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Shareholder Backs Yahoo!, Supports Independence
mikkl666 writes "In a follow-up to yesterday's story about the struggle between Microsoft and Yahoo!, major Yahoo! shareholder Legg Mason has announced that they are ready to back the company in their effort to keep out of Microsoft's grip. According to portfolio manager Bill Miller, 'the problem is Microsoft blundered with the letter this weekend. Telling the shareholders you're going to take something away from them is not a way to get their support'. Nevertheless, he believes Microsoft will end up paying what it takes to own Yahoo."
So no Yahoo! logo dressed up as a borg then ? :(
Is it just me, or is there only chaos and mayhem in store if MS tries to merge with Yahoo? They are two incompatible business and I can't see what MS would gain from their multi-billion dollars 'investment'. Why does IBM & Lotus come to mind right now?
Goodbye Slashdot. You've changed.
Does Yahoo have really aerodynamic chairs or something?
I've said it before, if Microsoft eliminates Yahoo Cribbage I will kill myself.
Do you want that blood on your hands, Microsoft?
Company A wants to buy Company B. Company A offers a price to shareholders, not too high, because if you pay too much you get punished by your own shareholders, so typically a bit too low. Then Company B waves their hands in the air, and start playing a hard to get bitch. Company A prepares a higher bid. Repeat a number of times. And Yahoo will be Microsoft's. So far it's just a bidding game.
Microsoft will gain no synergy from this acquisition. If anything they are just gaining redundancies. This is just the extinguish part of their business.
We will not be oppressed
Our courage will be seen by all
No cost is too great
The higher order shall reign
Our way is true
Prepared to fight
Ready for war New Slogan: Microsoft-Where do you want to be a Yahoo today?
Eh. Google gained nothing but redundancies by buying YouTube, but I'm not quite ready to call that a bad move.
Microsoft does make some pretty boneheaded business decisions, but this one is too soon to call definitively.
The more you tighten your grip, Tarkin....
They're approaching a Yahoo! acquisition with all the grace of the Mongols taking over a medieval village -- "If you let us in, you'll get a rough deal; if you resist, you'll get an even rougher one."
All it takes is for a couple more major shareholders to insist that Yahoo! is worth more than MS wants to pay, and the bluff will be very effectively called; you can't do a hostile takeover if you can't find shareholders willing to sell a controlling interest, and the shareholders are ultimately the ones who would suffer from an overly low valuation. Sure, maybe the Board is holding out for an unduly high valuation, but more likely MS is mis-valuing Yahoo! -- though I'm sure Yahoo!'s value would drop to whatever MS paid for it pretty quickly, if Ballmer really wants to get this far out of the company's core business.
All the more reason for major shareholders to turn their noses to the deal.
Freedom isn't free; its price is the well-being of others.
I don't think so. Google consolidated redundancies if anything (even with keeping Google Video) and possibly created a better bargaining chip for the future of the video market when dealing with networks and the like.
Whether or not it worked for the better is a different matter altogether.
If you're like me, you don't want MS to get ahold of your ancient Yahoo mail account. Not that I trust Yahoo implicitly, but I don't trust MS at all.
So I plan on springing for the $20 for POP access to the account, so that I can retrieve/delete the decade's worth of email I have in there.
expandfairuse.org
While I would hate to see Yahoo! bite the dust (more for historical reasons), it would be great for MS to flush a stack of cash, as I can see MS doing nothing but destroying what little is left of them.
Yes, MS, cash out everyone still hanging on to that sinking tub! The faster MS runs out of cash, the sooner we get to enjoy a world without them.
As for Yahoo!, I remember when you all didn't suck. Yep, you and HP...
Yahoo! is currently maintaining a $36 Billion dollar market cap. It goes without saying that deciding what an internet company is worth is somewhat shaky ground, but they are profitable by $0.47 per share in the last year and they have a set of managers who are clamoring that they have a lot of new revenue streams that are going to materialize in the next year or two.
So, what is Yahoo! actually worth if Microsoft's offer isn't good enough? $40 Billion? $50 Billion? $60 Billion? $100 Billion?
Can anybody defend their valuation with some finite analysis that goes beyond pulling numbers out of thin air? Furthermore, can somebody figure out how much Microsoft would be willing to pay based on the benefits that merging Yahoo's customers and properties into their own would produce?
If you look at the 5-year chart for MSFT, it is pretty clear that they have done a good job of maintaining the status quo... while the only real marketable success that they have enjoyed during that time has been the introduction of a competitive video game system.
On the other hand, the 6 month chart for Google is suggestive that the future value of internet based ad revenue isn't worth nearly as much as it used to be.
So, what gives?
Support the 30 Hour Work Week!!!
Seems to me that adds up to vote count of 1 against, and an undetermined number in favour of the buyout.
I have no idea who Legg Mason is, or what influence he has, but it is possible he's a Carl Icahn type and his actions may be an important factor. That said, my guess is that this thing will end up in a proxy fight that will be harder to follow for an average person than the ISO voting process, but with the added bonus of having the interesting politics and social ramifications replaced by arcane legal strategies and maneuverings that only lawyers and Wall Street Journal reporters could appreciate or find interesting.
I do think it would be good to see Microsoft fail to get their way for once. Assuming, of course, that a successful buyout of Yahoo isn't a failure in the making.
Two very divergent cultures. I think it is a lose-lose for MSFT. Get the deal done, and they become mired in a prolonged integration while adding significant debt to their balance sheet. The deal falls through and they are still left with an eroding cash flow (Windows) and problems with execution in virtually everything else they are in.
It is fascinating. You have two dinosaurs from two different periods. The Windows OS boom during the late 80s to mid 90s for MSFT and the internet boom during the mid 90s to early 00s.
I'm not expecting the best of times for either company, but unlike most folks, I'd bet on Yahoo for an appreciation 5-10 years out from now. MSFT is almost like a energy MLP. Everyone gets paid...until the resource runs out.
If I despise both companies should I be for or against a merger?
"You've got two choices. We can do this the hard way, or we can do this the REAL hard way."
If the shareholders are behind the board on this one then perhaps now would be a good time to enact a poison pill to make any hostile takeover a very bitter pill indeed for Microsoft to swallow.
Actually, they would gain flickr (I mentioned this in the flickr discussion as well... and probably better suited here...). Granted that's only a part of yahoo, it's probably a good stream of revenue for Yahoo and one of the few that people will actually pay to use; getting away from the advertising business model.
There is also a lot of data (personal and otherwise) on flickr. flickr can almost be a myspace / facebook, but without the idiots as it has one purpose (photography) and not spread thin over many (attention whoring / music / etc). But really, it has just about all the same things (profile / testimonials (or photo comments) / discussion forums that are usually kept on track / all your attention whoring needs... except the ability to alter your profile page and add a bunch of stupid crap that pisses other people off).
It also gets the 30-50 year olds that have been lost in the social networking ether.
Many people defected from flickr when Yahoo completely took over (you now have to use a yahoo id), I can't imagine the amount of users who would defect in MS took over (I would be one of them).
To where, however, is the question.
It's really not a resounding no to the merger, the basicly said we won't support any sort of deal if MSFT lowers the offer. They also said if you pay an extra $1 a share we'll support your takeover 100%.
They've realized their future in the Operating System market is pale at best.
Remember the EU court's decision about Microsoft being a monopoly? Well this was on Sep 2007. Is it a coincidence that less than 5 months later Microsoft offered to buy Yahoo!? I think not.
Sooner or later Microsoft would have to lift the veil on the APIs for their most popular products, and *anyone* (including GPL software developers) can read them. Microsoft knew this day would come, and their desktop market dominance will be destroyed sooner or later. How to prevent the competition from making better products, if you can't hinder them from being compatible? You can't.
So Microsoft was cornered into getting hold of an existing successful market: Internet services - that's the only way they can survive in the long term. But if they offered to buy Yahoo! after they released their APIs, the public would realize Microsoft's disadvantage. So they first offer to buy Yahoo, and THEN they release their APIs.
The fact that Steve Ballmer wrote that open letter only shows Microsoft's struggle against extinction.
Ladies and gentlemen, this is it. This is the beginning of the end for Microsoft. Congratulations.
But all Microsoft has to do is find a senior manager or two who have significant stock and are disgruntled. Bound to be plenty of those. Microsoft then makes them a job offer with much better pay. Cheaper than buying the stocks directly. Not sure if they can buy stocks directly, but if they can, again, that would be cheaper than buying all the stock. A third option is for Microsoft to act in ways that deliberately drive Yahoo's stock value down and use the threat of financial loss to intimidate shareholders into coughing up.
It's a small world and it smells funny; I'd buy another if it wasn't for the money; Take back what I paid (SoM)
The same thing happened to Cablivision, when the Dolan family wanted to buy them out for $36/share. Some major shareholders like ClearBridge Advisors, who owned 31.4 million shares at the time, or 13.6 percent of Cablevision voted against the buyout. When the buyout didn't go through, price fell to $30, and is now ~$23/share.
Remember, Yahoo was trading at ~$19/share, before Microsoft's offer inflated the price to ~$31. Microsoft, essentially, bid up the price. If the merger is voted against, the price will likely fall back toward $19 (I say this because aside from Microsoft's offer, nothing materially changed with Yahoo. In fact, they are projected to miss their quarter numbers which they will be reporting in a couple of weeks).
Also, Microsoft can start buying up Yahoo shares on the open market in a hostile bid (from Shareholders willing to sell their shares), which are currently trading below $31/share. So I wouldn't be surprised if Microsoft will get Yahoo below their current offer...
There's good argument that MS is only after market share, primarily in email where the acquisition would give them a monopoly - less so in search and web properties where it would only slow their loss. And there's no argument that MS is after technology - as Yahoo's stuff is run on open source platforms MS could leave in place for awhile; but certainly not publicly develop further.
However... consider this scenario:
1. Microsoft makes a huge bid for Yahoo that, while not clearly being in it's own best interests, clearly *is* in the best interest of Yahoo shareholders, and is far too large to be matched by anyone.
2. Yahoo predictably resists the offer, to the point where it's arguably *not* acting in the best interests of it's shareholders.
3. Microsoft uses this behaviour to wage a proxy fight to get Yahoo's whole board of directors fired and replaced with people it favours.
4. Microsoft now essentially controls the board of a competitor, without ever having actually bought them.
Now... however you feel about an actual acquisition of Yahoo by Microsoft - can we all agree it would make perfect sense for Microsoft to wrest control of Yahoo's board of directors - even if they had no intention of buying them?
Can anyone shed any light on whether it would be possible for Microsoft to win a proxy fight without an iron-clad guarantee they'd buy Yahoo under the terms of their current offer; or if Yahoo could do something that would force them to should the offer be a whole or partial bluff to win a proxy fight?
Not to be mean to microsoft or anything. But its reaaaly difficult for me to understand how in the world someone at microsoft can think that they can take over yahoo and on top of it they will retain the good talent in yahoo.
I would assume that since the takeover has been announced, that Yahoo! has been bleeding talented folks who don't want to be assimilated.
Have any of these folks started new companies? Any high profile defections to the Googleplex? Or would that be prevented by non-compete clauses in their contracts?
I'd imagine the morale of developers employed by Yahoo would take a huge dip is well. AFAIK most of the Yahoo infrastructure is based on open source technologies. If MS were to purchase Yahoo I'd be willing to bet money they would waste years migrating Yahoo to the MS stack, just for the sake of it being on MS technology. Exactly what they did with Hotmail. Much work with no real
The basic point is the merger would really be like mixing oil and water. Even from a fiscal standpoint i don't see it being a gain for Yahoo investors. The two companies just don't complement each other.
I think its some transparent posturing by Legg Mason in the hope of pushing Microsoft to increase its offer.
I'll see your hokum and raise you a boondoggle.
I dont think you can include iron-clad garantees into a proxy vote.
I mean its just an election, the party (in this case MSFT) tells you his candidates are better than the other's. What they do once they control the board is something else.
Off course if Microsoft gain control of the board and then screw over those Yahoo shareholder than voted for them, they might be able to sue them, but that takes time and resources. Also I guess the SEC or the government might intervene if it gets really ugly.
Also even if MSFT controls the board, I believe some things such as a Merger would still call for a vote of all the shareholders, so if the Merger offer was not up to shareholders expectations, they could vote No, even though they voted for having MSFT controlling the board.
Legg Mason also likely has a board member with a 6% share. Yahoo's board is elected from scratch every year, so all Microsoft has to do is win just one proxy election to seize majority control of Yahoo.
More likely Legg Mason is worried that Microsoft may actually conduct a hostile takeover for a lower price than the friendly price. (Microsoft's lower price would actually makes sense; Yahoo would probably be worth less after a hostile takeover.) Legg Mason probably doesn't care on the face of things whether Yahoo gets taken over or not, but they do care about the value of their stake.
I think Legg Mason's message is music to Microsoft's ears: if enough major shareholders get worried about a lower offer, they'll press the existing Yahoo board to cut the friendly deal (and then Microsoft will purge the board as soon as they get control).
At the end of the day, most shareholders don't have sentimental attachments to their stock (that's the first deadly sin of playing the market). If they get a good price they'll take it.
Engineering is the art of compromise.
Seems interesting given the timing...
http://news.yahoo.com/s/nm/20080409/bs_nm/yahoo_google_dc;_ylt=At1ZbJEnb.d8l6sncqqoLY6s0NUE
Yahoo in talks to use Google search ads: source
SAN FRANCISCO/NEW YORK (Reuters) - Yahoo Inc (YHOO.O) is in advanced talks to carry Web search advertising from Google Inc (GOOG.O) as part of a search for potential alternatives to being bought by Microsoft Corp (MSFT.O), a source familiar with the discussions said on Wednesday.
Yahoo also is still in talks with Time Warner Inc's (TWX.N) AOL about a potential tie-up, the person said.
I'm not sure which I'd rather have them be in bed with. But somehow I think this is better than MS.
This is likely to be very useful to many of us if this deal ever winds up going through.
Warning: Apple/Nintendo fangirl. Likes her electronics cute & cuddly. May be rabid.
If you want community use http://www.phototakers.com/ but if you want to just post photos online then start your own website like I did.
1. Shareholder want their shares to have higher value.
2. Yahoo! execs say MS undervalues them.
3. Shareholder supports Yahoo!
3.5 (Hopefully) MS buys Yahoo! at a ridiculous price
4. Profit!!!
Don't quote me on this.
I'll just reply to myself seeing as you can't reply to 4 people at once.
:)
Get some math me - thanks, will do. Oh wait, math doesn't have anything to do with what I said.
Electoral College - 'll demonstrate, and point out why I'm not comparing it directly to shareholder stakes but to the general concept.
Here's the deal... I know that in shares, people with more shares have more swing. I'm certainly not disputing.
I'm also guessing that for whatever reason, they decided to say that each share would be termed to have a 'vote' - I haven't looked into terminology, but what the hey.
However, in plain ol' English, I've never seen an object make a vote. Let alone a virtual object. There have not been 83,843,501 conscious decisions made my 83,843,501 people that say "screw you, Microsoft".
Say you're going out to a movie with 3 other people. You and 2 others vote for Movie A, the remaining guy votes for Movie B. 4 votes in total, 3 for Movie A. Clear cut enough, no?
But now that one guy says "yeah, but I'm paying, so Movie B it is". Fair enough (and let me stress that - fair enough, I'm not arguing that in the case of the shareholder have a 6% share and that -that- is what matters. Heck, didn't I even point that out in my post?), but just because he has greater swing does not mean that suddenly he has 4 votes while you 3 other guys have zero votes. Your votes may be meaningless, the other guy may always get his vote's way regardless of what you other 3 guys vote, but the actual vote count does not change.
And so the electoral college. I'll leave that to you guys to figure out what I meant - I obviously didn't make myself clear enough before
Flickr has always embraced 3rd party utilities and has an API that allows you to roll your own application using the photos on their site. They also are pretty up front with their attitude of "the service is ours, but the photos remain the photographer's". If Microsoft buys them, how long will that last?
"pretty clear that they have done a good job of maintaining the status quo" - by which you mean underperform the broader market - look at MSFT 5 year against the Nasdaq Composite or S&P 500 - significantly underperforms.*
... equities aren't worth as much as they used to be. (inverse equity ETFs and commodity funds don't count!)
Speaking of which, over the same time period, YHOO outperforms the indices.
"On the other hand, the 6 month chart for Google is suggestive that the future value of internet based ad revenue isn't worth nearly as much as it used to be." - or...it is suggestive that GOOG has outperformed the broader market. We have been in a bear market for 10 months now
*Now lets see if we can somehow have the MSFT vs ES/NQ chart come up when "significantly underperforms" is googled. That would make a nice blog entry. See also: litigious bastards
It doesn't mention Legg in it at all now. Anyone have a link to the original article?
Yeah, my karma sucks....but so do the mods.
The would probably win a proxy fight because those investors who have shares in Yahoo have more shares in MSFT. Thus for them it would be beneficial for MSFT to win.
If MSFT does not win then this latest move by Yahoo to work with Google is pure boneheadedness. If Yahoo does not get taken over watch their share price collapse... And not just a little collapse, but whole honken collapse.
"You can't make a race horse of a pig"
"No," said Samuel, "but you can make very fast pig"
Why? Yahoo still has all of its international operations; the US market isn't the make-or-break. Heck, there's got to be somewhere where Yahoo is number 1 in marketshare.
OSx86 FTW
Never been to Japan, have you? Yahoo has plenty of life left in it, even if it's all overseas.
OSx86 FTW
Ironic, huh? Yahoo! has been busy helping the Chinese Government find and lock up dissidents.
Yahoo! treasures their own freedom from Microsoft, but doesn't give a damn about the freedom of your average Chinese or for tha t matter anyone from Tibet. Moral Pygmies indeed.
The beginning of the End. Blow all your cash on Yahoo!, and when it ends up being as bad an acquisition as all of Balmer's other buys, maybe you can jack Vista up to a thousand dollars a pop for the "Jesus our marketing department is full of morons and our CEO is a doofus" edition.
Fiat Homos et Pereat Theos
2. Yahoo predictably resists the offer, to the point where it's arguably *not* acting in the best interests of it's shareholders.
Except some of Yahoo!'s largest shareholders want Microsoft to raise it's bid: "Yahoo's second-largest shareholder says Microsoft will need to up ante". Legg Mason Offers Yahoo Some Support.
FalconShould there be a Law?
The would probably win a proxy fight because those investors who have shares in Yahoo have more shares in MSFT.
Except some of Yahoo!'s largest shareholders want Microsoft to raise it's offer before they will approve it: "Yahoo's second-largest shareholder says Microsoft will need to up ante". "Legg Mason Offers Yahoo Some Support".
FalconShould there be a Law?
A Yahoo -Google merger could be cool. Google has great geek stuff, but their forward facing stuff is very dull and boring, YouTube is the only "hot" property, the rest is mostly geek toys branching off the search base.
Yahoo has a great front end presence. Their page is fun for NORMAL people to go to. Lots of games, Flicker, groups are out front, things to do, etc. In a lot of ways they're ahead of Google but don't know what to DO with it because they have so much going on.
Sure, shareholders could sue Microsoft if they remmend board members who subsequently don't vote for an acquisition. But if we've learned anything about Microsoft, it's that (at least during this administration); they know how make a profit even when they know they'll lose in court. The fines they got for abusing their monopoly against Netscape hardly made a dent in the advantage they got by crushing them.
Shareholders don't get to vote on acquisition - they can only vote for a new board if they don't like the decisions of the board, or sue the members personally (as they're already doing.
In scenario #1, Microsoft controls Yahoo for a year before that's a factor. And would probably change the bylaws so that the elections were staggered (not all the members are up for election at the same time) so they wouldn't be vulnerable to that the way Yahoo is now.
Scenrio #2 is also probably planned for. Things change very fast in the world of Internet companies. With control of the board members, it would be child's play to have the "conditions change" after winning the proxy fight and justify changing their "offer" to something that made better strategic sense for Microsoft. Keep in mind, this offer was made near Yahoo's 52 week low. If the change in membership cause Yahoo's share price to drop, MS could say the offers to high now. If the board neglects a portion of the company, it would drop in value. And exodus of lower level Yahoo employees changes the value. They could even claim that the "poison pill" of gold plated severance packages changes the wisdom of a buyout offer. All of these things are easily anticipated. Hence, planned for. They'll be ready to make shareholder lawsuits unprofitable non-starters.
The people I know in Yahoo say the parts are worth more than the whole. But Yahoo isn't going to sell it's parts off (like the email) under terms which prevent them from just rebuilding it - because the current board wants Yahoo to thrive long term. A board which just wants short term gains for the stockholder won't; and would sell off whatever parts of the company Microsoft actually wants because it makes sense.
Yahoo's search engine would be great for you or I to own, but it's worthless to Microsoft's because they have their own totally incompatible one. Why pay for something you'd throw away if you don't have to?
If nothing else - even if they throw a few million at a proxy fight; they're still crippling a competitor - wasting time and spreading FUD throughout the company and it's partners.
The deal as stated makes very little sense for MS, and while they suck at tech - if they're one thing they excel at, it's making deals. That alone should tell you that the deal their offering is not actually the deal they want.
Their unusually public bid is designed to make just the waves they want. The waves by themselves hurt their competitor. If they get control of the board too, everything else is just gravy.
It's only because they have more money than god (and their recent trend of massive stock buy backs) that their own shareholders aren't suing them on the merit of what they *claim* their trying to do.
Bill Miller is a fund manager who's regarded in the upper echelon of fund management. For 15 years the fund under his management has beaten the S&P (like a redheaded stepchild) with only the last 2 years having him underperform it.
MS is attempting to gain stronger foothold in online ads business--which makes up a majority of Yahoo's revenues. This is a more lucrative business than many of you might think--see Google if you don't believe me. For those of you saying that MS gains nothing out of this deal are highly mistaken with the aspect that it opens up (actually strengthens) another stream of revenue for M$--online advertising.
Further this with the fact Yahoo's market share of online advertising is quite large (it isn't quite Google, but it's still a more significant player than M$). You can pile this on top of the trademarks that Yahoo has (yes, you do pay a premium for a name) suchas Yahoo! del.icio.us, Flickr, HotJobs, Musicmatch, Overture,etc (each of whom do have some sort of brand loyalty) and you can see why Yahoo and significant shareholders (like Legg Mason) are asking for a bigger premium.
This situation simply equates to the fact that shareholders believe the business that is Yahoo! is worth more than it is on paper. (M$ obviously sees this fact and is willing to pay somewhat of a premium, but not quite the pricetag other shareholders have slapped on it.) I'm going with the guy who's bent Mr. Market over his knee for nearly 20 years.
Of course they do, it'd mean even more money if Yahoo sold.
But let's say you live in a house, and I own 5% of it. You built the house, you love it, you have all sorts of plans to make it even more perfect for you.
Say it's market value is $500,000. Someone comes along and offers you $700,000 for it, but if you sell it, not only would you have to move, but the person who wants to buy is someone you hate and, you believe, would ruin it.
Me, I want you to sell, because I'll make a profit. And if you can get more than the offer, I'll push for that too.
But for you, the idea of turning over your beloved house to someone you hate is so repugnant, that it would take a lot more than a decent profit to make it acceptable.
As long as my 5% share of your house doesn't give me the right to make you move out anyway (while still technically retaining your percentage of ownership) - you get what you want. Either your current dreams, or a pile of money so big that you'd consider it a fair trade.
Yahoo's board has an *emotional* attachment to controlling Yahoo. It's investors don't, they just (rightly) expect profit for investing.
Microsoft's unsolicited offer forced Yahoo to react emotionally, which is not what their investors want, so they may take control out of the board's hands.
Only Microsoft could create that type of reaction, and Yahoo is uniquely vulnerable to their investors for having done so.
My prediction:
If the *sale* goes through, Microhoo's stock will rise briefly, then go down.
If the MS wins the *proxy fight*, MS stock goes up, Yahoo goes up briefly, then down. Way down. And MS will then buy only the parts of Yahoo that make sense for it to buy, after which Yahoo stock plummets, and MS stock goes way up.
Note that neither scenario has Microsoft's stock going down. These guys know how to make best deals. Shame they don't know how to make the best software - but hey, ya can't be the best at everything.
If the *sale* goes through, Microhoo's stock will rise briefly, then go down.
From some of the comments above, that's what some are hoping for.
Note that neither scenario has Microsoft's stock going down.
Your first scenario, above, has MS stock going down after it goes up.
Shame they don't know how to make the best software - but hey, ya can't be the best at everything.
I have no doubt the engineers at MS know how to make great software, unfortunately it's those in charge that prevent them from doing so. MS releases software that's buggy and barely works at first but then slowly improves it. And with their lock on the desktop they are basically able to force people to use it, or make it expensive to switch software.
FalconShould there be a Law?