Yahoo to Microsoft: Put Your Money Where Icahn’s Mouth Is
If Microsoft is so intent on acquiring Yahoo, why doesn’t it go ahead and make another offer? That was the gist of Yahoo’s (YHOO) comment on Microsoft’s (MSFT) claim this morning that it’s interested in discussing an acquisition of some or all of Yahoo–but only if the company replaces its CEO and board of directors. In an incredulous reply to investor Carl Icahn’s letter to Yahoo shareholders and Microsoft’s statement on on the letter, the foundering Internet company accused the software giant of teaming up with Icahn to bully Yahoo into accepting a lousy deal.
If Microsoft really wants to buy Yahoo, “we again invite them to make a proposal immediately. And if Mr. Icahn has an actual plan for Yahoo beyond hoping that Microsoft might actually consummate a deal which they have repeatedly walked away from, we would be very interested in hearing it,” Yahoo said in a statement. The company noted as well that “as recently as June, Yahoo!’s independent directors and management approached Steve Ballmer about just such a transaction, only to be told that Microsoft was no longer interested even in the price range which they had previously proposed.”
So what now? Who knows. Piper Jaffray (PJC) analyst Gene Munster figures Icahn, who still plans to run a full board slate, has a decent chance of prevailing at Yahoo’s Aug. 1 meeting. “We had previously suggested that Icahn had a 30% likelihood of gaining control of Yahoo!’s board at the annual meeting,” Munster said in a research note. “Now we believe he has a 50% chance of gaining control.”
Comments
Despite Yahoo’s ineptness in telling its story, it really is in its/shareholder’s long-term interest not to let Microsoft carve out just the search business - which seems to be precisely what they want to do.
Doing this will really hurt Yahoo’s display ad business long-term, which is the majority of their revenue - search and display ads need to be on the same ad platform.
The impact of display ads today is hard to measure so they can only sell impressions. But online vendors with both search and display ads (Google, Yahoo, Microsoft - which has its own display ad platform and doesn’t seem to need Yahoo’s) plan to track what display ads users see over time and then correlate that with search queries. That will make it possible monetize display ads with a higher price. Most of the brand equity and awareness they create today gets harvested by search ads. But Yahoo is under such pressure to do a deal they are willing to mortgage this future synergy. If they weren’t so incompetent at telling their story that might be different.
http://techstrategypartners.wo.....g-carcass/
Posted by George Gilbert at July 7th, 2008 at 4:55 pmi can’t understand this overwhelming amount of interest in the whole yahoo! Microsoft deal. just let it go or wait until something actually happens all things digital.
Posted by brent crazsiemon at July 7th, 2008 at 8:37 pmI agree with Mr Gilbert. It seems like we’re analyzing this to death; no one knows and few care what the outcome will be. Isn’t there more interesting news to cover than this never-ending soap opera?
Posted by Phil Baker at July 7th, 2008 at 11:38 pm