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Yahoo spurns Microsoft again as bad blood boils

Autor admin | 13.07.2008 | Category COMPANIES, Internet News, Microsoft, Yahoo

SAN FRANCISCO - Yahoo Inc. has rejected Microsoft’s latest attempt to buy its online search operations in a “take or leave it” proposal that Yahoo said would have dismantled its Internet franchise.

Microsoft backs Icahn’s bid to oust Yahoo board

Autor admin | 08.07.2008 | Category COMPANIES, Internet News, Microsoft, Yahoo

SAN FRANCISCO - Microsoft Corp. threw its weight behind investor Carl Icahn’s effort to dump Yahoo Inc.’s board, saying Monday that a successful shareholder rebellion would encourage the software maker to renew its bid to buy Yahoo’s Internet search engine or possibly the entire company.

Yahoo and Microsoft making the rounds with old lovers?

Autor admin | 03.07.2008 | Category Internet News, Microsoft, Yahoo

A bit of deja vu is creeping into recent media reports of Microsoft whispering into the right ear of News Corp. and Time Warner’s AOL about potential partnerships, while Yahoo is whispering in their left.

The Yahoo + Google - Microsoft spin room

Autor admin | 15.06.2008 | Category COMPANIES, Google, Internet News, Microsoft, Yahoo

With the Microsoft/Yahoo/Google triangle taking a new shape as Microsoft exited and Yahoo and Google connected, the analysts covering tech industry sports are weighing in with their opinions.

Some Wall Street analysts believe Microsoft will take another run at Yahoo if the company can’t get back on track or Carl Icahn wins his proxy fight to control the Yahoo board. That may be wishful thinking. Kara Swisher reports that Microsoft is done with its courtship of Yahoo and nothing will bring them back to the negotiating table.

Mike Arrington of TechCrunch called the Yahoo-Google deal a massive destruction of shareholder value, employee morale, and the Interent balance of power:
Yahoo’s hatred of Microsoft runs so deep that they were actually, in the end, willing to destroy the future of their company just to keep it independent for a short while longer. They’ve ignored the wishes of their shareholders, employees and many now former key employees in killing that deal. And apart from Google, CEO Jerry Yang, President Sue Decker and possibly Tim O’Reilly, I don’t believe there is anyone in the world that is happy with what has happened.

In a further lambasting post, Arrington called Yahoo desperate and possibly neurotic:
Quite simply, it looks to me like Yahoo is effectively paying Google off to step in and (1) keep Jerry Yang, Sue Decker and the current board of directors in power, and (2) avoid a desperation deal with Microsoft for as long as possible, or longer. It’s not even clear to me that Google wants this deal, based on the terms. It almost looks like they’re just doing Yahoo a favor, and trying to keep them out of Microsoft’s hands.

At the other end of the spectrum, venture capitalist Fred Wilson thinks that Yahoo did the right thing by choosing Google over Microsoft as a partner.
Yahoo! finally woke up and did what they should have done years ago, cede search monetization to Google who simply does it better and will always do this era of search better than anyone else.
Now Yahoo! will do what it needs to do. Clean house, get lean, get out of businesses it shouldn’t be in. Focus on what it’s good at. And start making money and growing again.
They may need new leadership to do that. But selling this asset to Microsoft just because they had the wrong leadership and probably still have the wrong leadership is a mistake.

From my reading of the events over the last five months, Yang regrets that Microsoft walked away from the acquisition talks. “We all felt and understood a combination done right has a tremendous amount of power and leverage,” Yang said during an interview with Walt Mossberg at the D6 conference.

As a founder, Yang preferred that Yahoo stay independent and that he have the chance to turn the company around as CEO. Microsoft historically was not the kind of partner that Yang considered for a marriage. And his board of directors, led by non-executive Chairman Roy Bostock, seemed to go along with that line of thought.

But the entire affair turned out to be mostly about the money, as Decker admitted. “We never got through the price door,” she stated during the same D6 interview. Yahoo’s board believed that the company was worth more than $35 per share based on future promise, and Microsoft wasn’t on the same page. In effect, Microsoft called Yahoo’s bluff.

It also wasn’t helpful that Yahoo was negotiating the search deal with Google at the same time Microsoft was pursuing its hostile bid. After months of rejection, Microsoft basically became less enchanted with the potential marriage, and despite the pummeling from the shareholders, Carl Icahn’s camp, and the press, Yang and his advisors held out for more money.

Unable to come to terms with Microsoft on a generous deal just for the search business, Yahoo took the less complicated, non-exclusive Google deal that allowed the company to remain in the search game.

As I wrote in my post “The battle for Yahoo’s soul,” Jerry Yang and Sue Decker have a short runway–about six months–to prove that they can “redefine” the essence of Yahoo in a way that yields more revenue, profit, and positive buzz. With the continuing board room distractions, employee defections, and morale issues that go along with being under siege by various parties, the duo have their work cut out for them.

Google grows stronger in Microsoft-Yahoo fallout

Autor admin | 14.06.2008 | Category Google, Internet News, Microsoft, Yahoo

SAN FRANCISCO - Microsoft Corp.’s abandoned takeover bid for Yahoo Inc. appears to have culminated with a disheartening thud for those two companies but amounted to yet another coup for online search leader Google Inc.

What began in January as Microsoft’s most audacious attack yet on Google instead paved the way for the Internet’s most powerful company to gain even more clout through a deal that gives Google access to a large chunk of Yahoo’s advertising space.

By submitting to a partnership that endorses Google’s search advertising technology as a better choice than its own, Yahoo is giving online marketers even more incentive to spend most of their money with its biggest rival, according to industry analysts.

It looks like such a sweet deal for Google that the U.S. Justice Department and lawmakers are expected to take a hard look at the arrangement to make sure it doesn’t give Google too much control over the Internet’s search advertising market.

Google currently has about 75 percent of the U.S. search advertising market followed by Yahoo at 9 percent, according to the research firm eMarketer Inc.

Although they contend their alliance won’t lessen competition, Google and Yahoo have agreed to wait until late September to begin working together so the U.S. government has more time to assess the potential impact.

Even more importantly to Google, the Yahoo partnership keeps a potentially valuable weapon out of Microsoft’s control.

Without Yahoo’s renowned franchise, Microsoft once again is scrambling to find a way to fix its unprofitable online operations and narrow Google’s commanding lead in the Internet’s rapidly growing ad market.

Google shares gained $18.56 to close Friday at $571.51 while Microsoft shares added 83 cents to close at $29.07 — an indication that some investors were relieved the world’s largest software maker concluded it would be too expensive and troublesome to buy Yahoo.

On the other side of the fence, Yahoo shareholders had been clinging to the possibility that Microsoft would revive its last offer of $47.5 billion, or $33 per share, to buy the Internet pioneer. But those hopes evaporated late Thursday after Yahoo disclosed Microsoft had “unequivocally” rebuffed an attempt to renew the negotiations.

In a sign of investors’ frustration, Yahoo shares dropped as much as $1.77, or 7.5 percent, Friday before rallying late in the session to finish at $23.47, down five cents. The downturn marked Yahoo’s lowest stock price since it closed at $19.18 at the end of January, just before Microsoft launched its takeover attempt.

That leaves Yahoo’s market value 29 percent below Microsoft’s last offer, which was withdrawn May 3 after Yahoo asked for $37 per share. Yahoo’s stock hasn’t reached that price since January 2006.

At least Microsoft still has a strong, highly profitable backbone — a suite of software products that run most computers around the world.

Yahoo, though, may have made a Faustian bargain by hiring Google to show ad links next to a significant portion of the ad links appearing alongside search results on its Web site in the United States and Canada. The Sunnyvale-based company also will pluck Google ads to show on other Web sites in its marketing network.

Yahoo expects its annual revenue to get an $800 million lift from the arrangement with Google while still showing show the majority of its own ads alongside its own search results. But most analysts viewed it as an act of desperation, asserting it’s only a matter of time before advertisers shift all their business to Google because they know their messages will show up on Yahoo either way.

Deutsche Bank analyst Jeetil Patel described Yahoo’s decision to farm out advertising to Google as “one of the worst strategic maneuvers seen in the Internet industry.”

Google will get such great access to Yahoo’s highly trafficked Web site that it should be able to gather more insights about the correlation between search requests and advertising, ThinkPanmure analyst William Morrison wrote in a Friday research note titled “Giving Away The Store (To Google).”

And that additional data could help Google further improve its advertising formula to become an even more compelling marketing magnet.

The partnership also cast doubt on a turnaround plan Yahoo co-founder Jerry Yang began drawing up year ago after he replaced Terry Semel as the Sunnyvale-based company’s chief executive.

A big part of that strategy hinged on Yahoo becoming a “must-buy” for advertisers — a strategy that the Google deal appears to contradict.

“This raises very important questions about the long-term vision for (Yahoo) and its place in the industry,” said Cantor Fitzgerald analyst Derek Brown.

Yahoo shareholders will get a chance to vent their frustration at the company’s annual meeting Aug. 1 when activist investor Carl Icahn will seek to replace the board with nine alternate candidates.

Icahn was primarily interested in selling Yahoo to Microsoft, so his campaign to replace the board may be hurt if he can’t persuade shareholders he has other viable ideas on how to boost Yahoo’s stock price. He didn’t return a call seeking comment Friday.

Yang and his top lieutenant, Susan Decker, defended the Google deal as a profitable move that will better position the company to capitalize on the Internet advertising market’s growth from roughly $40 billion worldwide this year to a projected $75 billion to $80 billion market in 2011.

Microsoft contends it offered Yahoo a better alternative even after losing interest in buying the entire company.

When the latest talks broke off June 8, Microsoft was prepared to buy Yahoo’s search operations for $1 billion and pay $35 per share to accumulate $8 billion worth of Yahoo’s stock, according to an internal note sent Friday by Kevin Johnson, who oversees Microsoft’s online operations.

Microsoft also would have offered guarantees that could have boosted Yahoo’s operating cash flow by an estimated $1 billion annually, Johnson wrote.

Yahoo estimates the Google partnership will increase its operating cash flow by $250 million to $450 million annually.

“Regardless of Yahoo’s decision, we will continue to move forward on our strategy in online services and advertising,” Johnson assured Microsoft employees.

Microsoft left the door open to renewing talks about buying Yahoo’s search operations. Yahoo also gave itself some wiggle room by including a clause in the Google partnership that would end the alliance for a termination fee of up to $250 million.

Some analysts and investors still think Microsoft eventually might try to buy Yahoo in its entirety, although at a price well below $47.5 billion.

“Yahoo seems to have backed itself into a corner pretty effectively here so it would appear Microsoft has a lot of leverage,” said Dan Davidowitz, a portfolio manager for Polen Capital Management, which owns about 750,000 shares of Microsoft and 37,000 shares of Google.

Davidowitz said he isn’t interested in owning Yahoo’s stock.

Yahoo!

Yahoo chief says Microsoft not interested in renewed takeover tr

Autor admin | 29.05.2008 | Category Internet News, Microsoft, Yahoo

CARLSBAD, California (AFP) - Yahoo chief executive Jerry Yang said Wednesday that Microsoft is “no longer interested” in buying the pioneering Internet firm, but is considering “other partnerships.”

Yang also maintained that Yahoo is “not under siege” despite a threatened stockholder revolt led by billionaire corporate raider Carl Icahn.

Yang’s comments came during a speech at an “All Things Digital” conference organized by the Wall Street Journal in the Southern California city of Carlsbad.

“Microsoft is no longer interested in buying the company and they are discussing various other partnerships with us,” Yang said, echoing comments made the prior evening by Microsoft chief executive Steve Ballmer.

“We are listening.”

Yang implied that sparring that took place between the companies while Microsoft’s nearly 50 billion dollar offer was on the table has given way to talks aimed at finding a way for them to work together.

Microsoft could have taken a “much more hostile” tact and tried to oust the Yahoo board of directors that rebuffed advances by the Redmond, Washington, based software giant, according to Yang.

Yang stressed that it was Microsoft, not Yahoo, which walked away from the bargaining table.

Microsoft says it broke off takeover talks in late April after it upped its February 1 bid of 44.6 billion dollars by three billion dollars and Yahoo’s board still wanted more.

Yang defended the board’s handling of failed takeover talks with Microsoft and pleaded anew the case that the struggling Internet firm is poised to recapture its former glory and a bigger share of online advertising dollars.

Microsoft wanted to buy Yahoo to better take on Google, which dominates the lucrative world of Internet search and advertising.

“They definitely have an interest in Yahoo,” Yang said of Microsoft. “With the right circumstances, not only price, our board is open.”

Talks between Yahoo and Microsoft may be centered on letting Microsoft handle Yahoo’s online advertising in the belief it can pump more cash out of the promising revenue source.

Yahoo successfully tested just such an arrangement with Google during Microsoft’s takeover try.

An alliance with Microsoft, or even Google, could be a salvation for Yahoo board members facing a showdown with Icahn.

Icahn has reportedly bought a stake of more than four percent in the California firm and says he plans to oust board members he accuses of botching takeover talks with Microsoft.

Icahn has nominated a Microsoft-friendly slate, which includes him, to replace all ten Yahoo board members at elections to be held at an annual meeting in late July.

Yahoo delayed the shareholders meeting to an unspecified date because it needs time to prepare for the threatened coup attempt.

“The perception of us being a company under siege is just not accurate,” Yang said as he was peppered with questions about Yahoo’s future.

Yahoo’s potential to make money online stretches far beyond search, according to company president Susan Decker.

Internet search accounts for only 10 percent of the space for placing online advertising, and Yahoo boasts 500 million people that routinely use its properties, which include free email and user groups.

“It’s an enormous asset,” Decker said at the conference. “It’s undervalued. We want to do more with it.”

Yahoo!

Yahoo CEO open to more Microsoft talks

Autor admin | 07.05.2008 | Category Microsoft, Yahoo

NEW YORK - Yahoo Inc chief Jerry Yang signaled a more open stance towards Microsoft Corp on Monday, saying he had been seeking common ground when the software maker abruptly ended deal talks.

Yang told Reuters in an interview that he had “mixed feelings” about the weekend outcome, after investors showed their disappointment over the break-up of negotiations by sending Yahoo shares down 15 percent.

“We were negotiating a way to find common ground and then on Saturday they chose to walk away,” said the 39-year-old co-founder of the pioneering Internet company. “They started it and they walked away.”

Asked if Yahoo would still leave a door open for Microsoft to return, Yang said: “If they have anything new to say, we would be open. … I am more than willing to listen.”

After three months of negotiations, Microsoft CEO Steve Ballmer raised his offer for Yahoo to $33 per share from an initial $31, for a total deal value of about $47.5 billion.

Yang held out for $37 per share, saying that even the sweetened offer did not value Yahoo properly for its Web search advertising technology, its prominence in selling display ads and its lucrative overseas holdings.

But its two largest shareholders independently told The New York Times they would have sold for as little as $34.

“I am extremely angry at Jerry Yang and at the so-called independent board,” Gordon Crawford, portfolio manager for Capital Research Global Investors, the largest Yahoo shareholder with some 16 percent of stock, told the newspaper.

Reuters - Continued…

Microsoft withdraws offer for Yahoo

Autor admin | 04.05.2008 | Category COMPANIES, Microsoft, Yahoo

SAN FRANCISCO (Reuters) - Microsoft Corp walked away from its bid to buy Yahoo Inc on Saturday after the Internet company turned down its offer to raise the price by $5 billion to $47.5 billion.

Microsoft’s offer was for $33 a share but Yahoo would not lower its demand below $37, Microsoft Chief Executive Steve Ballmer said. The software company initially bid $31 per share for Yahoo more than three months ago.

“We believe the economics demanded by Yahoo do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal,” Ballmer said in a statement.

Analysts say Yahoo has overplayed its hand and they expect the Web pioneer’s shares to fall as much as 30 percent to $20 levels when Nasdaq trading resumes on Monday. The stock rose nearly 7 percent to $28.67 on Friday on hopes of an agreement between Microsoft and Yahoo.

 

“Wow. I’m shocked Yahoo wasn’t more reasonable. The stock will probably go down at least $5 on Monday. It is surprising that Ballmer walked away instead of trying a hostile bid at $33,” said Walter Price, a senior portfolio manager at RCM fund management company in San Francisco, which had 21 million Microsoft shares and 2 million Yahoo shares as of the end of December.

Laura Martin, a senior analyst at Soleil Securities, said she expected a number of shareholder lawsuits against Yahoo.

“The Yahoo guys want too much money for their company. We think $33 a share is fair in the context of the weakening economic environment and adverse advertising trends,” she said. “They’ve prioritized employees over shareholders in the hopes that someday they can create more than $8 billion of value, even if they have no track record of doing so,” she said.

Some Wall Street analysts also have said Microsoft could pull its bid as a negotiating strategy aimed at putting pressure on Yahoo to eventually accept a future offer.

Continued…

Report: Microsoft-Yahoo deal may go hostile Friday

Autor admin | 02.05.2008 | Category Microsoft, Yahoo

SEATTLE - Microsoft Corp. may go hostile in its bid for Yahoo Inc. as soon as Friday, according to a published report.

Citing unnamed people familiar with the matter, the Wall Street Journal reported early Friday that the world’s largest software maker may be preparing to go straight to Internet pioneer Yahoo’s shareholders.

An announcement was “likely” to come Friday, according to the report, though the newspaper said its sources cautioned that Microsoft may delay.

Chief Executive Steve Ballmer told employees in a company assembly Thursday that he knows how much he’d spend to buy Yahoo and accelerate his company’s Internet play.

“We’re willing to pay for that at some level, and beyond that level we’re not willing to pay for it. I know exactly what I think Yahoo is worth to me,” the executive said. “I won’t go a dime above, and I will go to what I think it’s worth if that gets the deal done.”

But he didn’t offer a figure, and he didn’t say whether Microsoft is considering raising its unsolicited bid, worth $44.6 billion at the time it was made in early February.

The offer is currently worth about $42.4 billion, or $29.48 per share, based on Microsoft Corp.’s closing stock price Thursday. Yahoo Inc. has rejected the offer, saying it undervalues the company. Microsoft’s board has been considering whether to raise the bid to as much as $33 per share, according to The Wall Street Journal.

Ballmer didn’t provide any new insight into the company’s efforts to buy the Silicon Valley pioneer during the meeting at Microsoft’s Redmond, Wash., headquarters, but he did indicate that an end to months of speculation was near.

“We ought to announce something in relatively short order,” Ballmer told employees.

His comments were first reported by Silicon Alley Insider, an online technology news site, and confirmed by a Microsoft spokesman.

Ballmer added that buying Yahoo is just one of many moving parts in the software maker’s strategy to compete with Google Inc. in search and Web advertising, and that if neither a friendly nor a hostile deal “look good,” he’s willing to walk away.

Microsoft’s board met Wednesday but reached no decision on a next step, the Journal reported. The software maker had given Yahoo until last weekend to agree to a deal or face the prospect of an ugly proxy fight.

Meanwhile, Yahoo is exploring a possible advertising partnership with Internet search leader Google Inc. or a merger with the online operations of Time Warner Inc.’s AOL as possible defenses if Microsoft tries a hostile takeover.

Impressed by a two-week test completed last month, Yahoo could firm up a long-term deal within a week, according to the Journal. Any alliance between Yahoo and Google would face intense antitrust scrutiny, however, because the two companies control more than 80 percent of the U.S. market for search advertising.

Yahoo and Google hope to allay those concerns by structuring their deal so their rivals, including Microsoft, could participate in an auction-based system, the Journal said.

Yahoo!

PC makers find ways to extend XP’s life

Autor admin | 27.04.2008 | Category Microsoft, Windows

Facing a June 30 deadline to stop selling PCs with Windows XP, the world’s largest computer makers are getting creative.

Taking advantage of the “downgrade rights” offered as part of the Windows Vista license agreement, Hewlett-Packard and Dell both plan to offer machines loaded with XP well beyond June.

Technically, the computers will be Vista Business or Vista Ultimate machines that have been factory downgraded to XP at the customer’s request. In practice, they are more like XP machines that come with an already paid-for upgrade to Vista when and if the customer chooses to do so.

HP said it plans to continue selling the “pre-downgraded” desktops, notebooks, and workstations to its business customers until July 30, 2009. Dell is already pitching the same option on its Web site and promising the models will stick around long after it stops taking standard XP orders on June 18. Other computer makers tell CNET News.com they are still exploring what to do but also want to sell XP beyond June 30.

There are limits to the approach being taken by HP and Dell. Only the Business and Ultimate flavors of Vista come with downgrade rights, meaning consumer machines can’t be sold in a similar fashion.

While companies can offer pre-downgraded machines via their Web site, things get a little more complicated when it comes to buying a PC at retail stores. It may be possible for customers to buy such a machine, but just how this will work–and if stores will offer such an option–is not totally clear. The tricky issue is that, to stay within Microsoft’s terms, the customer has to somehow “request” the XP downgrade.

All of this prompts the real question: Why won’t Microsoft just extend the deadline? The company’s rationale that customers and computer makers aren’t demanding a longer life for XP seems to be increasingly implausible.

Kevin Kutz, a director in Microsoft’s Windows unit, said that the downgrade-rights option meets customer needs.

“While (computer makers) continue to see large numbers of customers making the transition to Windows Vista, there are some pockets–like small business–that need a little more time,” Kutz said in a statement. “And from what we’ve heard from our partners, the downgrade rights option fulfills that need.”

The pre-downgraded PC option is just the latest way that PC makers have responded to stronger-than-expected demand. After shifting largely to Vista after its January 2007 mainstream launch, Dell and others quickly began adding more XP options in response to customer requests.

For some time now, computer makers have been selling machines with an XP recovery disc as a downgrade option.

Lenovo, for example, plans to keep offering an XP recovery disc with some Vista models through January 2009, according to InformationWeek.

The latest twist is the machines, like the ones HP and Dell will sell beyond June 30, that have Vista rights but contain XP pre-installed.

As for whether a broader reprieve might yet come for XP, Microsoft CEO Steve Ballmer has left the door open a crack.

“XP will hit an end-of-life,” Ballmer said in Belgium recently, according to Reuters. “We have announced one. If customer feedback varies, we can always wake up smarter, but right now, we have a plan for end-of-life for new XP shipments.”

CNET News.com