All Things Digital

“Facts are ventriloquists’ dummies,” Aldous Huxley once wrote. “Sitting on a wise man’s knee they may be made to utter words of wisdom; elsewhere, they say nothing, or talk nonsense.” Truer words, right? Certainly as far as they apply to Yahoo CEO Jerry Yang, who is back in the press again today making the facts surrounding Microsoft’s (MSFT) pursuit of Yahoo (YHOO) sound a whole lot like the latter. Microsoft, says Yang, wants only to destabilize his company, not buy it. And Microsoft has no real desire for a deal with Yahoo, though investor Carl Icahn and Microsoft CEO Steve Ballmer himself have said the company would discuss one with a new Yahoo board.

Yang finds those claims “baffling.” “To trust Mr. Icahn and his board is really a bad choice,” he told The Wall Street Journal, adding that he’s the man to right the foundering company. “I think that I can bring stability back to Yahoo, and I want to get on with building company,” Yang said. “I think that the destabilizing by Microsoft has become more and more intentional. I am not happy about it.”

And who would be, with Microsoft, Icahn and others calling for your head?

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.”

So that “record” that “casts doubt on whether Microsoft was ever committed to a whole company acquisition” of Yahoo? Entirely a product of Yahoo’s (YHOO) imagination, apparently. Because in a statement issued this morning, Microsoft (MSFT) said that it is open to discussing a “major transaction” with Yahoo–if the company sacks CEO Jerry Yang and replaces its board of directors at its annual meeting next month.

[W]e have never been able to reach an agreement in a timely way on acceptable terms with the current management and board of directors at Yahoo!. We have concluded that we cannot reach an agreement with them. We confirm, however, that after the shareholder election Microsoft would be interested in discussing with a new board a major transaction with Yahoo!, such as either a transaction to purchase the ‘Search’ function with large financial guarantees or, in the alternative, purchasing the whole company.”

Microsoft’s statement followed, by minutes, the publication of an open letter to Yahoo shareholders from billionaire activist Carl Icahn who is mounting a proxy battle for control of the company urging them to oust Yahoo’s current board of directors and renew merger discussions with Microsoft. Full text of the letter after the jump. Read more »

Much as Yahoo would like to believe otherwise, Microsoft’s not done with the company yet. Just as BoomTown suggested it might, Microsoft (MSFT) has circled back for another run at Yahoo (YHOO) and, if it’s successful, it will seize Yahoo’s search business and sell the rest of the company off for parts. The Wall Street Journal reports that Microsoft has approached Time Warner (TWX) and News Corp. (NWS) (owner of Dow Jones and this site) about joining it in a deal that would effectively lead to to the company’s breakup (see “Murdoch-Blocked?” and “MSFT/YHOO/AOL/ NWS/WTF?“). Seems Steve Ballmer is unwilling to abandon a deal that would more than triple Microsoft’s share of U.S. Web searches.

Yahoo, for its part, is said to be skeptical of a deal that would essentially dismember it, but people close to the company tell the Journal that Yahoo is still open to discussing any proposal from Microsoft. Perhaps even one that would see the software giant acquire Yahoo for $33 to $34 a share. After all, this is exactly the deal Yahoo proposed to Microsoft on May 17–two weeks after the company officially dropped its bid for Yahoo. That’s right, Yahoo CEO Jerry Yang and Co.–after insisting Microsoft’s offer “substantially undervalued” the company, tried to resuscitate a deal after Microsoft CEO Steve Ballmer scrapped the bid. From the Journal:

[On] May 17, two weeks after Microsoft officially dropped its pursuit of Yahoo … Yahoo CEO Jerry Yang, director Ron Burkle and chairman Mr. Bostock met with Microsoft’s Mr. Ballmer. Messrs. Bostock and Burkle told Mr. Ballmer they were prepared to sell Yahoo for $33 to $34 a share, the price range Microsoft had offered before talks broke down, according to people familiar with the meeting. That would have valued the deal at about $47 billion, or $6 billion less than Yahoo’s previous asking price of $37 a share.”

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

QOTD

I am sure there will [be] some day next month where I start thinking about software and I will start driving here to Microsoft, go up to the fifth floor and walk down to my office and they will be remodeling it. In fact, they were wondering if I was leaving at four or five today, so they could get started on that.”

– Microsoft chairman Bill Gates bids farewell to Microsoft

The stress of Microsoft’s failed bid for Yahoo has apparently been so great, the company’s been put off its food. Microsoft (MSFT) says it has no intention of seeking the search-advertising market heft it might have gained in an acquisition of Yahoo (YHOO) with a spate of other Internet purchases.

“People don’t understand what they’re talking about,” Microsoft CEO Steve Ballmer told the Financial Times, referring to speculation about a post-Yahoo buying spree. “At the end of the day, this is about the ad platform.”

And don’t forget Google (GOOG) …

Have you heard? Carl Icahn is unhappy with Yahoo’s current leadership and the manner in which it handled Microsoft’s unsolicited acquisition offer. In a stink-bomb of a letter to Roy Bostock, the chairman of Yahoo’s board of directors, Icahn accused Yahoo (YHOO) of acting against its shareholders’ best interests by making it practically impossible for Microsoft (MSFT) to stay at the bargaining table.

“Until now I naively believed that self-destructive doomsday machines were fictional devices found only in James Bond movies,” Icahn wrote, referring to Yahoo’s highly unusual severance plan that would have rewarded employees who left the company after a change in ownership. “I never believed that anyone would actually create and activate one in real life. I guess I never knew about Yang and the Yahoo Board.”

Doomsday machines? James Bond movies? Did Yahoo appoint Richard Kiel to its board and not tell anyone?

Oh, and by the way, the name’s Icahn … Carl Icahn.

His letter follows.

Read more »

Microsoft Chairman Bill Gates delivered his last scheduled speech as the full-time chairman of Microsoft (MSFT) this morning. He spoke at length about Microsoft’s application development plan, the August debut of Internet Explorer 8 and the company’s efforts to compete with Google (GOOG). But all paled in comparison to his discussion of Microsoft Robotics Developer Studio and the egg-throwing Ballmer-bot created with it. Transcript and video below …

Robot: Developers, developers, developers, developers, developers, developers; developers, developers, developers, developers, developers, developers, developers.

Bill Gates: Good; we’ve got the Ballmer-bot pretty excited here. It’s an amazing-looking robot. It’s just balancing itself, and fantastic.

Patrick Deegan: Yeah, what you see here is the latest in robotics technology. The Ballmer-bot features a dynamically stable mobile base, a rotating torso and two dexterous arms. This makes it so that it’s even able to throw eggs.

This year’s D conference had its share of great lines–tired ones, too (we’re all clear on the subject of Facebook and information sharing, right?). Here’s a selection of the former…

Guys like us avoid monopolies. We like to compete.”

–Microsoft (MSFT) Chairman Bill Gates

AOL is the Rodney Dangerfield of the Web. We don’t get no respect.”

–Jeff Bewkes, president and CEO, Time Warner (TWX)

I will probably never be a CEO again.”

–Yahoo (YHOO) CEO Jerry Yang states the obvious

It’s a company that creates technology.”

–Facebook CEO Mark Zuckerberg answers the question, “What is a technology company?”

Read more »

Microsoft’s unsolicited acquisition bid for Yahoo is apparently looking more attractive to the now-minor Internet major, especially since Carl Icahn has mounted a full-fledged fight for the nine seats now on Yahoo’s board.

Sources close to Yahoo (YHOO) say the company would likely agree to an acquisition if the price is right. Trouble is, Microsoft (MSFT) doesn’t seem to be interested in one anymore.

Or at least that’s the way it would like to be perceived. Speaking at an event in Moscow, Microsoft CEO Steve Ballmer once again feigned disinterest in an outright acquisition. “Yahoo was never the strategy we were pursuing, it was a way to accelerate our online advertising business,” he said. “We will spend money on some acquisitions. You can do a whole lot of things with $50 billion.”

You sure can. Like spend $47.5 billion of it on Yahoo, just as you planned to last month–even though, as BoomTown’s Kara Swisher reports, Chairman Bill Gates harbored little enthusiasm for buying Yahoo.

But that may happen yet. Some inside Microsoft say the software company would still like to acquire Yahoo, it just doesn’t want to pay the $37-a-share or so Yahoo CEO Jerry Yang and Co. are reportedly demanding. And it may not have to, if Icahn and other ornery Yahoo investors like Legg Mason Capital Management (LM) force Yahoo’s hand.