August 29, 2008

Microsoft to Acquire European Price Comparison and Shopping Site

Microsoft has reached an agreement to acquire Greenfield Online, the owner of Ciao, a European price comparison and shopping site. This seems to be in line with Microsoft's strategy of focusing on building up focused areas of search.

Ciao also includes consumer reviews and ratings with its search results. They boast a multimillion-user-strong online community and see more than 26.5 million unique visitors per month across seven countries. So far, more than 5 million product reviews have been generated.

Ciao joins Farecast, FAST, and Powerset in Microsoft's portfolio of search-related acquisitions for 2008.

“Ciao's success has been led by a team of talented people who took a unique combination of intuitive technology and the insight that comes out of their passionate consumer community to become one of Europe's leading shopping comparison sites,” said John Mangelaars, vice president, Consumer and Online, Microsoft Europe, Middle East and Africa. “This makes the company a fantastic asset to the future of our search offer. Integrating Ciao's capabilities into Live Search will provide a strong launchpad for our commercial search offer in Europe and enhance our e-commerce offering on MSN.”

Posted by Nathania Johnson at 8:41 AM | Permalink | Comments (0)

July 17, 2008

Yahoo's Latest Letter to Shareholders: We'll Sell for $33 Per Share

In a letter that is likely to believed by almost no one, Yahoo regurgitated much of the same old statements about Microsoft and Carl Icahn - and then slipped in something about selling the entire company for $33 a share. Of course, that's only "if Microsoft will negotiate a transaction that delivers certainty of value and certainty of closing. This is the simplest, most straightforward way to maximize value for you."

Rumor had it that Yahoo wanted somewhere in the neighborhood of $35-37 per share in the spring when the deal went south. Both sides have accused the other of walking away prematurely.

Then Carl Icahn created a proxy board and subsequently called for Yahoo to sell for $34.375 a share. Now Yahoo says it will go for $33 per share.

If I were Microsoft, I would just sit back, relax and continue to watch the price drop. If I were Google, I'd continue laughing all the way to the bank.

Here's the full letter:

Dear Fellow Stockholder:

The recently-formed Carl Icahn-Microsoft alliance continues to make misleading statements about their plans for Yahoo!. Your Board of Directors believes strongly that the Icahn-Microsoft agenda -as presented to us jointly last week - will destroy stockholder value at Yahoo!, serving only their very narrow special interests, clearly not your interests.

Your Board continues to work to maximize value for you and is taking the following steps to do so:

-- Moving forward with our strategic plan and strategies to lead in online advertising - with both search and display;

-- Preparing to implement our recently signed commercial agreement with Google that will increase cash flow;

-- Continuing to explore other ways to unlock value and return value to you such as unlocking the value of our Asia assets; and

-- Remaining open to negotiating a value creating transaction (including with Microsoft) that provides real and certain value - not just the possibility of value.

In contrast, let's review Carl Icahn's brief involvement with the Company to date.

Carl Icahn bought his stock two months ago for an estimated average cost of less than $25 per share. He is well-known as a corporate agitator with a short-term approach to his investments. His short-term approach gives Mr. Icahn a strong incentive to strike any deal with Microsoft that enables him to recover his investment and get back his money quickly, even a deal that does not provide full and fair value to you. Is that in the interests of all stockholders? Clearly, it is not.

Mr. Icahn has severely handicapped himself in his ability to negotiate a favorable transaction with Microsoft. Why?

-- Mr. Icahn has made it clear that his only objective is to sell part or all of Yahoo! to Microsoft. That fact, combined with his lack of an operating plan going forward, means that he will have no leverage to negotiate a fair deal with Microsoft. He has set himself up for failure.

-- Second, Mr. Icahn and his slate lack the working knowledge of Yahoo! and its Internet business needed to do two things that are required to successfully deliver a value-enhancing transaction for Yahoo! stockholders. First, they do not have the detailed knowledge to negotiate a complex restructuring of a large, innovative high technology company in a rapidly changing environment. Second, they do not have the hands-on experience to manage and lead Yahoo! during the approximately one year period estimated to be required to gain regulatory approval for a deal or to manage and lead the remainder of the Company (non-search) after a transaction is completed. Don't take our word for that. Mr. Icahn will be calling the shots if his slate wins and yet Mr. Icahn himself told the Wall Street Journal last fall: "Technology hasn't really been one of the things I've focused on too much before" and "It's hard to understand these technology companies." That's why you need a knowledgeable, experienced and independent board to represent your interests vis-a-vis Microsoft.

Mr. Icahn can't make up his mind about what he thinks will work for Yahoo!. He bought his position believing that he could bring Microsoft back to buy all of Yahoo!, at one point suggesting we publicly offer to sell Yahoo! to Microsoft for $34.375. But he didn't do enough due diligence to determine what your Board already knew: that it was Microsoft's decision to walk away and that it had rebuffed repeated efforts by your independent directors to get a whole company acquisition back on the table. Recognizing that a sale to Microsoft might not be an option, Mr. Icahn said as an alternative that we should enter into an agreement with Google (which we were already negotiating and subsequently signed), and that we should walk away from Microsoft's search-only proposal (which we did after careful evaluation of that proposal). Then, in an extraordinary flip flop, Mr. Icahn teamed up with Microsoft and embraced their latest joint search-only proposal--even though it involved significant execution and operational risks and was fraught with flaws that made the "headline value" asserted by Microsoft and Mr. Icahn more illusion than reality.

How can Yahoo! stockholders trust Mr. Icahn to deliver what he claims he can deliver when his actions have been so contradictory -and when all he has delivered so far is a risky proposal of questionable value from his new friends at Microsoft? Yes, the Microsoft/Icahn proposal is somewhat of an improvement over Microsoft's last search-only proposal, but no one should confuse a modestly improved offer with a good offer. The Icahn/Microsoft proposal was more "smoke and mirrors" than objective reality.

Now let's turn to the recent marriage of convenience between Microsoft and Mr. Icahn.

This "odd couple" collaboration - between two parties with keenly different agendas - is indeed perplexing. Why does Mr. Icahn believe he can count on Microsoft to complete a transaction? Certainly Microsoft is a well-respected and successful company and we have been clear that we are fully prepared to do a deal with them. But Microsoft's flip flops and inconsistencies over the past five months are so stupefying that one can only conclude that Microsoft was never fully committed to acquiring Yahoo! either because:

-- Microsoft can't decide what is and isn't strategically important to its online business; or

-- Microsoft is more interested in destabilizing a key competitor so that it can either enhance its competitive position or buy our highly valuable search business--and the enormously desirable intellectual property associated with it --at a bargain basement price.

Microsoft desperately needs to improve the performance of its online services business (consisting of its search and display assets) which, cumulatively since 2003, has lost money despite billions of dollars of investment. And yet Mr. Icahn would ignore this track record and its implications for his fellow Yahoo! stockholders, swallowing a deal that leaves Yahoo!'s future dependent, in part, on Microsoft's ability to monetize search. And, as Mr. Icahn has himself pointed out, it would eliminate any opportunity we may have to sell the entire Company for an attractive premium.

In contrast to the conflicting and confusing statements emanating from the Icahn-Microsoft alliance, your Board and management have been crystal clear about our position.

First, we will sell the entire Company to Microsoft for $33 per share or more if Microsoft will negotiate a transaction that delivers certainty of value and certainty of closing. This is the simplest, most straightforward way to maximize value for you.

Second, we remain open to selling only search to Microsoft as long as it provides real value to our stockholders and resolves the substantial execution and operational risks associated with the separation of our search and display businesses.

Third, your Board takes seriously its obligation to examine all value-creating steps it could take and continues to actively examine many of these now, including a potential spin-off of our Asia assets and a return of cash to stockholders. These are steps Yahoo! could take, if we determine they are feasible and in our stockholders' best interests, without any "help" from Microsoft or Mr. Icahn. But they are complex steps that require care and prudence. These should not be adopted simply because Mr. Icahn and Microsoft are trying to dress up Microsoft's inadequate search-only proposal.

While your Board continues to evaluate the foregoing avenues, your current Board and management continue to execute on our strategy to grow the value of our unique collection of assets. That strategy is working and we believe it can result in substantial double digit growth in operating cash flow as we move forward. Our recently executed search advertising agreement with Google reflects our commitment to achieving our strategic goals, while preserving flexibility to pursue a sale of the Company or even, on the right terms, a sale of our search business.

Please compare and contrast the straightforward, responsible actions and positions of your Board of Directors with the behavior of Mr. Icahn and Microsoft.

There you have the situation, as we see it, put as simply and clearly as we can. We believe the Icahn slate and agenda present significant risk to your investment in Yahoo!. We believe you cannot count on Microsoft to bail out Mr. Icahn's misguided agenda, at least not on terms that are in the best interests of Yahoo! stockholders.

In contrast, your Board remains fully prepared to represent your interests aggressively and conscientiously in the effort to maximize value--whether that takes the form of negotiating a transaction that provides full and fair value, with certainty; finding other ways to unlock and return value to you; or moving forward with our accelerated strategies to lead in online advertising.

Your Board of Directors remains committed to maximizing stockholder value. It is--and will remain--our number one priority. Do not be fooled into thinking otherwise by Carl Icahn.

We strongly urge you to vote your WHITE Proxy Card today for your current Board of Directors.

Thank you for your support.

Roy Bostock Jerry Yang Chairman of the Board Chief Executive Officer

Posted by Nathania Johnson at 10:03 AM | Permalink | Comments (1)

July 16, 2008

AOL Seeks Microsoft Deal Before Yahoo Aug 1 Shareholders Meeting

AOL is feeling the urge to merge and soon. Time Warner is reportedly seeking a deal with Microsoft prior to the fast-approaching August 1 Yahoo shareholders meeting.

The deal would merge AOL with Yahoo's search business, and owned by Microsoft. Time Warner would take a minority stake in the newly formed company. AOL has shifted its focus from dial-up internet service to online advertising.

Previously, Yahoo talked to AOL about a merger in what appeared to be one of many attempts to stave off Microsoft.

AOL's Platform-A was the top online advertising network in the month of March. The network reaches 9 out of 10 internet users, or 170 million people. Yahoo Networks came in second at 160 million, while Google came in third at 152 million.

Seems like Microsoft should acquire AOL with or without Yahoo. Then again, nothing is quite what it seems when it comes to the whole Microhoo debacle is it?

Posted by Nathania Johnson at 9:59 AM | Permalink | Comments (0)

July 15, 2008

Microsoft Gives Their Side of the Latest Yahoo Offer Story

If Microsoft and Yahoo spent half as much time developing search technology as they did battling out the proposed acquisition in the court of public opinion, they might actually make the marketplace competitive.

But instead of working together in peace and harmony, they're engaged in posturing that's akin to a nasty celebrity divorce - or an episode of The Hills.

This time, Microsoft is feeling the need to correct what they say are inaccuracies of Yahoo's account of the latest search proposal. Primarily, they say that no change-up in Yahoo leadership was part of the latest offer.

Furthermore, they say that Roy Bostock called Steve Ballmer and requested a new offer. They quoted him as saying, “with substantial guarantees on the table and an increase in the TAC (traffic acquisition cost) rate, there are the pillars of a search only deal to be done.”

Because of that, Microsoft says they made an offer that "included significant revenue guarantees, higher TAC rates, an equity investment and an option for Yahoo! to extend the agreement over a 10-year period."

That offer was made on Friday, rejected on Saturday, the same day as Yahoo's latest statement. It took Microsoft two more days to release their statement. Sounds like they took some time to get their story together?

Posted by Nathania Johnson at 9:00 AM | Permalink | Comments (0)

July 14, 2008

Another Microsoft Offer, Another Yahoo Rejection

Recently, Microsoft and Carl Icahn got quite cozy, and the budding relationship spawned a new Yahoo offer. Despite Yahoo's insistence that they remain open to an offer from Microsoft, they have, once again, rejected the software giant.

The new deal would split up Yahoo, selling the search portion to Microsoft. That sale would be overseen by Carl Icahn and his board.

The new proposal was rejected for the following four reasons:

Yahoo!'s existing business plus its recently signed commercial agreement with Google has superior financial value and less complexity and risk than the Microsoft/Icahn proposal.
The Microsoft/Icahn proposal would preclude a potential sale of all of Yahoo! for a full and fair price, including a control premium.
The major component of the overall value per share asserted by Microsoft/Icahn would be in Yahoo!'s remaining non-search businesses which would be overseen by Mr. Icahn's slate of directors, which has virtually no working knowledge of Yahoo!'s businesses
The Microsoft/Icahn proposal would require the immediate replacement of the current Board and removal of the top management team at Yahoo!. The Yahoo! Board believes these moves would destabilize Yahoo! for the up to the one year it would take to gain regulatory approval for this deal

Roy Bostock, Chairman of Yahoo! said, "This odd and opportunistic alliance of Microsoft and Carl Icahn has anything but the interests of Yahoo!'s stockholders in mind. Clearly, Microsoft, having failed to advance in search, is aligning with the short-term objectives of Mr. Icahn to coerce Yahoo! into selling its core strategic search assets on terms that are highly advantageous to Microsoft, but disadvantageous to Yahoo! stockholders. Yahoo's Board of Directors will not allow that to happen. Yahoo!'s Board remains open to any transaction that delivers full value to our stockholders - we just do not believe such a transaction should be dictated by Microsoft and a single short-term investor."

What do you think of Microsoft's latest offer? Was it just posturing in advance of Yahoo's Aug 1 shareholders meeting? Let us know in the comments.

Posted by Nathania Johnson at 9:31 AM | Permalink | Comments (1)

July 11, 2008

Google CEO Affirms Stance on Independent Yahoo

In the wake of Carl Icahn's declaration that Microsoft would buy a Yahoo run be a different board (and Microsoft's affirmation of the claim), Google CEO Eric Schmidt hasn't changed his position on what should happen with Yahoo. Speaking to reporters in Idaho yesterday, he reiterated that he believes an Independent Yahoo is best for the industry.

Schmidt called Microsoft's bid for Yahoo "anti-competitive," something Google has been saying from the beginning. He also said that the Redmond-based software giant has a history of being anti-competitive, and that's evidence enough of their intentions with acquiring Yahoo.

Of course, Google is facing its own anti-competitive issues with its recently announced search advertising deal with Yahoo. Despite the partnership being non-exclusive, the Justice Department formally opened their antitrust investigation into the matter earlier this month.

Still, it's no doubt that the search ad deal fuels Schmidt's desire for Yahoo to remain independent. That and a Microhoo would mean a stronger second place competitor in the search ad marketplace. Though, most would agree that second place is definitely first loser in a Google-dominated search industry.

Posted by Nathania Johnson at 11:41 AM | Permalink | Comments (0)

July 7, 2008

Carl Icahn Returns to Letter-Writing; Microsoft Open to Deal with a New Yahoo Board

The rumors of Microsoft still being open to a deal with Yahoo are true - with a caveat. The deal would have to be struck with a new board, not with Jerry Yang and his current set of cohorts. It could include a full acquisition or an alternative deal for just search. The software giant released the following statement:

"Despite working since January 31 of this year, as well as in the early part of last year, we 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."

Of course, it's not just any new board. Microsoft's Ballmer has been talking to Carl Icahn, who has put together a proxy board to take over Yahoo. The talks prompted Icahn to break out the quill, and compose his latest edition in his series of letter-writing expeditions:

Carl C. Icahn ICAHN CAPITAL LP 767 Fifth Avenue, 47th Floor New York, NY 10153

July 7, 2008

Dear Yahoo! Shareholders:

During the past week I have spoken frequently with Steve Ballmer, CEO of Microsoft. Several of our conversations have lasted as long as an hour. Also, a few of our discussions have taken place while other top executives, such as Kevin Johnson, participated. Our talks centered on the industry in general but, more importantly, on how Yahoo! and Microsoft can do a transaction together. Steve made it abundantly clear that, due to his experiences with Yahoo! during the past several months, he cannot negotiate any transaction with the current board. His logic is simple. If and when a transaction was consummated, Microsoft would be guaranteeing a great deal of capital at closing. However, a transaction could take at least nine months and perhaps longer to obtain regulatory clearance in the U.S., Europe, and elsewhere. During that period, if the current board and management team of Yahoo! mismanage the company (and their recent track record is far from reassuring), Microsoft would be putting its money at risk and a great deal could be lost.

For example, in a transaction to purchase the whole company, a very large amount of capital would be due at closing. Even in an "alternate" transaction, where just the "Search" assets were purchased, large guarantees would have to be made and, again, large sums could be lost if the company was mismanaged. Microsoft perceives this risk may be quite high with the current board and management in place. However, Steve made it clear to me that if a new board were elected, he would be interested in discussing 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. He stated that Microsoft would be willing to enter into discussion immediately if the new board that has been nominated were elected. While there can be no assurance of a future transaction, as many of you know, I have negotiated successfully a large number of transactions over the past years. If and when elected, I strongly believe that in very short order the new board would, subject to its fiduciary duties, be presenting to shareholders either a purchase offer for the whole company or a very attractive offer to purchase "Search" with large guarantees. I hope to continue to be speaking to Steve over the next few weeks; however, since I do not as yet represent the Yahoo! board, both Steve and I do not wish to get into details over price, or even which of these transactions makes the most sense.

Much has been said about how badly the Yahoo! board has "botched up" negotiations with Microsoft over the past months. There is no need to keep pointing out the mistakes I believe Yahoo! made by not immediately taking a $33 offer made by Microsoft. But one thing is clear -- Jerry Yang and the current board of Yahoo! will not be able to "botch up" a negotiation with Microsoft again, simply because they will not have the opportunity.

Our company is now moving toward a precipice. It is currently losing market share in its "Search" function; our current Board has failed to bring in a talented and experienced CEO to replace Jerry Yang and return Jerry to his role as Chief Yahoo!, and currently it is witnessing a meaningful exodus of talent. It is no secret that Google (which hired a great operator as CEO) continues to dramatically outperform Yahoo!. According to publicly available information, Google's income from operations grew 59% per year over the last two years while Yahoo!'s shrank 21% per year. However, none of the above has caused the Yahoo! board to hesitate in paying themselves $10,000 per week. IT IS TIME FOR A CHANGE.

If elected, I have little doubt that the new board, subject to its fiduciary duties, will do what the current board will not do, i.e.,

-- Immediately start negotiation with Microsoft to sell the whole company or, in the alternative, sell "Search" with large guarantees.

-- Move expeditiously to replace Jerry Yang with a new CEO with operating experience.

Sincerely yours,

CARL C. ICAHN

Posted by Nathania Johnson at 10:16 AM | Permalink | Comments (0)

June 27, 2008

Microsoft to (Finally) Acquire Powerset? Should Someone Tell Icahn?

Microsoft must have been putting on a good poker face a week ago when it said they weren't looking at any internet-based acquisitions in the wake of failed talks with Yahoo. Venture Beat is now reporting that Microsoft is poised to acquire semantic search company Powerset in the neighborhood of $100 million.

Meanwhile, Carl Icahn is still living his proxy dreams. He's calling on Microsoft to not make an alternative deal with Yahoo unless a $33 per share guarantee is in place, according to Reuters.

The question is: Which of Microsoft's bluffs should we call? The one where they said they weren't interested in acquisitions? Or the one where they're buying Powerset (to once again put pressure on Yahoo)?

Call bluffs in the comments!

Posted by Nathania Johnson at 11:38 AM | Permalink | Comments (0)

June 25, 2008

Microsoft and Yahoo: Are They or Aren't They?

Yesterday, TechCrunch reported that Microsoft and Yahoo were talking again. I was immediately skeptical. Recently, All Things Digital had called out TechCrunch as conducting piggyback reporting instead of doing their own heavy-lifting. While I thought that was a bit harsh (All Things Digital is a project of the Wall Street Journal, and quite frankly - who has their connections?), it came as no surprise that TechCrunch would attempt to break a big story.

Still, the mainstream press ran with the story. Surely, they had done their homework.

Maybe not.

This morning, Kara Swisher of All Things D explained why she didn't run with the story: she couldn't corroborate it. I read her story with a firm sense of "I thought so" until she said that her Yahoo and Microsoft sources "emphatically went out of their way yesterday–which is not so typical–to deny any talks were going on..."

Sounds like Ms. Swisher's sources are protesting a little too much.

If talks have resumed, it sounds like they might be doing it the right way this time - keeping the conversation behind closed doors instead of blasting rhetoric through the press. But that might be a big IF.

Posted by Nathania Johnson at 9:17 AM | Permalink | Comments (0)

June 20, 2008

Microsoft Adds Record Number of Employees, Rules Out Acquisitions

Last year, Microsoft added a record 11,200 employees last year, according the Seattle Post-Intelligencer. Many of those employees were gained through acquisitions that are part of Microsoft's attempt to make a land grab in the search market.

The acquisition of aQuantive added 2,600 employees to Microsoft's payroll. Travel search site Farecast and enterprise search company Fast Search & Transfer out of Norway were also acquired by Microsoft in the past year.

But don't expect any more internet acquisitions anytime soon. Microsoft is ruling out buying up major internet real estate, such as Facebook, in the wake of its failed attempt to acquire Yahoo, according to the Financial Times. Steve Ballmer and Kevin Johnson told FT that search is a part of the larger goal of generating revenue from advertising.

Now it seems those goals will be pursued internally. Microsoft just announced plans to build a search technology center in Europe. And recently, they rolled out the Cashback program, which rewards searchers who conduct online shopping at Live Search.

Microsoft did make an ad-related acquisition recently, but it was for television ad solutions provider Navic Networks. Still, this looks like an attempt to catch Google, which released opened up its Television Ads in Adwords up to everyone last month after being in private beta since last summer.

Posted by Nathania Johnson at 12:32 PM | Permalink | Comments (0)

June 18, 2008

Microsoft Continues Pursuit of Google with Navic Acquisition

Microsoft continues on in their pursuit of Google, this time enhancing their digital media advertising offering. The Redmond-based software giant has announced the acquisition of Navic Networks, a provider of television advertising solutions.

"Television media represents the largest percentage of advertisers and agencies' media budget today," said Brian McAndrews, senior vice president of the Advertiser and Publisher Solutions Group at Microsoft. "Together, Navic and Microsoft will deliver addressable television advertising solutions to help our partners better manage media spend by increasing advertiser reach and ROI, and maximizing publisher yield on television advertising."

Navic Networks will join Microsoft's Advertiser and Publisher Solutions (APS) Group. The group developed Microsoft's comprehensive advertising platform that includes television and video advertising.

Related Reading: Microsoft to Acquire AQuantive

Posted by Nathania Johnson at 10:30 AM | Permalink | Comments (0)

June 6, 2008

Icahn Wants Yahoo to Offer Itself Up for $34.375 Per Share

Hardly a Friday goes by without a good dose of Microhoo drama leading into the weekend. Today, Carl Icahn released his second letter in a week to Yahoo's Chairman Roy Bostock. He responded to yesterday's Yahoo response to his earlier letter ripping Yang. Plus, he suggests that Yahoo publicly offer itself to Microsoft for $34.375 per share.

Hey Carl, just one suggestion. That second paragraph is a doozy. Next time, chop those sentences up into more pretty paragraphs, ok?

Anyway, Icahn also outlined 5 steps his board would take if successfully elected at the shareholders meeting on August 1. Check out the letter in its entirety below.

Carl C. Icahn ICAHN CAPITAL LP 767 Fifth Avenue, 47th Floor New York, NY 10153

June 6, 2008

Roy Bostock Chairman Yahoo! Inc. 701 First Avenue Sunnyvale, CA 94089

Dear Roy:

While you may take issue with the content of my letter, I take issue with your oversight of Yahoo! Again, I stand by my characterization of your "poison pill" severance plan and I find it humorous to see you attempt to defend it.

Roy, it is you who "misrepresents and misstates the details" of the plan. Much like the rhetoric in many well known political campaigns, you keep repeating misstatements in the hopes that by repeating misstatements enough times it will convince your shareholders that these misstatements are valid. For example, you repeated, "the plan was fully disclosed at the time of its adoption and should be no surprise to anyone at this point." This is simply not true. The egregious magnitude of the dollar amount cost of the plan was never fully disclosed, nor was the email from your compensation advisor calling the plan "nuts." While you keep repeating that the severance plan was in the "best interests of shareholders", you neglect to mention that the financial cost of the plan could be immense. The documents obtained during discovery and released in the shareholder complaint show that Yahoo! estimates the maximum change in control severance expenses to be a staggering $2.4 billion if Microsoft bids $35 per share for Yahoo! You neglected to mention that the true cost to an acquirer may be even higher as the perverse change in control severance incentives may diminish the work effort of Yahoo! employees. In case you do not understand the plan, in addition to the $2.4 billion of severance expenses, I believe the plan will negatively impact employee behavior and degrade the ability of an acquirer to successfully integrate the acquisition. In the event of a change of control, the employee may decide not to work as hard in the hopes of cashing in on a robust severance package that awards up to two years salary and benefits, $15,000 of outplacement expenses, and accelerated vesting of stock options and restricted stock units. To make matters worse, it is not just the acquirer firing the employee that can trigger the severance package but the employee who may decide on his or her own to resign for "good reason" at any point within two years of a change in control. It is quite obvious to me that this plan impacts the price an acquirer would pay. Is it any wonder than an acquirer, once fully comprehending this plan, might not wish to negotiate any further? I again call upon you to honor your fiduciary duty to your shareholders and rescind this "poison pill" severance plan.

You asked, "what exactly would happen to our Company if you and your nominees were to take control of Yahoo!" I will give you my perspective on that.

-- First, I would work to have the board replace your "poison pill" severance plan with an acceptable alternative.

-- Second, I intend to ask our new board to hire a talented and experienced CEO (attempting to replicate Google's success with Eric Schmidt) to replace Jerry Yang and return Jerry to his role as "Chief Yahoo". Indeed, it was much speculated that Jerry would serve in the CEO role temporarily until a permanent CEO was hired after the board asked Terry Semel to resign.

-- Third, I intend to ask our new board to inform Microsoft that unless any alternative transaction can insure a $33 or higher stock price (of which I am skeptical) all talks of alternative transactions are over.

-- Fourth, I will ask our new board to offer publicly to sell Yahoo! to Microsoft in a friendly and cooperative transaction.

-- Fifth, to the extent Microsoft does not want to make a proposal, I will ask our new board do a deal on search with Google, but only if it contains termination provisions that would in no way impede a subsequent acquisition by Microsoft.

Now let me ask you a couple of questions, Roy:

-- Why don't you, now that you have the opportunity, remove the "poison pill" severance plan that I find to be ridiculous and thereby remove a major obstacle to a Microsoft acquisition?

-- In my opinion, Microsoft does not believe you will ever sell the entire company on a friendly basis. So why don't you stop dancing around the subject and publicly offer to sell the company to Microsoft for $34.375 per share and promise to cooperate completely?

-- Why are you still giving hope to Microsoft that there is a possible "alternative deal"? As long as there is the possibility of an "alternative deal", isn't it obvious that Microsoft will not make a bid for the whole company?

Sincerely yours,

CARL C. ICAHN

Posted by Nathania Johnson at 11:46 AM | Permalink | Comments (0)

May 23, 2008

Microsoft's Ballmer Says Yahoo Bid Was 'Never Strategic'

Yeah, you read that headline correctly. In a statement that no one believes, Steve Ballmer said in Moscow today that the bid for Yahoo was 'never strategic.'

Ballmer has been going around saying that Microsoft wants to catch Google in the search game, which was the reason behind their Yahoo bid.

strat·e·gy noun - a plan, method, or series of maneuvers or stratagems for obtaining a specific goal or result (via Ask.com's recently acquired Dictionary.com)

The Microsoft CEO is now boasting that it has $50 billion to spend on all sorts of acquisitions. Not that they're strategic or anything.

Posted by Nathania Johnson at 9:46 AM | Permalink | Comments (1)

May 9, 2008

Free to Go: Microsoft Releases Proxy Yahoo Board

It's speculation Friday, again. And today, the analysts will be pondering whether or not Microsoft will come back for Yahoo, something they haven't been secret about hoping for. But Microsoft is throwing a wrench into those plans by releasing members of its proxy Board of Directors, prepared for a hostile takeover of Yahoo.

Good negotiating is careful business, though, so this could be another negotiating ploy. Or it could be a very real indicator that Microsoft truly is moving on. Speculate away!

Posted by Nathania Johnson at 9:44 AM | Permalink | Comments (0)

May 7, 2008

About Face(book): Microsoft Feels Out Social Network Acquisition

Though Bill Gates was out there telling people Microsoft is not interested in making non-Yahoo acquisitions right now (at least in the search/social world), word comes that Microsoft bankers have sent "feelers" to Facebook about a full acquisition.

Here's why this is a solid move:

1. Microsoft already owns 1.6% stake in Facebook, worth $240 million 2. Microsoft formed a data portability partnership with Facebook and 4 other networks 3. At least two Google execs have jumped ship to Facebook in recent months

While Facebook has yet to "overtake" MySpace in the social media market, it is a viable competitor. And I'm sure Ballmer would love for Microsoft to own a social network that even Apple has used as a marketing ploy as of late. Recent commercials for the iPhone entice potential customers through the ability to access Facebook on the popular mobile device.

Additionally, internet users are turning to their social networks during their search process. Consumers want answers and reviews and social networks help them get opinions from trusted sources.

The Facebook move would likely be seen by many as a better fit than Yahoo. But expect just as many to see it as a negotiating ploy in their bid for Yahoo. Though Microsoft has officially withdrawn its bid for Yahoo, many analysts expect Ballmer and the team to return to the table for another stab at a grab for the search engine.

Posted by Nathania Johnson at 1:11 PM | Permalink | Comments (0)

Scorned Lovers: Microsoft Takes Some "Me Time;" Jerry Yang Stays Put

Microsoft and Yahoo are officially "off again" and their mutual friends are trying to decide who to side with. While many hold out hope that the two will eventually reunite Ross and Rachel-style, it's really anyone's guess as to what will transpire next.

For its part, Microsoft seems to be taking the chick flick approach. Top execs are making it known that the software giant is seeking some alone time and that they're not ready to date again just yet. Windows Live General Manager Brian Hall told Merrill Lynch Technology Conference attendees that Microsoft is moving on. And don't look for a rebound acquisition. Bill Gates has said Microsoft isn't pursuing alternative third parties. I guess MSFT will be eating the obligatory breakup chocolate ice cream all alone.

Meanwhile Jerry Yang is trying to paint Yahoo as a guy dealing with a crazy ex. He said Microsoft never made the purported higher bid of $32-33 a share. He claims that Yahoo thought that two companies were finding common ground when Microsoft bailed.

The whole thing is very reminiscent of a scene from The Break-Up starring Jennifer Aniston and Vince Vaughn:

Brooke: I just don't know how we got here. Our entire relationship, I have gone above and beyond for you, for us. I've cooked, I've picked your stuff up off the floor, I've laid your clothes out for you like you're a four year old. I support you, I supported your work. If we ever had dinner or anything I did the plans, I take care of everything. And I just don't feel like you appreciate any of it. I don't feel you appreciate me. All I want is to know, is for you to show me that you care. Gary: Why didn't you just say that to me? Brooke: I tried. I've tried. Gary: Never like that, you might have said some things that meant to imply that, but I'm not a mind reader...

But don't expect Yang's pithy comments to prelude his ouster. Kara Swisher reports that talk of Yang's firing is "greatly exaggerated." And while some shareholders are upset over the falling out, Yahoo's stock remains higher than it was before the unsolicited bid was put on the table. At the time of this post, Yahoo was trading at 25.36, which is a good seven points higher than before this soap opera began. Then again, stocks remain up over Wall Street's hopes that Microsoft will try to get back together with Yahoo and/or that a Google ad deal will be the rebound girl.

Posted by Nathania Johnson at 12:38 PM | Permalink | Comments (0)

May 5, 2008

Microhoo No More: What the Analysts are Saying

Now that Microsoft finally withdrew their bid for Yahoo, it's a free-for-all for anyone claiming to be an analyst.

Mostly, there's a lot of nervousness about what will become of the Sunnyvale search engine. At least one investor is calling for shareholders to withhold their votes for the current directors. Eric Jackson, who represents 140 shareholders who collectively own 2 million shares of Yahoo stock, said that the board didn't negotiate in good faith. He expected Yahoo shares to be trading at $19-20 per share when the stock market opened this morning.

But Yahoo may have won over enough analysts. There's the cautious experts who think that a partnership with Google for search advertising could save Yahoo. (Some estimates have Yahoo's stock as being worth $35 as a result of such a deal.) Additionally, the optimists are hopeful over Yahoo's open source initiatives such as Search Monkey. Then there's the promise of a robust advertising platform, expected to arrive this fall.

Until then, Wall Street is punishing Yahoo for its rejection of Microsoft's offer, though not quite as severely as Mr. Jackson expected. RBC Capital Markets Internet analyst Ross Sandler dropped the price target on Yahoo to $27 from $32. Expect to see agreement on this valuation. Overseas, the stock price dropped, an action echoed at the Opening Bell on Wall Street this A.M. At the time of this post, YHOO stock was down to $23, after closing on Friday at $28.67.

Investors knew this would happen and some are none too thrilled, as you might imagine. Some still hold out hope for Microsoft to return (or Yahoo to go begging at MSFT's doorstep) or a separate deal to be developed with AOL or News Corp. Even though News Corp's Murdoch officially said that he's not interested in Yahoo, there has been speculation that talks have still occurred. Still, at least one report today says those talks have "cooled."

So what happens next? Most likely, a Yahoo-Google deal will be announced, as early as this week. And then we'll wait and see if that's enough to keep investors happy or bring Microsoft back to meet Yahoo's demands for a higher bid.

Posted by Nathania Johnson at 9:55 AM | Permalink

May 4, 2008

Microsoft-Yahoo Mashup Scrapped: Hidden Winners and Losers

On Saturday, Microsoft formally withdrew its proposal to acquire Yahoo. With the Microsoft-Yahoo mashup scrapped (for now), who are the hidden winners and losers?

I'm not talking about the stockholders, advertisers, employees, CEOs, management teams, boards of directors or other stakeholders of Google, Yahoo or Microsoft. They are the obvious winners and losers.

No, I'm talking about the hidden winners and losers – or, at least the ones that have been hidden in plain sight. I may have missed some. I've been busy. (I've got a day job.) But, here are the ones I was able to find on Sunday:

Hidden Winners of the Scrapped Microsoft-Yahoo Mashup

The biggest hidden winner is AP photographer Mark Lennihan. His May 4, 2007 file photo of a Times Square news ticker flashing a headline about Microsoft above a billboard for Yahoo became one of the most used images in Google News to illustrate stories about Microsoft's unsolicited bid for Yahoo.

Another hidden winner is the Flickr group photo pool, "Microsoft: Keep You Evil Grubby Hands Off Our Flickr." Its About Us statement reads, “THIS GROUP WILL STOP MICROSOFT FROM BUYING YAHOO! AND DESTROYING THE FLICKR WE KNOW AND LOVE OR WE WILL DIE TRYING.” Put down the camera, son. It's over.

Kevin Ryan on the Microsoft Yahoo bid (Associated Press)

The final hidden winner is Kevin Ryan, the global content director for Search Engine Strategies and Search Engine Watch. His comments to AP on what the possibility of a Microsoft-Yahoo conglomerate means for the online marketplace ranks #1 in YouTube if you search for the two-word term, Microsoft Yahoo.

Hidden Losers of the Scrapped Microsoft-Yahoo Mashup

The biggest hidden loser is the Y-Que T Shirt Superstore. While it ranks #1 in Google Product Search for MicroHoo, that wasn't as popular at term as "Microsoft Yahoo," according to Google Trends. And now it's stuck with a bunch of funny t-shirts commemorating the takeover of Yahoo by Microsoft.

Another hidden loser is Kevin Heisler, executive editor of Search Engine Watch. What was he doing Saturday night at 9:59 p.m.? He was posting a story to the Search Engine Watch Blog entitled, “Microsoft Withdraws Yahoo Offer; Yahoo Responds.” He should have been out watching Iron Man, like Deborah Richman.

Steve Ballmer going crazy

The final hidden losers are the Rapid Response Team at Waggener Edstrom Worldwide and the staff at Joele Frank, Wilkinson Brimmer Katcher. Do a search for Steve Ballmer on Google. See the YouTube video of Steve going crazy? I've got four words for public relations professionals: Search Engine Reputation Management.

Posted by Greg Jarboe at 3:31 PM | Permalink

Iron Man: Ode to Gates and Ballmer?

Tonight I saw the Iron Man blockbuster, starring Robert Downey, Jr. as Tony Stark. The movie defines Stark as a precocious kid, by flashing an old photo of him with Bill Gates. Along with some additional life history, we learn that Iron Man is at the top of his technical game but has seen some better days.

In Iron Man, the Microsoft parallels could continue beyond this introduction. Bill has been thinking about how computing can positively impact the world for years. In Stark's case, a near-death episode makes him question the meaning of all his weaponry and its world-wide impact.

Meanwhile, Obadiah Stane has worked at Stark Industries for many years and serves as the second-in-command for the business. He bears an uncanny resemblance to Steve Ballmer, don't you agree?

As played by Jeff Bridges, Stane shares some of Ballmer's focus on the marketplace. If you leave aside the more sinister plot twists, Stark Industries is the biggest worldwide supplier of weapons. The company needs to stay technically competitive, and will do what makes sense to get there.

Of course, Microsoft is the worldwide supplier of desktop operating systems and has every intention of becoming a more potent online force. While in the game later, Ballmer wants to guide Microsoft in the most expedient ways possible -- with or without Yahoo.

So where does this movie metaphor take us? I think that Ballmer is saying that Microsoft will create an even better Iron Man now. It all about the war, not about saving the peace, right?

Posted by at 2:48 AM | Permalink

May 2, 2008

Yahoo-Google Deal is Imminent, So is Microsoft Decision

The Wall Street Journal is yet again providing Microhoogle scoops this morning. First up, Yahoo may announce a deal with Google to run its search ads. A few weeks ago, we learned that the tests of those ads were successful. And though the Justice Department is concerned about the partnership, the agreement will likely be nonexclusive, which should alleviate regulators' fears.

But regulators are not the only ones with fears that Yahoo needs to alleviate. Wall Street and shareholders have been waiting with baited breath to see if Microsoft and Yahoo could reach an agreement on price for the proposed acquisition. But the two remain divided on the value of Yahoo, and Microsoft is expected to make an announcement about whether it will pursue a hostile takeover of Yahoo or walk away from its unsolicited bid.

Even if Microsoft announces a hostile takeover, the Yahoo-Google deal could still go through. The agreement will likely use Right Media's ad exchange which employs a real-time auction system. Yahoo acquired Right Media last year. At least one analyst, Citigroup's Mark Mahaney, has the deal as bringing Yahoo an additional $1 billion a year in revenue. Mahaney previously predicted that Microsoft would increase it's offer to $34 per share based on Yahoo's revenue projections for the next three years. Earlier this week, Microsoft indicated it would offer $32-33, while Yahoo wants upwards of $35-37. The original offer is for $31 per share.

Posted by Nathania Johnson at 8:49 AM | Permalink

May 1, 2008

Microsoft Board Meets, Indicates Higher Bid for Yahoo

Late yesterday afternoon, the Wall Street Journal got word of a Microsoft board meeting. And ever since they reported the news, the speculation and rumor mills have been working overtime.

Henry Blodget over at the Silicon Valley Insider got a glimpse of a WSJ story suggesting that MSFT would raise the bid to $32-$33 a share. The story is no longer to be found on the interwebs, which is likely Microsoft's strategy, according to Blodget. The apparent strategy is to get comment out of Yahoo CEO Jerry Yang on whether or not the upped offer would be accepted.

Earlier reports have both shareholders and Yahoo execs saying "I see your $32-33 and raise you a $35-37." This is not likely to please the big wigs from Redmond.

But they may have forced their own hand in the matter when they didn't offer a higher bid sooner. It's the Yahoo-Google deal that likely tipped the scales in favor of Yahoo in the negotiating process.

Posted by Nathania Johnson at 8:50 AM | Permalink

April 30, 2008

Microsoft's $1.5 Billion Plan to Retain Yahoo Employees

While we await the news of Microsoft's next move in its pursuit of the unsolicited Yahoo acquisition, the Wall Street Journal has learned that the software giant plans to spend $1.5 billion to retain Yahoo employees should a merger - or takeover - occur.

The plan was revealed in court transcripts regarding a suit by shareholders against Yahoo's directors. The shareholders who filed the suit feel that Yahoo hasn't responded in good faith to Microsoft's bid. The suit was brought forth by two Detroit pension funds. The lawyers for the funds argued that a recent expansion of Yahoo employee benefits make it difficult for shareholders to get maximum value should an acquisition take place.

Posted by Nathania Johnson at 10:28 AM | Permalink

April 29, 2008

Fast Search Acquisition Completed by Microsoft

In January, Microsoft announced it's $1.2 billion offer for Norway-based enterprise search company, Fast Search. Last Friday, Microsoft completed the acquisition.

“With our companies combined, we'll be uniquely able to offer customers what they've been telling us they want most — a strategy for meeting everything from their basic to most complex enterprise search needs,” said Jeff Teper, corporate vice president for the Office Business Platform at Microsoft. “I'm incredibly excited to have the talented team from FAST joining us.”

Fast Search CEO John Markus Lervik will become Microsoft's corporate vice president of Enterprise Search.

“From the moment I started talking to Microsoft about the prospect of bringing our talent and technology together, I realized what a powerful impact we could have on the way companies use search to drive new revenue streams and improve productivity,” Lervik said. “Together we'll deliver better technologies that make enterprise search a ubiquitous tool, central to how people find and use information.”

Posted by Nathania Johnson at 10:04 AM | Permalink

April 28, 2008

Microsoft's Deadline Passes Without Yahoo Deal

Steve Ballmer's "Deal or No Deal" utlimatum has passed without a deal and the analysts are all-a-flutter with predictions and speculations. If you read all the reports, the possibilities for what will happen next can seem dizzying. So, let's keep it simple and gossip-free. There are only 4 likely outcomes:

Microsoft pursues a hostile takeover Microsoft presents a higher bid Microsoft withdraws from proposal altogether Microsoft buys another company (AOL?, Ask?)

With analysts predicting all four outcomes, depending on who you read, all the speculation means squat. The only thing matters is action, and rest assured we'll keep you posted should anything resembling action occur regarding Microhoo.

Posted by Nathania Johnson at 9:52 AM | Permalink

April 25, 2008

T-minus 1 Day: Last Minute Rhetoric from Microsoft and Yahoo

On yesterday's earnings call, Chris Liddell, Senior VP and CFO, affirmed recent statements by Steve Ballmer to focus on the online advertising market. He said that the strategy was based on three pillars:

To drive innovation and search
To increase value to advertisers and publishers
To grow user engagement across MSN and Windows Live properties

Liddell said that Yahoo would accelerate that strategy. But later, he made this statement:

We've yet to see tangible evidence that our bid substantially undervalues the company. In fact we see the opposite.

Yahoo continues to lose search share and profitability continues to decline year-on-year. The results that they announced on Tuesday were in line with the guidance that they gave on their last earnings call on January 29, after which their stock price closes at $19.05 and Wall Street analysts' consensus on value was significantly decreased.

Just how is Microsoft expected to accomplish their three pillars if Yahoo is as awful as they say?

Perhaps Liddell and Ballmer are beginning to ponder that exact question. Earlier this week, Ballmer suggested that Microsoft would go forward without a merger. During yesterday's call, Liddell suggested that an alternative to Yahoo's “no” is to withdraw the proposal.

Meanwhile, Yahoo remained consistent in what they've been saying all along – that they're worth more than Microsoft's original offer. Speaking on Yahoo's earnings call on Tuesday, CEO Jerry Yang reinforced his confidence in the overall value of his company:

Yahoo! has a unique and valuable combination of assets that include our global brand, our large worldwide audience, our leadership in online advertising, our strategic positions in Asia, our mobile and emerging market franchises, and our scales, tools, and technology.

Yang stated that Yahoo's Q1 revenues were particularly remarkable in the light of uncertainty caused by Microsoft's unsolicited offer. He also said that Yahoo remains open to its options, including a deal with Microsoft.

Then Yang zeroed in on what he felt was his most important statement on the matter:

If you take only one thing away from this brief discussion, I hope it will be that our board and management are committed to choosing a path to maximize stockholder value and will not enter into any transaction that does not recognize the full value of this company.

Tomorrow, the ultimatum comes. Decisions will be made and actions will be taken. But the rhetoric still has just begun.

Posted by Nathania Johnson at 9:54 AM | Permalink

April 24, 2008

Ballmer Wears Poker Face in Advance of Ultimatum Deadline

Yahoo earnings? What Yahoo earnings? Steve Ballmer doesn't seem to care about no stinking Yahoo earnings. Or their Google Adwords test. Or their three year revenue projections. Or their talks with Time Warner. Or forming the OpenSocial Foundation with Google. Or planning to make IndexTools free (like Google analytics).

Ballmer wants Yahoo at $31 a share and that's that. He's talking tough, saying he'll go forward without a merger. But almost no one believes him. Analysts still think the bid will be raised to anywhere from $32 to $34-ish per share.

Which brings us to Jerry Yang. He's got a poker face too, according to the analysts. Yahoo has already said No to Microsoft's bid and then issued a reminder after Ballmer's eviction notice. But many think Yahoo will indeed go for the sale should the bid be increased.

Increase or no increase, Wall Street seems to want this deal to go through. Unlike Google, Yahoo's positive earnings were followed by loss on stocks on the Street. Though Google is a pesky reminder that Wall Street doesn't always know what it's talking about.

Culture clashes could cause huge problems for Ballmer's goal of giving Google a run for its money. And, this will be especially true if it turns out that there is no bluff to call.

Posted by Nathania Johnson at 11:13 AM | Permalink

April 18, 2008

Microsoft Hires Lobbyists in Anticipation of Yahoo Acquisition

Microsoft is preparing for the best in its unsolicited bid for Yahoo. The AP is reporting that the software giant has hired lobbyists to address the inevitable regulatory concerns that will arise should the deal go through. Bryan Cave Strategies LLC will represent the Redmond-based Microsoft in what would likely be a hostile takeover.

Just one week remains before Microsoft's ultimatum deadline rears its ugly head. Yahoo releases first quarter revenues on Tuesday, and has been doing everything it can to resist the deal or raise the bid to a higher price tag.

Posted by Nathania Johnson at 11:21 AM | Permalink

Microsoft Acquires Travel Search Site Farecast

Microsoft has acquired Seattle-based travel search site Farecast for an estimated $115 million, according to published reports. Both parties are remaining largely mum on the matter, which resolved April 9.

Farecast uses predictive technology to offer its users comprehensive results on hotels and airfare prices. It also uses historical data to let searchers know if they're really getting a deal.

All 27 of Farecast's employees will become Microsoft employees as a result of the acquisition.

Posted by Nathania Johnson at 9:27 AM | Permalink

April 9, 2008

Yahoo to Test Google Ads – Take That, Mr. Ballmer!

Yahoo announced today that it "will begin a limited test of Google Inc.'s AdSense for Search service, which will deliver relevant Google ads alongside Yahoo's own search results."

The test will affect about 3 percent of Yahoo search queries, and will only apply to search traffic from yahoo.com in the U.S. and will not include Yahoo's publisher network or other partners. The test is expected to last up to two weeks.

This can be seen as Yahoo thumbing its nose at Microsoft CEO Steve Ballmer, who basically implied in his ultimatum letter last weekend that Yahoo had no other options than to take Microsoft's offer. But this test is not really an indication of anything concrete, as Yahoo specifically says, "the testing does not necessarily mean that Yahoo will join the AdSense for Search program or that any further commercial relationship with Google will result."

According to the Wall Street Journal, the test is "designed for the two sides to evaluate the revenue potential of a broader search ad outsourcing arrangement. They have been discussing such an arrangement as part of Yahoo's pursuit of alternatives to Microsoft Corp.'s unsolicited acquisition offer, according to people familiar with the matter."

Stay tuned to the ongoing saga of Microhoo. In our next episode, Yahoo will announce that it's teaming up with Apple to put Yahoo ads on the iPhone. At least that's what "people familiar with the matter" have told me.

Posted by Kevin Newcomb at 4:41 PM | Permalink

Yahoo Gets Investor Support on Efforts to Fend Off Microsoft

Microsoft's gamble that Yahoo investors will support their takeover of the search engine may already be backfiring. According to published reports, Legg Mason, Yahoo's second largest investor is standing behind Yahoo in its efforts to fend off Microsoft.

Recently, Microsoft gave Yahoo an ultimatum to accept its offer or face a hostile takeover. Yahoo has been trying to demonstrate its value by releasing 3 year revenue projections and announcing details about its forthcoming AMP advertising platform.

Posted by Nathania Johnson at 7:59 AM | Permalink

SEW Experts: Making Yahoocrosoft a Reality

The quibbling of two secondary competitors, while another lengthens its lead, has resulted in the downfall of many in the past. Yahoo and Microsoft would be wise to learn from those past mistakes. In today's Searching for Meaning column, "Making Yahoocrosoft a Reality," Kevin Ryan humbly offers some advice for both sides.

Posted by Kevin Newcomb at 12:00 AM | Permalink

April 7, 2008

Yahoo to Microsoft: We Already Dumped You

After Microsoft issued its ultimatum to Yahoo this weekend, giving them three more weeks before things get ugly, Yahoo's board of directors responded this morning, reminding Microsoft CEO Steve Ballmer that it already rejected Microsoft's offer, and Yahoo still thinks Microsoft's offer is too low.

"Our Board's view of your proposal has not changed. We continue to believe that your proposal is not in the best interests of Yahoo! and our stockholders. Contrary to statements in your letter, stockholders representing a significant portion of our outstanding shares have indicated to us that your proposal substantially undervalues Yahoo!. Furthermore, as a result of the decrease in your own stock price, the value of your proposal today is significantly lower than it was when you made your initial proposal."

Yahoo's letter says that discussions between the two have been constructive, discussing potential integration and regulatory issues. It also notes that Ballmer was present at two of those meetings.

Yahoo's board insists it is the best group to evaluate a deal, and says that it's not averse to talking to Microsoft, if the price is right: "In conclusion, please allow us to restate our position, so there can be no confusion. We are open to all alternatives that maximize stockholder value. To be clear, this includes a transaction with Microsoft if it represents a price that fully recognizes the value of Yahoo! on a standalone basis and to Microsoft, is superior to our other alternatives, and provides certainty of value and certainty of closing. Lastly, we are steadfast in our commitment to choosing a path that maximizes stockholder value and we will not allow you or anyone else to acquire the company for anything less than its full value."

Read the full text of the letter, after the jump.

Dear Steve:

Our Board has reviewed your most recent letter with regard to the unsolicited proposal you made to acquire Yahoo on January 31, 2008.

Our Board carefully considered your unsolicited proposal, unanimously concluded that it was not in the best interests of Yahoo and our stockholders, and rejected it publicly on February 11, 2008. Our Board cited Yahoo's global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as its substantial unconsolidated investments, as factors in its decision.

At the same time, we have continued to make clear that we are not opposed to a transaction with Microsoft if it is in the best interests of our stockholders. Our position is simply that any transaction must be at a value that fully reflects the value of Yahoo, including any strategic benefits to Microsoft, and on terms that provide certainty to our stockholders.

Since disclosing our Board's position with respect to your proposal, we have presented our three-year financial and strategic plan to our stockholders, which supports our Board's determination that your unsolicited proposal substantially undervalues Yahoo. Those meetings with our stockholders have also provided us an opportunity to hear their views.

We have continued to launch new products and to take actions which leverage our scale, technology, people and platforms as we execute on the strategy we publicly articulated. Today, in fact, we are announcing AMP! from Yahoo, a new advertising management platform designed to dramatically simplify the process of buying and selling ads online.

Finally, our Board has been actively and expeditiously exploring our strategic alternatives to maximize stockholder value, a process which is ongoing. All of these actions have been driven by our overarching commitment to maximize stockholder value.

Our Board's view of your proposal has not changed. We continue to believe that your proposal is not in the best interests of Yahoo and our stockholders. Contrary to statements in your letter, stockholders representing a significant portion of our outstanding shares have indicated to us that your proposal substantially undervalues Yahoo. Furthermore, as a result of the decrease in your own stock price, the value of your proposal today is significantly lower than it was when you made your initial proposal.

In contrast to your assertions about the effect of general economic conditions on our business, Yahoo's business forecasts are consistent with what we outlined in our last earnings call. As you know, we recently reaffirmed our Q1 and full year guidance, which is a testament to our ability to perform in line with our expectations despite the current economic environment. In addition, our three-year financial and strategic plan which we have made public demonstrates significant potential upside not previously communicated to the financial markets. This plan has received positive feedback from our stockholders, further strengthening the view that Yahoo is worth well more as a standalone company than the value offered in your proposal, and would be even more valuable to Microsoft. Your own statements have made clear the strategic importance of Yahoo's substantial assets and capabilities to Microsoft.

We regret to say that your letter mischaracterizes the nature of our discussions with you. We have had constructive conversations together regarding a variety of topics, including integration and regulatory issues. Your comment that we have refused to enter into negotiations to conclude an agreement are particularly curious given we have already rejected your initial proposal, nominally $31 per share at the time, for substantially undervaluing Yahoo and your suggestions in your letter and the media that you are considering lowering the value of your proposal. Moreover, Steve, you personally attended two of these meetings and could have advanced discussions in any way you saw fit.

As to antitrust, we have discussed with you our concerns. Any transaction between us would result in a thorough regulatory review in multiple jurisdictions. As a follow up to a recent meeting among our respective legal advisors we had on this topic, and at your request, we provided to you on March 28 a list of additional information we would need to further our understanding of the regulatory issues associated with any transaction. To date, you have still not provided any of the requested information.

We consider your threat to commence an unsolicited offer and proxy contest to displace our independent Board members to be counterproductive and inconsistent with your stated objective of a friendly transaction. We are confident that our stockholders understand that our independent Board is best positioned to objectively and knowledgeably evaluate our Company's alternatives and to maximize value.

In conclusion, please allow us to restate our position, so there can be no confusion. We are open to all alternatives that maximize stockholder value. To be clear, this includes a transaction with Microsoft if it represents a price that fully recognizes the value of Yahoo on a standalone basis and to Microsoft, is superior to our other alternatives, and provides certainty of value and certainty of closing. Lastly, we are steadfast in our commitment to choosing a path that maximizes stockholder value and we will not allow you or anyone else to acquire the company for anything less than its full value.

Very truly yours, Roy Bostock, Chairman of the Board Jerry Yang, Chief Executive Officer

Posted by Kevin Newcomb at 8:25 AM | Permalink

Microsoft Gets Tired of Waiting

Microsoft is apparently tired of waiting for Yahoo to respond to its unsolicited takeover bid, and has issued a deadline of April 26 for Yahoo to come to terms on an acquisition agreement, or face a hostile takeover. On Saturday, Microsoft CEO Steve Ballmer sent a following letter to Yahoo's Board of Directors, outlining Microsoft's displeasure with Yahoo dragging its feet for the past few weeks instead of jumping into Microsoft's arms.

Text of the entire letter is after the jump.

Dear Members of the Board:

It has now been more than two months since we made our proposal to acquire Yahoo at a 62% premium to its closing price on January 31, 2008, the day prior to our announcement. Our goal in making such a generous offer was to create the basis for a speedy and ultimately friendly transaction. Despite this, the pace of the last two months has been anything but speedy.

While there has been some limited interaction between management of our two companies, there has been no meaningful negotiation to conclude an agreement. We understand that you have been meeting to consider and assess your alternatives, including alternative transactions with others in the industry, but we've seen no indication that you have authorized Yahoo management to negotiate with Microsoft. This is despite the fact that our proposal is the only alternative put forward that offers your shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers, and consumers.

During these two months of inactivity, the Internet has continued to march on, while the public equity markets and overall economic conditions have weakened considerably, both in general and for other Internet-focused companies in particular. At the same time, public indicators suggest that Yahoo's search and page view shares have declined. Finally, you have adopted new plans at the company that have made any change of control more costly.

By any fair measure, the large premium we offered in January is even more significant today. We believe that the majority of your shareholders share this assessment, even after reviewing your public disclosures relating to your future prospects.

Given these developments, we believe now is the time for our respective companies to authorize teams to sit down and negotiate a definitive agreement on a combination of our companies that will deliver superior value to our respective shareholders, creating a more efficient and competitive company that will provide greater value and service to our customers. 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. The substantial premium reflected in our initial proposal anticipated a friendly transaction with you. If we are forced to take an offer directly to your shareholders, that action will have an undesirable impact on the value of your company from our perspective which will be reflected in the terms of our proposal.

It is unfortunate that by choosing not to enter into substantive negotiations with us, you have failed to give due consideration to a transaction that has tremendous benefits for Yahoo's shareholders and employees. We think it is critically important not to let this window of opportunity pass.

Sincerely,

Steven A. Ballmer Chief Executive Office Microsoft Corp.

Posted by Kevin Newcomb at 1:02 AM | Permalink

April 4, 2008

Microhoo's Second Date Doesn't Go Very Well

Executives from Microsoft and Yahoo reportedly met this week, but both sides came to the much anticipated second date with stubborn stances. Microsoft wouldn't raise their original bid price of $31 per share and Yahoo wouldn't delve into details of the acquisition unless the bid was raised, according to published reports.

This should come as no surprise to anyone who has been following the negotiations since Microsoft made the unsolicited offer for the Sunnyvale search engine on February 1. Yahoo recently tried to show the world just how much its worth by releasing positive revenue projections for the next three years. Meanwhile, this week Microsoft already said it wasn't interested in raising its original bid price.

Posted by Nathania Johnson at 7:47 AM | Permalink

April 1, 2008

Microsoft to Stay Firm in Original Yahoo Offer

According to published reports, Microsoft is unlikely to raise its bid for Yahoo. It seems that Microsoft doesn't think Yahoo's recent projected revenues provide any reason to raise purchase price from the original $31 per share offer. The bid included cash as well as stock and the original $44.6 billion buyout price is now valued around $42 billion.

In early March, reports surfaced that the two search players had met to discuss generalities of the proposed acquisition. So far, there has been no second date, and some moves by the two companies have shown potential incompatibilities for the pair. Yahoo joined Google's OpenSocial initiative and Microsoft is engaged in a data portability partnership with 5 social networks.But Microsoft is showing a strong hand as a patient suitor.

Upcoming Q1 revenue reports could provide fodder for either side to defend its stance. But many analysts point to a forthcoming Yahoo shareholders meeting as a pressure point for Yahoo CEO Jerry Yang and the board of directors. The meeting must occur within 13 months of the last meeting, which was held June 12, 2007.

Posted by Nathania Johnson at 9:33 AM | Permalink

March 21, 2008

Is Microsoft Offering a Rose to the Wrong Bachelorette?

While Yahoo plays games with Microsoft's acquisition bid, some are beginning to ask, "Why isn't Microsoft buying AOL?"

One of the biggest concerns about a Microhoo is the expectation of a significant culture clash. The same sentiment does not exist when pondering a Microsoft/AOL marriage.

Additionally, Microsoft's bid was unsolicited. Time Warner, on the other hand, has publicly said that it's open to selling off AOL.

AOL recently doubled its audience with the acquisition of Bebo. Together, the social network and AOL's instant messaging platform, AIM, reach 80 million users worldwide. Additionally, AOL has spent $1 billion building a display ad network. With online advertising the driving force behind Microsoft's desire to catch Google, an AOL acquisition could make more sense for the Redmond-based software company.

Posted by Nathania Johnson at 12:20 PM | Permalink

March 14, 2008

Microsoft & Yahoo - Shotgun Wedding

I have been following the unfolding developments regarding Microsoft/Yahoo since they were announced with only mild interest. This is not because the potential alliance would not have an effect on the industry - clearly it would shake things up quite a bit. But there has been actually very little of interest since the initial buyout proposal. Despite the posturing on all sides, events have unfolded in an entirely predictable manner. In the latest development, Nathania Johnson blogged about Yahoo! Goes on a Date with Microsoft, and wondered if there would be a second date to follow.

To me, there is no drama. This is not a first date - it's a shotgun wedding.

The only reason that two companies with such completely different philosophies and business cultures would even consider such a deal is because they have no choice. Yahoo!Search (Overture/GoTo) was an early innovator in the PPC space, but has clearly fallen behind. Microsoft was late to the party, and is once again finding it hard to establish dominance in the Internet arena (outside of its comfortable desktop monopoly).

There may be more posturing in the next few weeks, with crying, chest beating, and histrionics. But the final act has already been written. The only question to be settled is how many goats and chickens Yahoo will get in the dowry. The alternative for both companies in the search advertising arena is unthinkable: to languish and lose market share as perennial also-rans to Google.

Posted by Tim Ash at 1:46 PM | Permalink

Yahoo! Goes on a Date with Microsoft

Just one week after cozying up to AOL, Yahoo met with its patient suitor, Microsoft. While arrangements for the highly anticipated union were reportedly discussed, no bankers were in attendance to negotiate Yahoo's dowry.

Meanwhile, some analysts are wondering if Microsoft will leave its bride at the altar. But Steve Ballmer has been telling anyone who will listen how Yahoo is central to Microsoft's goal to catch Google. With first quarter revenues to be announced soon, pressure is mounting on Yahoo to make a decision about the $44.6 billion bid.

If its advertising executives keep jumping ship (or are pushed?), as Steve Berkowitz and now Joanne Bradford have, Microsoft may start thinking twice about upping its offer to Yahoo just to replenish its ad-focused brainpower.

No word yet on a second date.

Posted by Nathania Johnson at 10:03 AM | Permalink

March 10, 2008

Panama or AdCenter? Microsoft Has Already Decided

If its proposed acquisition of Yahoo goes through, don't expect Microsoft to rush to integrate Yahoo's technology into its platform.

In an interview with the Financial Times, Microsoft's Chief Software Architect Ray Ozzie said that Microsoft will proceed carefully with any kind of integration, due to both technology and culture differences between the companies.

This comes on the heels of Microsoft's declarations of its intentions to catch Google in the search and online advertising game. While the $41.6 billion takeover of Yahoo is a core element of increasing its search market share, the company will also be rolling out more internet services aimed at complement existing traditional software.

Yahoo has been resisting Microsoft's courtship. Last week, the search engine was talking to AOL about a possible merger, though many saw the talks as simply a delaying tactic.

Posted by Nathania Johnson at 9:01 AM | Permalink

February 24, 2008

How It Came To This: Virals vs. Microsoft

Microsoft recently published a letter from Kevin Johnson, President of Microsoft's Platforms & Services Division, to his team. The letter details Microsoft's interest in the Yahoo! merger, and the benefits the company and its employees will gain if the deal goes through. The letter seems to focus entirely on a friendly purchase, though Microsoft has already authorized a proxy fight for Yahoo! NYTimes.com DealBook looks at the letter as a "pep talk" to employees in preparation of a protracted and dirty fight, despite the letter's gentle nature. I'm inclined to agree.

But how did it get to this? How was such a huge, and by many accounts, generous, offer so roundly rejected by Yahoo? Let me propose a novel answer; you're to blame.

Yes, you - the average Flickr user, Digg poster, YouTube browser. You embraced virals that broadcasted the "evil empire" stereotype of Microsoft and directly appealed to Yahoo to either reject the deal--or to hold out for more money. You flooded Flickr with images opposing the purchase, pledging to keep Microsft's "evil grubby hands" off of Flickr. You Dugg a video of Sphigler advising Jerry Yang to pull out an iPhone during his meeting with Microsoft as a negotiating technique. In fact, you Dugg it twice. According to Ran Harnevo, CEO of 5min.com, which created the Sphigler viral (below), the video may have been directly responsible for the decision by Yahoo's board. "I received a mail from someone at Yahoo that everyone had seen the video," he said, "including Jerry Yang."

In short you lived up to your honorific as Time's Person of the Year. You tanked the biggest deal of the decade. At least for now.

Watch more DIY videos on 5min.com

Posted by at 5:58 PM | Permalink

February 20, 2008

Microsoft-Yahoo Fight Heats Up

Microsoft's unsolicited bid to acquire Yahoo is heading down an unpleasant path. This week, Microsoft is reportedly undertaking a proxy fight, sending letters directly to shareholders to garner enough support to oust Yahoo's board of directors and replace them with a merger-friendly board. A proxy fight is estimated to cost Microsoft up to $30 billion, but was likely seen as a cheaper alternative for Microsoft than raising its bid price.

"We sent them a letter and said we think that's a fair offer," Bill Gates, Microsoft's chairman, told The AP on Monday. "There's nothing that's gone on other than us stating that we think it's a fair offer. They should take a hard look at it."

At the same time, Yahoo's current board has approved retention packages and enhanced severance benefits for all Yahoo employees. The aim is to both keep Yahoos around during the threat of a takeover, as well as to give them a more lucrative way out if the Microsoft acquisition is fulfilled.

As outlined in a Form 8-K filing with the Securities and Exchange Commission, employees would get an enhanced severance package if they lost their job or left for "good reason" within two years of a change of control. An employee exercising the package would get a continuation of base salary and health insurance for 4 to 24 months, depending on job level. Employees will also benefit from accelerated vesting of all stock options, restricted stock units and any other equity-based awards previously granted.

Posted by Kevin Newcomb at 6:02 AM | Permalink

February 11, 2008

Microsoft Won't Take "No" for an Answer

Yahoo's board of directors may have spurned its advances, but that's not going to stop Microsoft in its effort to acquire Yahoo. In a statement released this afternoon, Microsoft made it clear that it would continue with its plans, one way or another: It is unfortunate that Yahoo! has not embraced our full and fair proposal to combine our companies. Based on conversations with stakeholders of both companies, we are confident that moving forward promptly to consummate a transaction is in the best interests of all parties.

We are offering shareholders superior value and the opportunity to participate in the upside of the combined company. The combination also offers an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market.

A Microsoft-Yahoo! combination will create a more effective company that would provide greater value and service to our customers. Furthermore, the combination will create a more competitive marketplace by establishing a compelling number two competitor for Internet search and online advertising.

The Yahoo! response does not change our belief in the strategic and financial merits of our proposal. As we have said previously, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!'s shareholders are provided with the opportunity to realize the value inherent in our proposal.

Judging by that statement, it seems that Microsoft plans to push its original $31-per-share offer directly to shareholders in an effort to force the Yahoo board's hand.

Posted by Kevin Newcomb at 9:57 PM | Permalink

February 10, 2008

AOL Yahoo Talk Merger - Microsoft Rebuked

Yahoo merges with AOL, saves Time Warner and re-Bewkes Microsoft. That's a best case scenario for Yahoo from investment bank advisers at Goldman Sachs and Lehman Brothers. The i-banks are advising Yahoo on mergers with media and technology firms that might snatch Yang & Co. from the jaws of Microsoft. On Sunday, Siobhan Kennedy and Suzy Jagger of The Times Online (UK) broke the story AOL may emerge as Yahoo's exit strategy from the Microsoft $45 billion (give or take a billion) bid.

An AOL merger leads the pack of deals Yahoo and its i-bank M&A advisers are pursuing. Not long ago Yahoo failed to close a deal for AOL. Now the pressure from Yahoo shareholders won't let up until a Microsoft bid (sweetened or unsweetened) is accepted - or an AOL-sized deal is done. Time Warner CEO Jeff Bewkes would be the big winner.

Google has long been discussed as Yahoo's outsourced search partner (again). The surprise? The House of Mouse has emerged as a possible home for Yahooligans. (The revenge of Terry Semel?)

If you can't bring Hollywood to Yahoo, then move the Yahoo to Hollywood. Any Yahoo tie-up would likely put Disney CEO Bob Iger in the driver's seat, not a bad thing for Yahoo's beleaguered shareholders.

Would an AOL merger somehow increase the value of Yahoo's stock by more than 60 percent? (Microsoft premium: 62 percent) Not likely. Yahoo shareholders have long been asking - to no avail - for a plan to boost YHOO by 25 percent from its 52 week low. So far the Microsoft bid has been the only (un)plan that did.

I mentioned the AOL scenario last Friday morning on a conference call with Oppenheimer senior analyst Sandeep Aggarwal and Oppenheimer's Media & Internet and Enterprise Software teams.

Kevin Lee of Didit joined us on the call, along with Jaideep Singh, CEO of vertical search engine Spock.com and Seth Barnes, senior manager for Edmunds.com, a leading consumer automotive site.

To listen to a replay, the dial-in number is (888) 266-2081 or (703) 925-2533. Replay dates are now thru 2/22/2008 23:59 EST.

Whether the Yahoo AOL portal-saurus merger would work is moot.

Now it's One Deal, One Day.

All this week: Yahoo! on Woot!.

Posted by Kevin Heisler at 11:43 PM | Permalink

February 8, 2008

Decision Time for Yahoo?

According to Michael Arrington at TechCrunch, today's the day Yahoo's board will make a decision on how to proceed with Microsoft's takeover bid:

"There are only two options left. Accept the offer in principal, and try to increase the price with no negotiating leverage at all, or do a deal with Google to outsource search advertising and, likely, search itself.

The board, we've heard, is basically being told by outside advisors to take the Microsoft deal. But we've also heard that a contingent of senior executives at Yahoo, who are willing to do literally anything to thwart a Microsoft takeover, are pushing for the Google deal and will present their case at the meeting."

One concern of Yahoos may be losing the company's identity and being assimilated by Microsoft. In an effort to assuage those fears, Microsoft CEO Steve Ballmer gave empty reassurances in an interview with Business Week. "Yahoo, the brand, will live," Ballmer said. He didn't elaborate on that, of course, so it could be anything from Microsoft's premier online brand to a token start page (think Netscape).

Yahoo's Panama platform will not likely be as lucky, if Tarek Najm, adCenter's general manager, has anything to say about it. He told Business Week there was nothing he liked about Panama that he would want in adCenter: "We're the leaders in technology," Najm says. "Ours is better."

Posted by Kevin Newcomb at 8:49 AM | Permalink

February 6, 2008

Yahoo Desperately Seeking Suitor

With limited options, Yahoo board members face increased pressure to accept Microsoft's hostile bid. Yahoo has resisted Microsoft's advances in the past, convincing shareholders a turnaround was just around the corner.

So how much money did Yahoo leave on the table by declining the earlier offer? Microsoft won't publicly reveal the bid. Yahoo CEO Jerry Yang would be loath to share the offer from the company the Valley loves to loathe.

Here's the rumored Microsoft bid made last year: $40 plus per share. That's the number Oppenheimer analyst Sandeep Aggarwal cited in a note to clients, suggesting a potential 26-40 percent upside for investors from the current offer of $31 per share - if Yahoo can negotiate a better deal for its shareholders or find a more suitable suitor.

So who's willing - besides Google - to play white knight to Yahoo's digital damsel in distress?

The knights hardly comprise a round table. Only five companies have been widely reported as possible suitors: AT&T, Comcast, News Corp, Time Warner, and Verizon Communications. None has stepped up to enter the fray. Rupert Murcoch of News Corp publicly stated he didn't plan to prepare a competitive bid.

The Wall St. Journal (subscription) reported this morning that Yahoo's hoping against hope that a rival bidder or a business tie-up with Google would save the day. Google desperately wants to derail the deal, even though their share of searches continue to erode Yahoo's market share.

Mike Arrington of TechCrunch expects shareholders to approve the deal soon.

A Google-Yahoo partnership, though, isn't an ideal solution for Yahoo either. It's not as if Google could sign a noncompete agreement with Yahoo in lines of business Yahoo has strength in: local mobile, e-mail, display advertising, or e-mail.

How much revenue Google would be willing to forego by partnering with Yahoo in search also remains in question. In its quest to index the world's information, Google has become a victim of its own success.

A grizzly bear hug (not even a teddy bear hug) from Ballmer may have squeezed the life from Silcon Valley's once and future king.

Now it seems Google's mouth-to-mouth resuscitation of Yahoo's search business will be the only hope for Yahoo's survival.

Posted by Kevin Heisler at 8:07 AM | Permalink

February 3, 2008

Google Weighs In On Microhoo: It May Be Evil

David Drummond, Google SVP corporate development and chief legal officer, issued the company's official response to Microsoft's proposed acquisition of Yahoo this afternoon. Essentially, Google's position is combining its two main competitors could be bad for the Internet...even border on evil.

Drummond says in the official Google statement:

"It's about preserving the underlying principles of the Internet: openness and innovation.

"Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC? While the Internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies -- and then leverage its dominance into new, adjacent markets.

"Could the acquisition of Yahoo! allow Microsoft -- despite its legacy of serious legal and regulatory offenses -- to extend unfair practices from browsers and operating systems to the Internet? In addition, Microsoft plus Yahoo! equals an overwhelming share of instant messaging and web email accounts. And between them, the two companies operate the two most heavily trafficked portals on the Internet. Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors' email, IM, and web-based services? Policymakers around the world need to ask these questions -- and consumers deserve satisfying answers.

"This hostile bid was announced on Friday so there is plenty of time for these questions to be thoroughly addressed. We take Internet openness, choice and innovation seriously. They are the core of our culture. We believe that the interests of Internet users come first -- and should come first -- as the merits of this proposed acquisition are examined and alternatives explored."

Posted by Rebecca Lieb at 5:18 PM | Permalink

February 1, 2008

Yahoo Board, Sans Semel, to Consider Microsoft Bid

Yahoo's board of directors has issued a statement saying it will evaluate Microsoft's unsolicited bid to acquire Yahoo for $44.6 billion. Not surprisingly, the board will be doing so without the input of former CEO and chairman Terry Semel, who stepped down as chairman last night. He was replaced as CEO by founder Jerry Yang back in June, and has been busy staffing up his old Windsor Media venture, though it remains to be seen what form that former investment firm will take. Roy Bostock, who has sat on Yahoo's board since May 2003, was elected to serve as non-executive chairman.

Semel's departure may bode well for a potential Microsoft deal, since he's been vocal in his disdain for such a merger. It also won't hurt that Yahoo's been shedding executives for the past year, so at least some of the potential redundancies are already dealt with.

On a conference call this morning to discuss the acquisition, Kevin Johnson, president of Microsoft's Platforms and Services Division, suggested that Microsoft's offer would be the only one Yahoo could get, given anti-trust concerns that would prevent Google from making an offer. he played on the underdog theme, saying, "The fact is the industry will be better served by having a more credible alternative" in search and advertising.

Posted by Kevin Newcomb at 10:11 AM | Permalink

January 8, 2008

Microsoft Offers $1.2 Billion For Norwegian Search Company

They may not have Google's market share but Microsoft does not seem to be stopping its acquisition of more properties in the search space, having offered $1.2 billion for Norwegian company, Fast Search and Transfer, according to the New York Times.

The Olso-based company "is a specialist in search technology used inside companies and government agencies to cull for information in documents, databases and software applications. Its software helps teams of workers quickly search the corporate storehouse of information for answers about procurement, marketing, manufacturing and product design," the NYTimes.com reported.

NYT reporter Steve Lohr examines the relationship of this acquisition with Google's push into the office services business with the launch of more products at Google Docs.

"Microsoft has already offered enterprise search from SharePoint, a product in the Office family designed for groups of workers to collaborate on projects. And Microsoft already has a partnership with Fast, for providing enterprise search.

But by purchasing Fast, Microsoft can more fully integrate the Norwegian company's technology into its Office technology. Jeff Raikes, president of Microsoft's business division, which includes Office, pointed to advantage of having “a single vendor with solutions that span the full range of customer needs," Lohr wrote.

The Microsoft move is seen as one aimed at adding to their Office products and services, NYT reports, The Microsoft bid "represents a 40 percent premium over the closing price of the Norwegian company's shares on Tuesday," they added.

Posted by Frank Watson at 1:59 PM | Permalink

August 13, 2007

Microsoft Completes aQuantive Acquisition

Microsoft has completed the acquisition of aQuantive, and has created a new Advertiser and Publisher Solutions (APS) Group to fit it in.

According to the release, "This new business group will be responsible for building Microsoft's monetization engine to serve the advertiser and publisher community."

The APS team will have responsibility for building and marketing all ad platforms, including Atlas, DRIVEpm, MSNDR and Microsoft AdCenter. It will also house other media types, like in-game and mobile ads, and the agency arm Avenue A | Razorfish.

The APS group will be run by Brian McAndrews, CEO of aQuantive, who will report directly to Kevin Johnson, president of Microsoft's Platforms & Services Division (PSD). That makes three groups housed under Johnson in the PSD:

The Online Services Group, led by Steve Berkowitz, is responsible for Microsoft's “audience” business, including the MSN.com portal, Windows Live services and Live Search. The Microsoft Digital Advertising Solutions sales force lives here.
The Advertiser and Publisher Solutions Group, led by Brian McAndrews, is responsible for building the monetization engine to serve the advertising and publishing community.
The Search & Advertising Platform Group, led by Satya Nadella, is focused on building search technologies and the advertising platform to support Microsoft's business and customer goals.

Yusuf Mehdi, who was named chief advertising strategist and head of the Online Business Group last year, will take on the newly formed role in PSD of senior vice president, Strategic Partnerships, where he will be focused on overseeing international mergers, acquisitions and partnerships; managing strategic accounts; and forging relationships with early stage startups and venture capital firms. Mike Galgon, an aQuantive co-founder, has been named chief advertising strategist and will report to McAndrews.

Posted by Kevin Newcomb at 11:40 AM | Permalink

August 10, 2007

Microsoft's aQuantive Acquisition to Close Soon

Microsoft's intended acquisition of aQuantive moved a step closer to completion when the shareholders of aQuantive approved the acquisition yesterday, according to Seattle Post-Intelligencer reporter and blogger Todd Bishop. That means the deal could close as soon as next week.

All that's left now is the hard part: figuring out how aQuantive is going to fit together with Microsoft. So far, it looks promising, according to Nick Hanauer, aQuantive's chairman. Hanauer told Bishop that he was at first worried that Microsoft might mishandle the process, but that things are now going well.

"My early fears that Microsoft would bungle the integration have vanished. Clearly they have done and are doing a spectacular job," Hanauer told Bishop. Asked what had caused his concern, he said, "Just the usual politics and ego getting in the way."

Posted by Kevin Newcomb at 11:14 AM | Permalink

July 26, 2007

Microsoft Wants an Ad Exchange Too

Not to be left out of the ad exchange party, Microsoft plans to acquire AdECN, an online ad exchange similar to Right Media (acquired by Yahoo) and DoubleClick's (soon to be acquired by Google).

The idea of an ad exchange is similar to a stock exchange, where buyers and sellers work through a broker. Similarly, AdECN does not do business directly with advertisers or publishers; it works instead with ad networks, ad brokers, and a few ad agencies that maintain relationships with buyers and sellers, acting as a network themselves.

If you're keeping score, that leaves newcomer ContextWeb and its ADSDAQ exchange as the last independent player standing in the ad exchange space.

Posted by Kevin Newcomb at 5:01 PM | Permalink

May 23, 2007

Microsoft's Berkowitz: Consider aQuantive Deal a Merger

At a JP Morgan Technology conference Tuesday (link to webcast), Steve Berkowitz, Microsoft's senior VP of online services, told investors that they should consider the company's $6 million purchase of aQuantive as "more of a merger" than an acquisition, according to Seattle P-I blogger Todd Bishop.

At the conference, Berkowitz told investors: I look at it more as a merger. ... There are certain acquisitions you acquire to look at and say, 'OK great, there's lots of cost synergies, and how are you going to do that.' We look at the aQuantive acquisition as one of revenue opportunity and relationship opportunity. ... We didn't have a strong publisher-facing relationship. ... We have a very strong advertiser connection but we didn't have the tools for the advertisers. So we look aQuantive as an additive, or more of a merger of businesses, and that for us is really exciting, because it's getting us into places we weren't in before.

Posted by Kevin Newcomb at 12:02 AM | Permalink

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