Microsoft Offered $40 a Share For Yahoo

fistfullast33l writes "Bloomberg is reporting that a recently unsealed court case by shareholders against Yahoo reveals that Microsoft offered $40 a share for the Internet search company in January 2007 and Yahoo turned it down. We've extensively discussed Microsoft's bid for Yahoo earlier this year for $33 a share, which was rebuffed. Investor Carl Icahn has launched a proxy fight against Yahoo over the spurning of the Microsoft deal." CWmike notes Computerworld's coverage of the revelations: "The complaint places much of the blame on [Yahoo CEO Jerry] Yang, describing him as someone with a 'well-known' antipathy toward Microsoft who acted out of a personal interest to keep Yahoo independent. Something wrong with that? Oh, yeah... public company."

Comments

Public companies

[Romancer]

Fair warning: Rant

Public companies are now being run by the shareholders that take out payday loans, refinance their houses so much they owe money when they sell, cannot build traditional savings since all their income is treated as disposable. Basically the get rich generation with no long term goals other than their next big "fix".

Why does it surprise anybody that the driving force behind these companies is to sell out no matter what the cost to the business, the employees, or even the customers?

Re:Public companies

[Actually, I do RTFA]

Why does it surprise anybody that the driving force behind these companies is to sell out no matter what the cost to the business, the employees, or even the customers?

And to head off the stream of ignorance about to insist that public companies are legally required to maximize shareholder value, the US Supreme Court has rejected that interpertation. The purpose of a Board of Directors is to protect a company, which it is allowed to view as a collection of relationships between customers, employees, etc. The case that decided this precident was based around rejecting a higher offer to take one that better served the companies culture.

Your company culture may be "profit maximizing," but don't pretend you can dictate to other companies.

Re:Public companies

[Actually, I do RTFA]

Actually, what you're referring to is the "business judgment rule,"... The Board is *required* to focus on maximizing wealth for the company's owners, i.e., the shareholders.

No, I'm not. And no, the board is not. Unocal v. Mesa Petroleum established that, for Deleware companies (like Yahoo!), when faced with an unsolicited bid, the board could take into account not only shareholder value, but also the interests of: creditors, customers, employees, and possibly a larger community.

When the Board throws a "For Sale" sign up, however, it is obligated to take the highest bid.

Carl Icahn's role in this...

[swordgeek]

I hope everyone realises that Carl Icahn isn't a long-term shareholder upset with how the company is being run. He thought he could run it better when Jerry Yang rebuffed MS, and AS A RESULT, bought a significant number of shares. In other words, he bought into the company for the sole purpose of getting Yang tossed out.

In the world of billionaires, not always the most friendly of folks, Icahn is about as pleasant as a rabid shark with PMS. If he gets his way, he'll install a new board, sell Yahoo to MS at $40, help gut the company, and then leave with a few more dollars in his pockets. Yahoo staff will be out of work, the search engine market will become a battle of two titans, and basically everyone will lose except for Carl and his board.

Jerry Yang did the right thing for the COMPANY

[WebCowboy]

Yeah. That will have been worth it, when in 2010, Yahoo! shareholders realise their $11.00 per share. It all depends on your perspective. Yes, it WILL be worth it for Yahoo EMPLOYEES and USERS. On the other hand, Yahoo SHAREHOLDERS are understandably unhappy. Yahoo shareholders that are angry are upset because they wanted a way to jump ship and make a boatload of money...pure greed. A buyout would hurt Yahoo employss, Yahoo users and the industry as a whole. It would make the AOL/TW and Daimler/Chrysler mergers look like a raging success.

If it came as a surprise to anyone that Yahoo's founders and high-level managers have an antipathy towards MSFT then they must've been living in a cave, or are total morons. From Yahoo's inception there has been little love for MSFT--if they ever cooperated it was grudgingly, in their own self interest. There is a cultural gap bigger than the Grand Canyon there.

It doesn't help that there is a giant impedance mismatch when it comes to technology and infrastructure. A Netcraft search is telling: Yahoo is almost universally FreeBSD, and what is left is Linux. Yahoo has ZERO Microsoft in their data centres. MSFT, of course, is almost universally Windows Server.

Remember what happened to Hotmail when MSFT bought it? They ripped out all the FreeBSD over the first couple of years, subjecting users to regular periodic disruptions. "To hell with users, we eat our own dogfood dammit!". Not only that, I'd say most of the hotmail employees were abandoned too--wandered away or pushed out.

Hotmail still exists today as a cornerstone to MSFT's "Live" initiative and is probably the biggest webmail provider out there so it wasn't all bad of course, but there is a difference here: MSFT had no webmail service of note before buying Hotmail. In the case of Yahoo, what have they got that MSFT doesn't have? They both have an IM platform and client, a search portal, webmail, advertising services, etc...except NONE of Yahoo's runs on MSFT technology! Within 2 years, the yahoo portal will be gone, the IM client will be gone, the webmail will be gone, everything will be gone. Yahoo is coveted for its customer base and advertising presence. It'll live for awhile as "MS Yahoo! Live" for awhile then it'll be gone. It's employees will be gone. It'll be a footnote in history.

It doesn't matter all that much to me; I have no great love for either company and think they both offer mediocre service and crappy software. However, if Yahoo's directors and Yang himself care about the company and really believe it would grow, they've made the right decision to resist a buyout by MSFT. You'd have to be a fool to think there'd be anything of substance left of Yahoo after MSFT slayed them and feasted upon the corpse. Some of us would cheer to see that, but I'm betting the founder, directors and loyal employees would understandably NOT want to see that.

Anyways, who is to say that Yahoo shareholders would be better off with the MSFT shares tossed their way in a buyout? Right now, I'd say NEITHER stock is going anywhere exiting in the next 2 years. By the way, if you just go by the charts, Yahoo did the right thing; in the past year, YHOO has lost just over 9 percent, but MSFT has lost over 10 percent. If you extend where things have been out to 2010, if you think YHOO is heading towards $11, then MSFT will probably be $10.50.

Re:Messy mergers

[Enderandrew]

I don't think acquiring Compaq has anything to do with current success. The merger cost tons of money, held up HP for a good two years, and led to Carly's demise as CEO.

HP has done reasonably well since then, but that is akin to saying just because Time Warner has some success now, that doesn't justify the disasterous merged with AOL.