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."

Comments

What is MS hoping to gain exactly?

[jfbilodeau]

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?

Re:What is MS hoping to gain exactly?

[Amouth]

i doubt i would consider it a "merge" of the compaines.. i doubht MS would ever really merge.. they would buy and then partion it out and let it rot..

unless MS is don't noting but tasking a couple of spare MS people to throw out crazy offers at yahoo to cause PR and basicly make yahoo lose concentration as a company on what it is they should be doing..

trust me when you work for a large company and there is a rummor of a buyout no one gets anything done really..

i could see MS doing this.. why i don't know.. but it makes more sence then them wanting any IP yahoo has..

Re:What is MS hoping to gain exactly?

[zappepcs]

1 - embrace, extend
2 - send threatening letter
3 - lose shareholder support
4 - throw chairs
5 - remove legislator funding to pay off shareholders
6 - merge companies
7 - lay off good workers who have not yet left
8 - pay millions to change logos, make announcements
9 - pay off MSN staff
10 ...
11 profit!^H^H^H^H^H Watch Google grow exponentially

Re:What is MS hoping to gain exactly?

[UnknowingFool]

Yes there will be chaos. Many people like myself can see major problems in the merger.

The first being the technologies. Yahoo tries to be platform agnostic. They use whatever works best and is cheapest. Right now they support a lot of BSD projects. Microsoft mandates Windows. The conversion of hotmail years back was a major hassle for MS. That was just one system. Yahoo is much larger than that. That conversion will take lots of time and effort.

The second issue is the cultures. I offer no opinion on which culture is "better", but they are different. Now MS is coming in as a hostile takeover. That is not going to sit well with Yahoo employees. On the other side, MS people may not want to bring in Yahoo people.

Third, large scale mergers like this almost never work. AOL-Time Warner. Daimer-Chrylser. Recent history has shown that failure happens more often than naught. And those mergers were approved by both companies involved.

Microsoft gains nothing except reduced competition

[Bryansix]

Microsoft will gain no synergy from this acquisition. If anything they are just gaining redundancies. This is just the extinguish part of their business.

Re:Microsoft gains nothing except reduced competit

[hkgroove]

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.

Go for it Bill!

[pegr]

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...

Re:Go for it Bill!

[Anonymous Coward]

What little is left of them?? A world without them? Are you kidding? If you're expecting this deal to cripple them AND you're arguing that this would be a Good Thing, you're wrong on both counts.

A quick perusal of their investor relations site ( e.g. http://www.microsoft.com/msft/earnings/FY08/earn_rel_q1_08.mspx ) would tell you that they're experiencing phenomenal growth and that they have a profit margin enjoyed by very few large companies. To argue that MS is somehow on it's last legs is ridiculous. They can tank this deal and still be more or less fine. They could literally burn the $40bn in cash and still be more or less fine (of course, their investors might get a little jittery if they started doing that...).

And to argue that the complete meltdown of a company that employs 80,000 people worldwide - most of whom are IT workers - would somehow be good for the rest of us is equally ludicrous.

You might as well have said "Spending $40bn on a risky deal is totally going to kill MS because there's no way one of the fastest growing modern companies can spend one year of income on an acquisition. And this is great because I want to get paid less."

It's a start

[value_added]

From the fine article:

A major Yahoo Inc shareholder, Legg Mason, is ready to back Yahoo's effort to stay independent if Microsoft Corp lowers its buyout offer, the Wall Street Journal said, citing an interview with portfolio manager Bill Miller.

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.

Could spell trouble...

[imstanny]

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...