All Things Digital

Yahoo’s attempts to rally shareholders in advance of its annual meeting on Aug. 1 are going about as well as its attempts to rally its business. Which is to say, not well at all.

In a regulatory filing urging shareholders to vote for its incumbent board of directors at the upcoming annual meeting, Yahoo (YHOO)
characterized Microsoft’s (MSFT) position throughout the two companies’ acquisition talks as “unresponsive and inconsistent.”

Which is ironic, because the same can be said of Yahoo’s turnaround strategy and its share price as well. Yahoo’s shares were trading at $19.18 the day before Microsoft announced its $31-per-share bid for the company. Six months later they’re trading at $19.65, not 50 cents from where they started.

“We know what Yahoo’s worth,” Microsoft CEO Steve Ballmer said back in April. “$44 billion is a lot of money. If Yahoo’s shareholders like it, that’s great. We are prepared to go forward without a merger with Yahoo. … Time is money.”

It certainly is.

Get this. Yahoo’s merger talks with Microsoft collapsed because the software giant wasn’t fully committed to them. This, presumably according to the same folks at Yahoo (YHOO) who would have us believe the company didn’t learn of Microsoft’s (MSFT) offer of $33 per share until Microsoft CEO Steve Ballmer’s kiss-off letter to Yahoo CEO Jerry Yang.

According to a shareholder presentation the group filed with the SEC, Yahoo believes that “the record casts doubt on whether Microsoft was ever committed to a whole company acquisition.”

The record casts doubt on whether Microsoft was ever committed to a whole-company transaction? Really? Are we all talking about the same record here? Because in the public one that I’ve been looking over, Microsoft sounds pretty damn committed. A few examples:

Microsoft’s consistent belief has been that the combination of Microsoft and Yahoo clearly represents the best way to deliver maximum value to our respective shareholders, as well as create a more efficient and competitive company that would provide greater value and service to our customers.”

–Microsoft CEO Steve Ballmer, Feb. 1, 2008

Ad Age: If Yahoo comes back and says this isn’t enough money, would you borrow money or partner to make it happen?
Mehdi: Without a question, we are very committed to this combination. … We have a whole set of plans and preparations ready to go to make it work. And we’d like to do that in a cooperative way with Yahoo. No question–our commitment is clear with this one.”

–Yusuf Mehdi, Microsoft’s senior vice president of strategic partnerships, Feb. 11, 2008

If we have not concluded an agreement within the next three weeks, we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo board.”

–Microsoft CEO Steve Ballmer, April 5, 2008

I am disappointed that Yahoo has not moved toward accepting our offer. I first called you with our offer on Jan. 31 because I believed that a combination of our two companies would have created real value for our respective shareholders and would have provided consumers, publishers and advertisers with greater innovation and choice in the marketplace. Our decision to offer a 62% premium at that time reflected the strength of these convictions.”

–Microsoft CEO Steve Ballmer, May 3, 2008