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Yahoo! Rejects Microsoft's Offer, Says 'Still An Option'
mikkl666 writes "In response to an open letter from Steve Ballmer, Yahoo! posted a press release claiming that Microsoft's offer 'substantially undervalues Yahoo!' and is therefore not in the best interest of the company. They also bemoan that the letter 'mischaracterizes the nature of our discussions' and that the threat to make an offer directly to the shareholders is 'counterproductive and inconsistent with the stated objective of a friendly transaction'. Nevertheless, they explicitly point out that a transaction with Microsoft is still an option, but only if they are willing to pay 'a price that fully recognizes the value of Yahoo!'"
Yahoo has more pages and traffic than just about any site on the internet. Yahoo and Google are Microsoft's only real competitors on the internet. So my guess is they simply want to absorb one of their competitors to leverage against the other. Microsoft's not gaining market or mind share on their own, so like usual they're trying to buy it.
Developers: We can use your help.
Microsoft has a ton of cash it is sitting on and it's burning a hole in their pocket. They're also a company that has lost an overall focus and their major enemies from the past generations are gone. They are building up a new "feindbild" with Google in the lead role -- so to them taking over number 2 (Yahoo) would be a logical procession if they can't buy #1 (Google).
Microsoft always needed an enemy to rail against (because they usually didn't innovate, rather copied and improved upon). They have been at this unfocused lash-out stage for quite a number of years.
But really, this purchase is redundant. They're better off taking the excess cash, paying dividends, and let that be the end of it. The MS/Yahoo merger will be stillborn. The management there will be hostile and leave after the buyouts and the Microsoft drones won't be any better.
Why on Earth would MSFT offer so much when they could/should develop the search technology, content, and customer base themselves? I don't think they can.
Why would Yahoo refuse to accept an offer that is clearly more than they'd get from anyone else? Maybe management has its head in the sand as to its marketplace position.
Going hostile on the acquisition is really, really stupid since one of the best parts of an IT company is the IT talent.
Going hostile will antagonize the whole company, including the best IT talent, IMO.
If you can read this... 01110101 01110010 00100000 01100001 00100000 01100111 01100101 01100101 01101011
I think that it's just another nice way of refusing.
I think that the Yahoo! folks realize that Yahoo! and Microsoft don't really mix together.
Microsoft only wants the userbase and the brand, not the products. If Microsoft were to acquire Yahoo!, all their technology (Apache, Oracle, MySQL, PHP, Java, etc running on top of Linux and BSD) would be replaced by Windows servers running IIS. That would make most of the Yahoo! engineers redundant.
I am pretty sure that they would just add the missing features to their Live products, and rebrand them as Yahoo! The Yahoo! products will start a short (i.e.: 1-2 years) death as soon as Microsoft buys them, to make room for Yahoo! branded MSN/Live ones.
Imagine a .NET/Mono based Zimbra.
Furthermore, I assume that at that level all negociations are 'friendly'. Unless they fail, when they become friendly only for the winning side.
Finally, I do believe that Yahoo! is worth more than that ammount, because there are countries where no competition exists (see Romania). In a blog from one of the Fedora Art Group members, the blogger said that over 90% of the email addresses in Romania were Yahoo! ones. I can confirm this with the Messenger part. I've never seen anyone giveout a GTalk or MSN id in Romania, only Yahoo!.
UNIX was not designed to stop you from doing stupid things, because that would also stop you from doing clever ones.
If I was a shareholder, I would be very mad. If Microsoft is going to do a hostile take over by buying their shares on the open market, they'll probably get Yahoo for less than their current offer. Same thing happened with Cablevision a few months ago. When the Dolan family offered a buy-out for $36, some 'major' shareholders rejected the offer, pompously saying that Cablevision is worth more. Well guess what, the market didn't think so. The second the buyout was rejected, the stock plummeted below $30 and is now at $23!
Just think of how many FreeBSD/Linux servers would disappear from Netcraft if Yahoo went over to the Dark Side?
Embrace/Extend/Extinguish
"To those who are overly cautious, everything is impossible. "
Yahoo's stock is way overpriced. They're a large, mature company, not a growth company. Revenue is down. So they should have a P/E ration in the 10-20 range, like IBM, Microsoft, Oracle, and SAP.
But YHOO has a P/E ratio of 59 today. Which is far, far too high. Their market cap is around $37 billion. Divide that by 4 and you're close to what the company is really worth. Maybe $10 billion.
This is why Microsoft's institutional shareholders are unhappy with the proposed deal. Microsoft is overpaying, and that makes Microsoft less valuable.
Of course, if Microsoft just drops the deal, the bottom falls out of Yahoo stock, and it probably goes down to something closer to what it is really worth.
Google is overpriced too, but not as badly. Their P/E is around $36, while their revenue is flat or declining slightly. The fundamental problem with Google is that all those free services they give away don't make them any money. They've never found a second big moneymaking product.
I still can't even figure out why Microsoft would want them other than to just make them go away.
Bingo!
The only motive here is the elimination of a competitor. Price is no matter; Microsoft wants Yahoo! destroyed because it's one of the two barriers in the way of Microsoft owning the search business.
It's similar to back when Microsoft decided that Netscape had to die. It rapidly became clear that the leaks were true: Bill and Steve had decided that they would lose whatever money they had to lose to own the browser market. They succeeded, and although they've made no money from IE at all (i.e., they've sunk the entire cost of developing it), they are now firmly in control of what the majority of eyes see on the Web. Sinking a few hundred million into IE was a small price to pay for that power.
Their goal now is to control what all those eyes see when they search the Web. Their problem is that most people think either "google" or "yahoo" is what you type to do a search. Not even MS fanboys like MS's search. They understand that they can't compete in the search arena on quality. So they're going to use their huge pile of money to destroy their remaining competitors. Yahoo is the easiest target, so they're going after it first. And they'll lose whatever they have to lose to kill it.
Then it'll be google's turn in the crosshairs.
Those who do study history are doomed to stand helplessly by while everyone else repeats it.
In theory, if yahoo was taken over by microsoft, microsoft would control more of the search engine world than google. Remember overture? that was bought out by yahoo and it was a strong competitor against google adsense. I def. do not think yahoo is worth that asking price....microsoft is agressivly trying to consolidate the web advertising market and level the field with google. Somehow...I dont see that happening.
Trying to install linux on my microwave, but keep getting a kernel panic...
What does Yahoo! have that Microsoft prizes so highly?
Well see, the boxers I'm wearing right now are worth $2. But if you offered me to buy them for $3.24 (a 62% premium), there's no way in hell I would accept. Surely that's way more than they are worth though, but I still wouldn't accept. However, I would accept if you made an offer I would deem good enough, something way above my boxers' real value, somewhere around $50.
So what's so worthy about my boxers so that I wouldn't let them go for less than 20 times their true value? Nothing, I just would hate to give you my bloody underpants, so I would only let them go for a ridiculously high price.
You just got troll'd!
Neither company has a monopoly on anything that would be impacted by this merger. There will be no antitrust or court issues here.
I'm simply amazed at how many people think this won't happen. This merger is going to happen, regardless of what the current Yahoo board may say. If they don't approve it, they will be replaced by the angry shareholders, who are being robbed of the best offer they'll ever see for their shares.
"Finally, I do believe that Yahoo! is worth more than that ammount," If that was true, Yahoo would already be valued at that much. While it may be true at some point in the future that may be the case, but if I was a Yahoo investor considering the economy is entering a recession and Google is starting to slow down I would take the money and find a better investment. The Yahoo board doesn't have its shareholders best interest in mind here. Whether it is good for the internet, computers, world peace, global warming or the war in Iraq it doesn't matter. The CEOs have a duty to the shareholders that they seem to be neglecting here.
Spelling and grammar mistakes specifically left in to give the grammar and spelling nazis a meaning to their life.
I think that the Yahoo! folks realize that Yahoo! and Microsoft don't really mix together.
Doesn't matter. What does matter is whether the executives refusing this offer is in the best interests of the owners, which is to say shareholders, of the company. If "they don't mix well together" is the excuse for refusing the offer, then the Yahoo! board has just broken the law.For a site about things like basic rights, Slashdot users sure do like to censor "dissent".
This argument is tired. Yahoo's share price was above the initial offer less than 6 months ago. Tech stocks were the 2nd largest hit recently next to financials. For comparison, Apple shit out almost -40% too, should shareholders support their buyout at the low market cap? Yahoo mgmt is right, the offer does undervalue their potential and they can offer their share holding investors greater value (key: if they can execute). Unfortunately, investors are outnumbered by gamblers these days.
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And not just a competitor in selling similar products (search, email, etc), but also a competitive threat.
Yahoo owns Zimbra, the FOSS threat to Exchange. This is a cheap way for Microsoft to destroy a wide swath of open source products and projects Yahoo contributes toward.
The market has given Yahoo a low valuation based on its earnings and future outlook both as a company and in the current recession. It's the perfect time for Microsoft to exploit that to expand its monopoly power and kill off competition.
Even for shareholders who only care about money, the issue should be: since MS is going to be paying this "premium" with stock (it doesn't have enough cash), is the shell game price really a premium at all?
No matter what reason Yahoo!'s management has for refusing, this is the only acceptable one. By law, Yahoo! has a fiduciary duty to act in the best interest of its shareholders.
The only reason a stockholder would not accept an offer at twice the stock's value was if said individual thought he or she could somehow gain more utility from holding on to the stock. This letter is simply Yahoo! covering its ass.
As a developer, Yahoo's work on their JavaScript library, ignoring their other freeware projects like the pattern library and Doug Crockfords talks on YUI Theater, is worth more to the web community than double the stock price. I can't expect share holders to know the good stuff Yahoo is doing for the community, and how things may change if Microsoft buys Yahoo. I think respect is what Yahoo Management thinks they have that is worth so much.
I still use Google for search (and I don't use Y!UI), but I respect the hell out of Yahoo. I don't think Microsoft can cultivate the kind of environment Yahoo has in recent years.
I hope to all that is good in the web community that Yahoo manages to resist a Microsoft takeover.
Which is interesting because if Microsoft just wanted Yahoo to go away, the best thing they could probably do would be to drag this out as long as possible. Executive leadership would be distracted dealing with the proposed acquisition instead of focusing on their actual business, current employees would be planning their escape plan instead of being focused on their work and potential employees would steer clear of a company with such an uncertain future. Then, after dragging it out, Microsoft could just withdraw their offer and walk away from the table. Almost instantly, Yahoo's stock price would fall back to the mid to high teens it was valued at before the proposed acquisition was announced. Shareholder lawsuits would almost certainly ensue over the board not acting in shareholders' best interest. That would only hurt the morale of current and potential employees more while creating yet more distractions to the leadership.
quote: It's the stock buybacks that are eating up MS' cash reserve. Buying back your own stock is an admission you have nothing better to do with your money that give it back to your shareholders
Why is it bad for a company to return cash to investors? 'You invested in us, and now you get some of the profit' sounds like thouroughly sensible economics. I'd expect it if I invested in a company directly.
VLC Remote for iPhone and Android
what else would you call it when after ten years of competition, their brightest idea is to try to buy out the competition, not with money earned by fighting the competition, but by using their main cash cow as their own means to compete?
I'd call that business as usual in this industry.
Example: YouTube wasn't bought with money Google made off of Google Video. Microsoft, Google, and Yahoo all do this all the time.
While the parent post doesn't quite reach the level of astroturfing, it does feel like an attempt to find a silver lining in what really was an unmitigated fiasco for Microsoft. The company announced quite loudly that it would be migrating to NT, then failed repeatedly. It then more quietly began migrating to Windows 2000, then announced success, then had to retract that. It then issued a white paper on the migration, arguing that Windows 2000 was a better platform than UNIX, even though there were still Solaris and even BSD servers being used until 2003, well after the white paper was issued, and in many cases, BSD code was used to replace the parts of the Windows server OS that just weren't up to hosting a major application like Hotmail.
Please note that I am not saying there is anything wrong with Microsoft using BSD code - the BSD license clearly permits that. The point is that for whatever reason, despite immense financial resources and huge financial and PR incentives, Micrsoft appears to have been completely incapable of making an industrial-strength OS as late as 2002 that could match the power and security BSD and Solaris had in 1997, and when it did have success, it was by simply appropriating the superior code from the BSD base.
Additionally, and actually this is my main point in writing this post, whether or not Microsoft had bought and tried to migrate Hotmail, the evolutionary pressure to improve its OS's security and scalability would have been just as strong. So I really don't see the silver lining in this story the way the parent post does. If there is a silver lining for Microsoft, it's that they learned that BSD code is often just plain better than Microsoft code, and simply taking the BSD code is more effective and a lot cheaper than trying to catch up. One wonders why they don't take something like OpenBSD and make a Microsoft front end for it. Windows would then basically be a window manager, a lot cheaper and simpler to maintain, and the heavy lifting would be done by a system that has time and time again been shown to be better than any Windows ever built, especially in terms of security, which is really the biggest issue with Windows these days, what with there being multiple botnets of hundreds of thousands of Windows machines out there eating massive amounts of internet, LAN and machine resources.
"It is nice to know that the computer understands the problem. But I would like to understand it too." --Eugene Wigner