo has more email users than Google, Yahoo messenger more than GTalk, Flikr more than Picasa… Ok Google is much better in ads, and is winning brand recognition compared to Yahoo. But is the war over? Does Pepsi give up because Coke has better share? Aren’t Macs now a real alternative to Windows, even in Windows still commands far far higher market share? Why can’t Yahoo come back on their own? Maybe they just need a change in leadership.

A Microsoft-Yahoo wedding only benefits investors and bankers, but not at all the end-user.

http://tech-talk.biz/2008/05/0.....-weddings/

@ Yahoogle

Yahoo is so not a media company. In fact their strategy has been to move away from content creation (bye bye Vince Broady et al) and towards being an advertising seller - for themselves or anyone else who is interested. In Europe, Yahoo are, one-by-one, becoming the sales agents for the major mobile network operators (though selling diidly shit of their inventory, unfortunately).

Yahoo know that doing media is expensive, specialised and doesn’t create as much profit as services - that’s why they leave content to Disney, CNET, Time Warner etc.

But they are trying to be jack of all and master of none: mobile, display, behavioural, search - they need to win in one, not be mediocre in all.

Their best bet is in display and they do well in display sales, have innovative solutions. But hard to scale/offer effectively to third parties.

MSFT want reach to offer a whole new raft of services we haven’t seen yet (plus search and display ads). And an earlier post was right - AOL well may be a cheaper target for not that far-off many users (though far less email accounts.)

If Yahoo gets bought by Microsoft, two things will happen:
1) Microsoft will *still* screw up the internet
2) Yahoo will vanish is a puff of smoke.

Make that three things: Google will laugh all the way to the bank.