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Yahoo Rejects Another Bid From Microsoft, Icahn
Last night Yahoo rejected another offer for its search business from Microsoft and investor Carl Icahn. The proposal also included conditions that would have required the replacement of Yahoo's top management and board of directors. This is not the first time Icahn has pushed for such a measure. Quoting:
"Yahoo said in rejecting the offer it told Microsoft it was willing to sell the entire company for at least $33 a share and its board believed such a deal could be negotiated and executed before its annual shareholders meeting on August 1. Yahoo said it also informed the software giant it remained willing to negotiate an 'improved search-only transaction.' Microsoft, however, rejected both offers, Yahoo stated."
I mean really, Microsoft is basically saying "Help us replace your board of directors with one sympathetic to us, oh and hey no worries we still make a purchase offer in your best interests."
It is worse than that. MS is saying "replace your board of directors with a board especially appointed to sell the company to us".
The problem with that it that it rules out refusing to sell, which greatly weakens Yahoo's negotiating position - it is much harder to get a good price if the buyer knows you have to sell to them.
The current board should have sold at the higher price, but changing the board now will not help.
Microsoft had tens of billions of dollars and their usual way of doing things drove MSN into the ground. Why do they think that their usual way to of doing things combined with a Microsoft-owned Yahoo will yield a different result?
I am not daming them at all. I am simply stateing the trend the past few months has been to go for the quick cash. I think that has a great deal to do with all the uncertainty right now.
I also think your wrong. Yahoo is an established internet company with a wide range of services. They are number two in search and not likely to be pushed out of that position by anyone else out there right now. If you look at Yahoo historically before all the Microsoft Hubub started you'd see their stock prices tracks the index by and large. Yahoo is not just a search company they are a media company. I think there is a long term slow growth value play in Yahoo is Microsoft is run off.
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But that's exactly the problem: Yahoo is a media company. Good media companies are able to generate plenty of good content at the lowest cost. At the same time, good media companies do a good job monetizing their content, whether through advertising, subscriptions, value-add, etc.
Yahoo does a poor job doing both. They have tons of content creators and developers working on each property. For example, Yahoo! Finance has roughly 700 people working on that aspect of the portal alone. Yahoo's efforts with Panama are a failure and they have trouble monetizing their search.
I think their poor use of resources and inability to monetize efficiently points at poor execution. Add on top of that the fact that Yang has not changed much since Semel shows that the company is continuing it's downward march.
3's a crowd. Ballmer isn't interested in a buyout, they're not even buying Yahoo's market share in the traditional acquisition sense. What Ballmer is doing is eliminating the current number 2 player in web search^w^w the online ad market, a position that will automatically be filled by MSN. We already know what Ballmers game plan is, in his own words...
I think the plan is to force out the directors, get them to hire new executives, and then act *shocked* when the SEC blocks the buyout. MS keeps its cash, Y! has been crippled beyond competition, investors lose.
I'm not sure if I should hate MS for this latest bout of evil, or love them for trying to pull a fast one on Icahn.