Should Yahoo accept Microsoft's offer?
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Mike Arrington is doing a great job of laying out the options for Yahoo wrt Microsoft's offer to buy them out. He's written two pieces that helped put it together for me. Mike clearly has great sources in the investment banking community and among potential buyers of Yahoo, and is actively talking with them. He's got a business lawyer's mind and, as you know I'm sure, he's spent the last few years immersed in web applications.  Bottom-line: Yahoo's three choices are: 1. Tough it out alone. 2. Sell advertising rights to Google. 3. Accept Microsoft's offer.  Mike argues that option 1 would result in shareholder lawsuits and in the end would get Yahoo nowhere because they'd end up selling to Microsoft eventually. Option 2 would enable them to pay a major cash dividend to their shareholders, making up for the lost windfall coming from Microsoft's offer. Options 2 and 3 have the risk of being rejected by government regulators.  Now, as a member of Yahoo's developer community, and generally a respector of Yahoo (is that a word) -- I say take the deal. I don't think Yahoo has ever had leadership that has been up to navigating the treacherous waters of tech industry economics and politics. At least with the Microsoft acquisition they would get one -- Ray Ozzie. He's a guy you can sit across the table from and plot something out and he can deliver. I've had many good meetings with Yahoo people, but rarely have they resulted in action. From my own selfish point of view, Microsoft owning Yahoo might mean that Ray makes more trips to the Bay Area (figuratively) and when he sits down, we can talk about new open interfaces and developer programs for Yahoo properties. I've read most of the commentary on the Yahoo deal, and the other piece that made an impression was Mark Cuban's. He says that Yahoo should accept the Microsoft deal because it would give them the breathing room they need re Wall Street. He argues that the market has always allowed Microsoft to sink resources into developing markets, and that's exactly what Yahoo needs to become the organization that it has been trying to be. Instead, the market treats Yahoo as a comp to Google, but Yahoo doesn't have the economics of Google, so that's, long-term, a losing battle.  There's one more reason I think Yahoo should sell to Microsoft -- the fatigue of the people. The company has been wobbly too long. If they don't take the Microsoft offer it's going to be a long wobbly decline and the shareholders will be right to be angry. Here's their chance to get out, it's time, so just do it.
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In a statement late Monday afternoon, Microsoft responded to Yahoo's rejection of its initial takeover bid as many believed it would, and as the company itself indicated it probably might do: It will take its case directly to Yahoo shareholders.
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Is Microsoft's acquisition of Yahoo even news at this point?
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Microsoft Corp. offered to buy search engine operator Yahoo Inc. for $44.6 billion in cash and stock in a move to boost its competitive edge in the online services market.
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Microsoft said&#160;its $44.6 billion offer to purchase Yahoo&#160;is &quot;fair&quot; and hinted that it may pursue a hostile takeover of the Internet company, according to a statement Microsoft made Monday in response to&#160;Yahoo&#39;s formal rejection of its buyout offer.In a statement, Microsoft said it&#39;s &quot;unfortunate&quot; that Yahoo &quot;has not embraced&quot; its proposal to combine the two companies, and the rejection of the offer &quot;does not change our belief in the strategic and financial merits of our proposal.&quot;The company also hinted that it may take the offer directly to Yahoo&#39;s shareholders, a move that could result in a hostile takeover.&quot;As we have said previously, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo&#39;s shareholders are provided with the opportunity to realize the value inherent in our proposal,&quot; Microsoft said in its statement.Earlier Monday, Yahoo formally rejected Microsoft&#39;s bid to acquire the company in a half-stock/half-cash purchase, saying it undervalued Yahoo.On Feb. 1, Microsoft offered to pay $31 per share for half of Yahoo&#39;s outstanding shares in cash -- about $22.3 billion -- and 0.9509 of a Microsoft share for the other half. Microsoft&#39;s half-cash/half-stock offer to Yahoo was valued at about $44.6 billion at the time it was made; Yahoo&#39;s share price was $19.18 at the time.However, since then Microsoft&#39;s stock has gone down while Yahoo&#39;s has risen, making the deal, under its current terms, worth less than when it was originally offered. This led to speculation that Yahoo might look for other suitors; the company is reportedly looking for about $40 per share. Yahoo&#39;s share price closed at $29.87 Monday; Microsoft&#39;s closed at $28.21.Some have speculated that Microsoft would raise its offer to the company to about $35 per share -- about midway between its original offer and Yahoo&#39;s target price -- but in its statement on Monday, the company seemed adamant about keeping the offer as it stands.&quot;We are offering shareholders superior value and the opportunity to participate in the upside of the combined company,&quot; Microsoft said. &quot;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.&quot;Microsoft&#39;s offer to purchase Yahoo is an attempt to join forces and improve both companies&#39; positions against Google in online advertising and services. However, many questioned both the logistical complexity and cultural differences involved in combining the companies, and there are fears that it will thwart rather than help their efforts to compete with Google.Yahoo is reportedly in talks with both AOL and Google to try to avoid being acquired by Microsoft. Analysts said Monday that Yahoo&#39;s initial rejection of the offer is more of an attempt to elicit a higher bid -- either from Microsoft or another company. If none comes, the company might decide in the future to accept Microsoft&#39;s offer as it stands, they said.
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A chorus of Wall Street analysts are urging Yahoo to take the deal, now that it's clear no other buyers are really emerging. But they're also saying it's time for Microsoft to raise its original offer for Yahoo in order to make it happen.
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Would Yahoo! give Microsoft an unfair advantage over Google?
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SAN FRANCISCO/NEW YORK  - Yahoo Inc would consider a business alliance with Google Inc as one way to rebuff a $44.6 billion takeover proposal by Microsoft, a source familiar with Yahoo's strategy said on Sunday.
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Yahoo&#39;s board of directors plans to reject&#160;Microsoft&#39;s unsolicited $44.6 billion takeover bid,&#160;The Wall Street Journal reported Saturday, citing as its source &quot;a person familiar with the situation.&quot;According to the report, the source said the Yahoo board has determined that the $31-per-share offer &quot;massively&#160;undervalues&quot; the online services company. In addition, Microsoft&#39;s buyout bid doesn&#39;t take into consideration the business risks that Yahoo would be taking if it entered into an agreement that in the end might not be approved by government regulators, the source told the Journal.According to the Journal, Yahoo&#39;s board intends to send Microsoft a letter on Monday, detailing its position.A Yahoo spokeswoman declined to comment on the report today. &quot;We are not providing details on the board&#39;s review process,&quot; she wrote. &quot;Yahoo&#39;s board is carefully and thoroughly evaluating the Microsoft proposal in the context of all of the company&#39;s strategic alternatives, and will pursue the best course of action to maximize long-term value for shareholders.&quot;Microsoft, which announced its offer for Yahoo on Feb. 1, couldn&#39;t be reached for comment today. The offer is a combined cash-and-stock deal; in announcing the bid, Microsoft said Yahoo shareholders could choose to receive either cash or Microsoft stock, although it added that the total consideration would be equally split between the two forms of payment.Yesterday, published reports said that Yahoo&#39;s board was meeting to discuss the offer.Yahoo is still evaluating other options,&#160;including a search advertising partnership with Google, according to today&#39;s report by the Journal. It also may still be open to a longer negotiation with Microsoft: The Journal said it was told by the source that Yahoo would be unlikely to consider any offers below $40 per share.If so, that would require Microsoft to raise its original offer by at least 29 percent, or about $13 billion. In other words, the cost for Microsoft to become a more credible rival to Google in the search and online advertising markets could start at about $57.6 billion.Google has been doing what it can to scuttle the Microsoft takeover bid, including playing the antitrust card by asking, in a blog post by one of its executives last Monday, whether Microsoft might &quot;attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC?&quot;Microsoft quickly shot back, issuing a statement saying that a combination of it and Yahoo merger would &quot;create a more competitive marketplace.&quot;(Eric Lai contributed to this story.)Computerworld is an InfoWorld affiliate.
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Microsoft Corp offered  to buy Yahoo Inc for $44.6 billion, in a bold bid to transform  two ailing Internet businesses into a worthy competitor for  market leader Google Inc.
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Microsoft said&#160;its $44.6 billion offer to purchase Yahoo&#160;is &quot;fair&quot; and hinted that it may pursue a hostile takeover of the Internet company, according to a statement Microsoft made Monday in response to&#160;Yahoo&#39;s formal rejection of its buyout offer.
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Microsoft Corp  said on Friday  it has offered to buy Yahoo Inc , the popular Web  portal, for $44.6 billion in cash and stock, seeking to join  forces against Google Inc  in what would be the biggest  Internet deal since the Time Warner-AOL merger.
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NEW YORK/SEATTLE  - Yahoo Inc  on Monday  rejected Microsoft Corp's  unsolicited $41.5 billion  takeover offer as too low, forcing the software maker to either  sweeten its bid or adopt a hostile approach to clinch a deal.
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Microsoft&#39;s $44.6 billion offer to purchase Yahoo&#160;is a dramatic statement from a company that delayed acknowledging the importance of emerging Web business models for so long, it faced becoming an also-ran in the Web 2.0 economy.But the cultural implications of the move are so tricky that the deal could end up backfiring for both vendors if Microsoft doesn&#39;t take care to learn from its past and use Yahoo to transform its business and&#160;not just help bolster its unproven efforts in online advertising and hosted services.The unprecedented deal, which would put a sizable dent in Microsoft&#39;s wallet, would be the largest purchase ever for the company. If Microsoft is willing to spend that much money, it also has to be willing to change some old ways of thinking to make the most out of the investment, analysts say.To achieve this, analysts caution Microsoft to be careful not to view Yahoo as a one-trick pony, taken onboard only for its user base and infrastructure to bolster Microsoft&#39;s online advertising interests against Google. While this is certainly the primary reason for the deal, to make the most of it, Microsoft has to not only respect the strength of Yahoo&#39;s brand but also be willing to let go of some of its own traditional proprietary interests -- not just on the product side but in its culture as well.Microsoft has never been one to let go of its vision or proprietary interests too easily; when acquiring companies, it usually subsumes the products and services and brands them as its own.While this has worked in the past because Microsoft traditionally has shied away from acquiring big-name or big-ticket items --&#160;last year&#39;s $6 billion aQuantive deal&#160;was a notable exception -- it&#39;s not as simple to do this with a company like Yahoo, analysts said.In the areas of online search and particular services and as an online destination for users, Yahoo is a stronger brand than Microsoft. Microsoft must recognize this and be willing to give up some of its interest in new content and services branded, respectively, under MSN and Windows Live to make the deal successful, said Ned May, director and lead analyst for market research firm Outsell.&quot;The big question is, will Microsoft take this and recognize it for being a stronger property and migrate its efforts there, or will it try to push its own efforts out through Yahoo?&quot; he asked. &quot;Historically, there&#39;s no precedent for it to do anything but use [an acquired company] to get Microsoft&#39;s message out.&quot;Though Microsoft and Yahoo are different types of companies and the union itself makes much more sense, Ron Schmelzer, analyst and managing partner with Zapthink, likened the deal to Time Warner-AOL, in which AOL&#39;s brand was damaged, not enhanced, after all was said and done.But investing as much as the gross domestic product of some countries in one company could inspire Microsoft to &quot;change its stripes&quot; and rethink its own interests, he said.To make the deal a true success, Microsoft also has to prove that it can let go of its entrenched Windows OS and desktop software culture, which had been the anchor keeping Microsoft from moving more quickly against Google and Yahoo in online advertising and services in the first place, Schmelzer said.&quot;The application itself is moving away from the thing that sits captive on your desktop to the thing that&#39;s distributed on the Internet,&quot; he said. &quot;Microsoft has to rid itself of its &#39;80s and &#39;90s perspective -- which was great in the &#39;80s and &#39;90s, but now 80 percent of the value of the computer is not in the computer itself.&quot;Microsoft had been moving in this direction before Friday&#39;s news, but it has been burdened by its need to keep the customers of two of its biggest consumer products -- Windows and Office -- happy, as well as its enormous portfolio of enterprise and business customers. Instead of moving full bore into the Web, Microsoft had adopted a &quot;software plus services&quot; strategy as a nod to its software legacy and inability to move fully to a more services-oriented strategy because of it.Still, some think an entire cultural shift isn&#39;t necessary for Microsoft to make the most out of the deal. David Mitchell Smith, vice president and fellow at Gartner, said Microsoft can leverage Yahoo successfully without changing its usual way of doing things, by keeping the brand and merging the best parts of Yahoo&#39;s Internet business, such as its online content, advertising and search, with its online services efforts.&quot;I would expect to see the Yahoo brand come out of this very, very strong,&quot; he said. In particular, Microsoft has been making moves to drive more video and other multimedia content online through MSN, and that is one area where the company could give up its own identity in favor of Yahoo&#39;s, Smith said.Andrew Brust, chief, new technology for consulting firm twentysix New York, said that the combination of Microsoft&#39;s existing Web technology and the Yahoo brand would be &quot;nicely complementary,&quot; though he acknowledged the risks of such a union. Even so, &quot;risk aversion is not a good Internet strategy,&quot; Brust said. Taking a risk in this area as well as bringing &quot;some truly Internet-focused mindset into the corporate culture&quot; may be just what Microsoft needs.Others likened the deal to another risky one, HP-Compaq, which many feared would be a disaster because of product overlap and cultural differences. That deal eventually proved successful.However, it&#39;s important to keep in mind how much more of a role that culture and the cool factor plays on the Internet than it does in the world of traditional computer hardware, warned Outsell&#39;s May. He said Yahoo users may be put off by the notion of Microsoft as their new daddy and see Google as the lesser of two evils, which would defeat the notion of the Microsoft-Yahoo union in the first place.
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Yahoo Inc. is set to reject Microsoft Corp.'s offer, initially worth $44.6 billion, as undervaluing the business, a source familiar with the situation said on Saturday.
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More competition courtesy of the proposed Microsoft-Yahoo! combo?
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InfoWorld - While observers believe that Microsoft is willing to pay Yahoo $44 billion primarily for its users and advertising base, Microsoft's chief software architect, Ray Ozzie, wants to grow its developer community as well.