Disappointing trading for Yahoo
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The boss of Yahoo says he is working on a "strategic plan" for the firm after reporting a sixth quarterly profit fall.
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Confirming&#160;weekend rumors, Yahoo rejected on Monday&#160;Microsoft&#39;s $44.6 billion cash-and-stock offer, saying the unsolicited proposal substantially undervalues the company.
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SEATTLE/SAN FRANCISCO  - Yahoo Inc   rejected Microsoft Corp's  unsolicited $41.6 billion  takeover offer as too low on Monday, forcing the software maker  either to sweeten the bid or adopt a hostile approach to clinch  a deal.
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BOSTON/SEATTLE  - Yahoo Inc's   second-biggest investor urged Microsoft Corp  to raise  its $42 billion bid for the Web pioneer and warned Yahoo it has  few options left, raising the pressure on them to seal a deal.
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Yahoo Inc  on Monday rejected  as too low Microsoft Corp's  unsolicited takeover  offer, currently valued at $42 billion, putting the ball back  in the software giant's court to pursue a deal.
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An analyst runs through the numbers and shows just how far Yahoo has slumped. Will its poor stock performance make it a takeover target?
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Yahoo&#39;s rejection of Microsoft&#39;s acquisition bid&#160;is likely a negotiating strategy to elicit a higher offer and shouldn&#39;t be seen as an attempt to resist a deal at all costs, according to analysts.Neither Microsoft nor Yahoo has many options to improve their position in online services and advertising, and combining forces is their best bet against common rival Google, analysts said.&quot;It&#39;s part of a larger negotiation that&#39;s occurring. Clearly, Yahoo should be and is seeking a higher bid, and this is part of that process,&quot; said Clayton Moran, a financial analyst with Stanford Group.Yahoo is unlikely to find a company willing to bid as much as Microsoft for it, while Microsoft will not be able to attain its Internet goals by acquiring a company other than Yahoo. &quot;While they need to negotiate and go through the process, at the end of the day this deal will happen,&quot; Moran said.On Monday, Yahoo rejected Microsoft&#39;s bid, saying it undervalues the company. Microsoft offered to pay $31 for half of Yahoo&#39;s outstanding shares and 0.9509 of a Microsoft share for the other half. At the time of the offer, Microsoft&#39;s stock stood at $32.60 and the bid was valued at $44.6 billion, a 62 percent premium over Yahoo&#39;s stock price at the time. However, the bid&#39;s value has dropped with Microsoft&#39;s sliding stock price, which at press time was $28.10. At the same time, Yahoo&#39;s stock price has risen from a close of $19.18 on the day before the bid to $29.75 at press time.Moran predicted that Microsoft will adjust its offer so that it ends up at $35 per share, probably increasing the fixed cash portion and reducing the variable stock portion so that value is less vulnerable to Microsoft stock fluctuations. A $35-per-share offer would be a midpoint between the original bid and the $40 per share Yahoo is reportedly seeking.&quot;We continue to view a Yahoo sale to Microsoft as the most likely outcome,&quot; Citigroup financial analysts wrote in a note published Sunday after press reports over the weekend that Yahoo would reject the Microsoft bid. The rejection isn&#39;t surprising but rather is consistent with Yahoo&#39;s board job to &quot;extract maximum value&quot; for shareholders, the Citigroup analysts wrote.Yahoo has reportedly held talks with Google and AOL to explore alternatives to a Microsoft acquisition. One scenario being floated would be for Yahoo to outsource its search advertising business to Google, while another, reported Monday by The Times of London, has Yahoo and Time Warner&#39;s AOL discussing a possible merger.However, neither option would match the potential benefits of an acquisition by Microsoft, Moran said. &quot;A combined Yahoo-AOL wouldn&#39;t be particularly strong, and Yahoo&#39;s stock wouldn&#39;t react favorably to that deal,&quot; Moran said. A search partnership with Google would boost Yahoo&#39;s revenue, but it wouldn&#39;t address larger problems within the company, he said.For Moran, if Yahoo has approached AOL, it has done so probably to send a message to Microsoft that it has other options and that Microsoft has to sweeten its offer. Meanwhile, Google&#39;s intervention is probably directed at complicating and lengthening the negotiation process between Microsoft and Yahoo and thus delaying the formation of a stronger rival, Moran said.While merging with AOL is unlikely to give Yahoo the boost it needs, such a deal would probably be more palatable to Yahoo&#39;s management because Yahoo would be the strongest party in the fusion, according to industry analyst Greg Sterling of Sterling Market Intelligence.&quot;Yahoo sees its own demise in a Microsoft acquisition. My sense is that Yahoo&#39;s management believes that Yahoo&#39;s soul wouldn&#39;t survive as part of Microsoft,&quot; Sterling said.At this point, the situation is very complicated for both Microsoft and Yahoo. If Yahoo is intent on fending off Microsoft&#39;s advances at all costs, Microsoft could opt to walk away empty-handed and face a public embarrassment, or attempt a hostile takeover, which could alienate and scare away Yahoo employees it would want to retain, Sterling said.At the same time, Yahoo can&#39;t simply wave away a generous Microsoft offer if it doesn&#39;t have an alternative to it, Sterling said. &quot;There is a great deal at stake for both sides, and it&#39;s very complicated,&quot; he said.Microsoft declined to comment about Yahoo&#39;s rejection. AOL didn&#39;t immediately reply to a request for comment about its reported merger talks with Yahoo.
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Yahoo (Quote, Chart) isn&#39;t ready to concede the e-mail search market to Google (Quote, Chart). In a deal that signals aggressive response to the growing popularity of Google&#39;s (Quote, Chart) Gmail service, Yahoo
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If you search for Yahoo Microsoft, this page is the second hit. I like that of course. It's generating a fair amount of flow, since the combination of Yahoo and Microsoft is a pretty hot topic. Keeping the topic going, I think it's pretty amazing that Microsoft wants to buy Yahoo, but then again, which of all their web efforts has captured our imagination? At least Yahoo has Flickr, and when they try something new, we all try it with them (often with not the greatest results). The rambling continues... If Yahoo is into poison pills, try this one out.  Reserve 5 percent of Yahoo's common stock for blogger options. Put us to work to find new businesses for Yahoo, ones that are relevant to our world. When we find them, reward the bloggers with a significant upside stake in Yahoo's future, not the airy-fairy kind, but real stock that we can trade. Handled properly, it could raise shareholder value by much more than 5 percent. Just the kind of deal they pay you to do, oh Yahoo gods and board members.  Of course it'll never happen. It's an idea like the one I keep proposing for newspapers -- that they hire their public editors from the public, independent bloggers with no journalism experience, with no undue reverence for the institutions so revered by journos. They're going away, just like Yahoo is (sad but true). Now what will rise in their place? Imho, something that's home grown, with the integrity of the people, in our interest. The more they invite the public in, the more clued in they will be when we figure out where we want to go with news on the web. It's why I'm excited about the Obama campaign and why I keep giving to it (I'm up to $400 now). I'm excited because so many other people are excited.  I like his idea about tuition for public service for college students. It's so simple. People want to be involved, they want to use their energy and creativity to solve problems. In the 20th century we were couch potatoes. In the 21st we do it for ourselves.  The first tech company that fully embraces this, not just in the form of User Generated Content (what an insult) but by giving us power (that comes from stock) will rule the world. If Y! had the guts, it won't be long before they're making tender offers to buy out Ballmer.  BTW, I think I understand why Ballmer wants Yahoo! When Yahoo engineers wake up they program stuff like Yahoo Live, which is pretty cool and runs on the web, and while it steals ideas from smaller companies, it adds some pretty cool stuff of its own. When Microsoft engineers wake up they program stuff like Vista, a multi-year, multi-billion dollar waste of money, time and customer goodwill. They can't do another Vista without wrecking the franchise. Now the question is -- where do they go for growth? That's what Yahoo is for.
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No need to be so polite, Terry Yahoo! has become leakier than a sieve. Typically this is a sign of an unhappy place to work - which Yahoo! may or may not be, we hesitate to judge.â¦
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SEATTLE/NEW YORK  - Yahoo Inc rejected Microsoft  Corp's unsolicited $41.6 billion takeover offer as too low on  Monday, forcing the software maker to either sweeten the bid or  adopt a hostile approach to clinch a deal.
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NEW YORK/SAN FRANCISCO  - Yahoo Inc.  and  AT&T Inc.  are negotiating potentially sweeping changes  that could scale back their partnership, the Wall Street  Journal reported, dragging Yahoo shares down 5.2 percent.
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Confirming&#160;weekend rumors, Yahoo rejected on Monday&#160;Microsoft&#39;s $44.6 billion cash-and-stock offer, saying the unsolicited proposal substantially undervalues the company.In a statement, Yahoo said that its management team, along with financial and legal advisors, believe the offer doesn&#39;t reflect cash flow, earnings potential, or recent investments in its advertising platform.Further, Yahoo said its board would continue to&#160;evaluate other &quot;strategic options.&quot;&#160;[&#160;See related Special Report:&#160;Microsoft makes bid for Yahoo&#160;| Blog:&#160;&#160;Yahoo + Microsoft: What&#39;s love got to do with it?&#160; ]&quot;We remain committed to pursuing initiatives that maximize value for all stockholders,&quot; the statement said.Microsoft offered $31 per share on Feb. 1, which was a 62 percent premium over Yahoo&#39;s closing price the day before. Since then,&#160;Yahoo&#39;s stock has risen in value&#160;and was trading just above $29 on Monday morning.Yahoo&#39;s executives were rumored to have been searching for a buyer other than Microsoft. However, no buyer has emerged. Yahoo&#39;s latest moves mean that Microsoft may have make a more generous offer, or pursue a hostile takeover.Microsoft said it believes the acquisition of Yahoo would give it the engineering talent and resources to compete better with Google. While Microsoft and Yahoo have had some success with display advertising, Google has built a fortune on contextual text ads that appear during a search.
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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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Yahoo Inc. and AT&T Inc.  are negotiating potentially sweeping changes that could scale  back their partnership, the Wall Street Journal reported,  dragging Yahoo shares down 5.3 percent.
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Yahooâs board decided that Microsoftâs $44.6 billion hostile bid undervalues Yahoo, a person familiar with the matter said.
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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.