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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.'"
IANAL.
My take is that shareholder lawsuits are never a given in this country. There is a good possiblity that Yahoo will just show in court that their managerial view of the long view showed greater long term shareholder value in avoiding the merger. there is a good possibility that the suit might be dismissed on face. However, this doesn't always happen. If these investors are large enough, or find other plaintiffs who are, the mere public pressure of the suit could pressure the Yahoo board to do a few possible things:
1. Make a deal with microsoft to put it up to a vote of shareholders.
2. Just go ahead with the deal anyways.
I can't remember the last time a lawsuit like this went through off the top of my head. But I know that the record on them is not completely one-sided. I'll do some digging and be back
It's bad that they're doing this. I would suspect that Yahoo! has a good reason for refusing the takeover attempt (possibly trying to prop the companies financials up to leverage a higher bidfrom Microsoft). In suing the board members they stand to earn what they would have earned should Microsoft have succeeded in the bid. However if they laid and waited patiently there would be a good chance of Microsoft offering a higher bid. Theres also the possibility of them getting no future bids from Microsoft at all, however I believe the potential for rewards far outweigh the risks. Microsoft wants Yahoo! for a reason and it's not just that Yahoo! is a search company. It's the whole package the search, the messenger and
What Yahoo management can do is thwart Microsoft by making it too expensive to buy up all the shares. Such a tactic is called a poison pill:
http://en.wikipedia.org/wiki/Poison_pill
The bottom line seems to be that, if Microsoft is determined, Yahoo's management probably can't prevent a takeover unless some other buyer is more determined and has deeper pockets.
There is no retirement fund in the world that should be invested in Yahoo. Retirement people...when you are nearing retirement age you want to have little to no risk. Nobody will be losing any money in their golden years because of this except the idiots that put the money there in the first place.
This is more likely a long term outlook 'retirement fund'...a pair of funds that right now are in their 'high risk' or 'moderate risk' spans of time. The folks putting in to these funds right now should be in their 20's to 40's. A small hiccup now is not going to be a major factor 30+ years from now...these idiots are just trying to sue their mistakes away because they've already made too many poor investments.
Who is this that even the wind and the waves obey Him? Surely this computer must submit also!
True. Stocks are a gamble. However, as these Funds likely have Class B common stock, which provides them with ownership and voting rights, they are demonstrably justified in wanting to file a suit primarily due to the fact that the decision to "spurn Microsoft" is a decision for the OWNERS, not the MANAGERS left in control.
(here's why economists should only be allowed one arm...) But on the other hand, thus the problem with Agency.
Stocks are not guarenteed investments. People invest in it because they believe the price will go up, but have no recourse if it doesn't.
Those poor schmucks that dove into Blackstone at $40/share when it went public probably wish they could sue now that it's down to $15. (Yea, it "opened" at $34 but not to the general public. When the market opened to the public, it bolted up to $40, been going down ever since.)
This is why stocks are risky investments. They're not guarenteed and not insured. You can lose money. If you want a sure thing, invest in Treasury Bonds.
Are you a treasury bond trader? Who qualified you to make all of these remarks? Stocks are perfectly reasonable investments if you understand what your willingness to accept risk is and if you diversify your holdings. If you want safe, don't even get treasury bonds, I hear some checking accounts give interest now.
Treasury bonds offer a rate of return that is on average much, much lower than the stock market or even the corporate bond market. That is partially because they are lower risk investments. they serve a great role (as do corporate and municipal bonds) for medium term investments because they give a relatively known and fixed return for low risk. for a long term investment, they should now be the majority of your portfolio. You just won't break 3% after transactions costs. Compare a fund investing for 30 years at 3% with one investing at 6%. After 30 someodd years, the 3% portfolio will have roughly doubled, but the 6% portfolio will have increased by ~6 times. That's a pretty significant difference.
Just because you lost money on stocks doesn't mean that they are bad for everyone, always. Sheesh.
The myth of shareholder primacy
Granted, this is about Australian law, but American law isn't substantially different. Microsoft want to swallow up Yahoo. The company would no longer exist. It's relevant.
Stocks are a zero sum game, if not one of the biggest pyramid schemes around. When people make money on a stock, there is another schlub who will be losing money in the future. Money doesn't appear from nowhere.
If you want to invest in something, invest in oil commodies, or if you *really* have to do a stock, do Exxon-Mobile or an oil based stock where they are making profits higher than most European countries' GDPs.
It is funny to look at it from perspective especially historical. I admit I may be mistaken here but I was always convinced that the purpose of shares existing in the first place was to have a possibility of shared ownership for many indihviduals. This is not really the case anymore and it is mostly used for pure speculative purposes that hardly have anything to do with reality of anyone company making profits or not. OTOH this is the only remaining option for owners to get managers to do what they want.
So here we are two corrupted sides fighting for money.
How spectacular.
iirc shares are a legal variant of a scam...
some SOB was selling parts of a company or property in southeren USA to different people around the nation. over time it was found that he had sold of more then 100% of the company or property...
thing is that the US government found it to be a nice way to raise cash if it was controlled somehow, so they created laws for how this was to work legally. over time, it spread around the planet...
comment first, facts later. http://chem.tufts.edu/AnswersInScience/RelativityofWrong.htm
I kind of liked the concept though. If major nations could reach consent on such a tax and if it would be added to normal income tax it would even work - hey, one can dream
I don't read replies by ACs.
I thought the accepted method for shareholders to get the company to do what they want was to replace the board and then the upper management, rather than suing.
No. Shareholder lawsuits are not about investors. Shareholder lawsuits are about lawyers.
Shareholder lawsuits are guaranteed to occur any time a company does (or declines to do) any significant action that might affect the price of the stock. They are not an event. They are not newsworthy except as an indication of our broken legal system.
Yahoo's brand name is probably second only to Google on the internet, and if they would properly make use of it, they could probably top Microsoft in market cap. However, that said, Jerry Yang, and the last two CEOs have done a shit poor job of running the company, and Yahoo will not realize its full potential as long as Yang and the rest of the old Yahoo vanguard control the board. The company gets many more page views than Google, and has a larger registered user base, yet Google has been much more successful in on both the technical and business fronts.
Yahoo, as evidenced by the chronic underperformance (they can't even consistently meet their OWN guidance, let alone Wall Street's), is not a well run company and certainly is not living up to its potential. While I'm not convinced Microsoft can fix what's wrong with Yahoo and certainly not convinced it wants to buy Yahoo for only that purpose, I am convinced that the board and management have no clue what they are doing, and clearly at the very least is ambivalent toward their shareholders. I'd go so far as to venture that Yahoo's board has contempt for them. If Yahoo does remain independent, it wouldn't surprise me to see a revolt against the board at the next shareholders meeting.
The sun beams down on a brand new day, No more welfare tax to pay, Unsightly slums gone up in flashing light...
"...preventing the Yahoo employees from jumping off with golden parachutes"
For those of us still left after the mass layoff, we have signed and guaranteed parachutes of golden color specifically in the case of such hostile take over. At least one thing is clear, if Microsoft is going to buy out Yahoo they are going to be paying fat checks to all of us. To me that shows a lot of good faith on the part of Yahoo, but also a very sad well known understanding of what happens in the aftermath of a buyout by Microsoft.
Presumably you can tell me what Microsoft products were canned in favour of the newly acquired FrontPage and Visio as would have to happen for Zimbra to replace Exch...
I can't even finish that sentence, it's too ridiculous. When I read your post I read the complete lunacy of the apologist.
Banks aren't any more risk-free than government bonds. Banks can go under and then you are dependant on the government to eventually pay you back. Errors in paperwork can occur, identity fraud happens, etc. And more than that, if you aren't willing to trust a certain government with your money they don't need to default on your bonds. They could just as easily seize banks under their jurisdiction at any time.
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