Yahoo Sued for Spurning Microsoft

tuxgeek writes "In the continuing saga of Yahoo resisting a Microsoft buy out, Yahoo is now being sued by its shareholders. 'Two Detroit pension funds have sued Yahoo Inc. and its board of directors, saying they breached their duties to shareholders in trying to thwart a takeover by Microsoft Corp. The lawsuit was filed in Delaware Chancery Court on Thursday by lawyers representing Detroit's police and fire retirement system and general retirement system, as well as 'all other similarly situated public shareholders.'"

Comments

Beholden to short term investors

[seifried]

Lovely, some short term investors would liek to crack open the golden goose and get allt he eggs now. Which may not be a bad idea (I can't imagine Yahoo!'s share price going up very significantly unless they have something very surprising in the works. If I was a shareholder I'd probably want to sue them too, but I'd feel dirty about it (but rolling around in money would probably cure that).

Re:Beholden to short term investors

[marcello_dl]

> As an individual shareholder I probably would not sue, at least if I'm interested in long-term profit. I personally don't see how Yahoo can generate more wealth if they belong to a company which has managed to gain around 6% market share by investing billions. The logic behind it seems to be very flawed.

I would add that MS would be buying up a competitor, and it's all too common for companies to buy competitors to leave them to wither and then close them down after they sucked up all valuable assets and clients.
As an individual shareholder I'd be primarily worried about that scenario, and I wonder why a fund forgets about it.

I would also add that suing your own company brings bad publicity to it- are they interested in their company well being or what?

Sorry but conspiracy theorists linking such a move to MS pulling strings have the most reasonable scenario here.

Oh by the way, dear real shareholders: the minute you sell to MS I'm canceling my subscription to yahoo. I do not trust MS to do something different with yahoo than what they did to hotmail. Besides, since I am a linux user and hobby dev for OSS software, you'd basically sell my data to the enemy. Double plus ungood.

Re:Beholden to short term investors

[ocbwilg]

As an individual shareholder I probably would not sue, at least if I'm interested in long-term profit. I personally don't see how Yahoo can generate more wealth if they belong to a company which has managed to gain around 6% market share by investing billions. The logic behind it seems to be very flawed.

Yes, the logic is flawed, but it's your logic. It doesn't matter what sort of wealth Yahoo can generate long-term if they are owned by Microsoft because the current Yahoo shareholders will not be shareholders at that point. Basically the logic to the lawsuit goes like this:

Yahoo was trading around $19 a share, with little prospect of going up and a high likelihood that they will continue their slide.
Microsoft offered $31 a share for Yahoo.
Yahoo is unlikely to hit $31 a share in any situation other than a buyout offer.
Yahoo shopped around and played coy to see if they could get a comparable or better offer from anyone else, and they didn't.
Therefore, in order to maximize their investment a Yahoo shareholder should take the $31 offer and run.
After that, Yahoo is a wholly owned subsidiary of Microsoft and the current shareholders own none of it, so how much value Yahoo can generate at that point becomes irrelevant.

Now it's true that since the offer Yahoo's share price has jumped up to around $28 a share. But since Yahoo has done nothing to improve their outlook in the past month it's safe to assume that this jump is due to Microsoft's offer. If Yahoo were to ultimately reject the offer and Microsoft would back down, you'd probably see Yahoo's stock price drop to a level even lower than it was at the time the offer was made as many investors will probably write the company off as a lost cause.

At any rate, it's all proceeding according to plan. Yahoo will ultimately accept the offer, or they will face even more shareholder lawsuits. If they still refuse to sell they will most likely face the replacement of their board of directors with a group who are MS-friendly. As I said here, it's the shareholders who have the final say on this deal, and they'll say yes.

Hardly just a childish rivalry

[weston]

To have someone deny me that chance based on a childish rivalry would really upset me.

There's *so* much more going on here than that.

The most important thing is that Microsoft would destroy the company as it's known now. They'll mess with the back-end technology, swapping in their own, they'll merge some stuff with Windows Live and vice versa, they'll kill anything that's a threat to their desktop hold or they'll limit its prime interoperability to Microsoft products. Features will become dependent on IE and Silverlight.

In short, its goals will go from being a premiere portal and online services company to being anything that can maintain and enhance Microsoft's dominance. Lots of people who work there would rather work for the former than the later (and it *will* hemorrhage key employees if they're bought for that reason). And some of them even have a damn good argument that the company is worth more long term if it serves the former goal. It's not unlikely they'll achieve it, and especially as the desktop becomes less and less relevant, I think they have the potential to outdo Microsoft in terms of their worth.

Short term, of course, you can get quite a good cash-out on the offer MS made... especially compared to anything else available while the markets in general are struggling. And lots of suits and shareholders don't know how to think any other way than short-term gains.

Yeah, like Bungie

[Tanman]

I hear they are doing horribly.

Zimbra, Domino, Byarni, Groupwise

[SgtChaireBourne]

There's plenty of Exchange alternatives out there. You got a good chunk of the open source ones, but there's plenty of commercial competitors out there too. Domino, Byarni Insight, Novell Groupwise to name a few of them.

Yep. With Zimbra, Kolab, and Citadel that makes six. However, the magazines and newspapers don't dare write a word about them, even if they would. In addition to being one of the last remaining advertisers, MS has fifth-columnists working against competition in many places. It's not a conspiracy, just greed and/or politics.

The main reasons people use Exchange is because it is tied into Active Directory exclusively which is tied into their Windows Desktops exclusively. It also tied exclusively into Outlook (which most businesses have due to the Office monopoly), the functionality in Exchange mirrors that for Outlook; they are a perfect lock-in by design. It always comes back to illegally leveragingthe Windows/Office monopoly and vendor lock in.

There fixed that for you. It's one aspect near the heart of the 10+ year anti-trust trial MS lost in 2004 and lost in appeal for in 2007.

If Windows or any of the products worked with standards, then it would be possible to swap out components. One reason for the extreme suckitude is that the lock-in guarantees no competition. Old habits die hard and going way back, MS DOS 4 sucked rocks a market for DR-DOS which in turn caused MS-DOS 5 which unlike 4 was usable. Same for the Windows-Outlook-Exchange, except now there is lock-in to such an extent that businesses have to be quite serious about dropping MS and getting into functional products.