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May 15, 2008

Yahoo Responds To Icahn

Yahoo's Chairman of the Board Roy Bostock fired back a reply, on behalf of the beleaguered board members Carl Icahn has been trying to replace, stating Icahn had a "significant misunderstanding of the facts about the Microsoft proposal and the diligence with which our board evaluated and responded to that proposal".

Icahn had sent an open letter to the board informing them of his intended proxy fight, Kevin Newcomb reported earlier today.

Read Bostock's letter after the jump:

Dear Mr. Icahn:

We are in receipt of your letter with regard to your intention to seek control of Yahoo!'s board of directors.

Unfortunately, your letter reflects a significant misunderstanding of the facts about the Microsoft proposal and the diligence with which our board evaluated and responded to that proposal. A fair-minded review of the factual record leads to one conclusion: that Yahoo!'s ten-member board, comprised of nine independent directors along with Yahoo! CEO Jerry Yang, remains the best and most qualified group to maximize value for all Yahoo! stockholders.

Conversely, we do not believe it is in the best interests of Yahoo! stockholders to allow you and your hand-picked nominees to take control of Yahoo! for the express purpose of trying to force a sale of Yahoo! to a formerly interested buyer who has publicly stated that they have moved on. Please may I remind you that there is currently no acquisition offer on the table from that company or any other party. That said, we have been crystal clear in our stance that we have been and remain willing to consider any proposal from any party including Microsoft if it offers our stockholders full and certain value.

From the beginning of the process with Microsoft, Yahoo!'s independent directors focused on one central goal: how best to maximize stockholder value. At all times directing this process, Yahoo!'s independent directors carefully considered Microsoft's initial unsolicited proposal, which was at the time valued at $31 per share. After considering input from its financial advisers the board unanimously concluded that Microsoft's proposal significantly undervalued Yahoo! and was, therefore, not in the best interests of the company or our stockholders. While we rejected this offer publicly on February 11, 2008, we could not have been more clear in that communication and in every subsequent communication, both public and private, that we were and are willing to enter into any transaction that would maximize value for stockholders and provide them certainty of value.

The record of our efforts to engage Microsoft in meaningful discussions is unequivocal. Following receipt of Microsoft's proposal on January 31, our board of directors has met over twenty times to review Microsoft's proposal and Yahoo!'s other strategic alternatives. Throughout this process our board kept an open mind and an open ear. Our independent directors met with several of our largest stockholders to solicit their views and to make it clear that Yahoo!'s independent board is fully committed to maximizing stockholder value. In addition, at the direction of our board, our management team met with many of our investors to provide insight into Yahoo!'s strategy and views on value.

Our board's openness also extended to Microsoft. Without reciting all of the contacts between us and between our advisers, the senior-most management of Yahoo! and Microsoft and the companies' respective financial advisers spoke on numerous occasions and met in person seven times. During those meetings, Yahoo! discussed its strategic objectives in search and display advertising monetization, its perspectives on operating strategy and integration in a transaction with Microsoft, its perspectives on transaction synergies, and other non-price deal terms. Because certainty of closing is a critical issue, we sought to understand Microsoft's thinking with regard to the regulatory issues associated with a potential transaction. In fact, at the board's direction, our lawyers on March 28 asked for additional information in this regard, information which was never forthcoming.

On April 15th, a meeting was held at Yahoo!'s request. At that meeting, which included our respective financial advisors, we made clear, once again, that we were open to a transaction with Microsoft. During those discussions, Yahoo! made a detailed presentation of its strategic and financial plan, its thoughts on integration and its view with respect to the potential synergies that could be achieved in a transaction, essentially laying the foundation for Microsoft to understand--and respond to--our board's conclusion that Microsoft's offer substantially undervalued the company. Following that meeting we also provided to Microsoft a list of key non-price deal terms that our board believed were critical items to be addressed in a deal to provide reasonable protections for our stockholders.

Throughout this period, Microsoft continued to state that it would not raise its offer, and even suggested that it could lower it.

Despite this failure by Microsoft to respond in any substantive way to any of Yahoo!'s requests, on May 2nd, the same day we first learned of Microsoft's apparent willingness to increase its proposal to $33 (although this oral "offer" was never delivered in writing and did not include details of a cash/stock mix), our board determined to continue discussions, instructing Jerry Yang to indicate to Microsoft that we would be prepared to enter into a transaction that valued Yahoo! at $37 per share and that provided reasonable certainty of value and certainty of closing. This was communicated to Microsoft in-person at a meeting in Seattle on May 3rd. With Microsoft's offer at $33 and Yahoo!'s counter-proposal at $37, Microsoft elected, within hours, to walk away from the negotiating table and informed us that they were "moving on," having never engaged further on price or any of the key non-price deal terms.

In short, Yahoo!'s board was at every point in this process prepared to enter into a transaction with Microsoft that would maximize stockholder value--and included certainty of value and closing. What Yahoo!'s independent board refused to do was to allow control of this company to be acquired for less than its full value.

That brings us to today. Our business is performing well as evidenced by our first quarter results. As we have publicly stated, our board continues to actively and expeditiously explore strategic alternatives to maximize stockholder value. None of the alternatives we are considering would preclude us from entering into a transaction with Microsoft or any other party.

We continue to believe that Yahoo!'s current board has the independence, the knowledge, and the commitment to navigate the Company through the rapidly changing Internet environment and to deliver value for Yahoo! and its stockholders.

We look forward to a productive dialogue.

Very truly yours,

Roy Bostock

Chairman of the Board

Posted by Frank Watson at 6:58 PM | Permalink | Comments (1)

March 12, 2008

Yahoo! and Microsoft open new R&D Centers in Israel—even if Yahoo! still doesn't understand Israel

Yahoo! just opened a research office in Israel—it's first—in Haifa, Israel. The office is right near Google's first office in Israel; they opened a second office in Tel Aviv two years ago. Microsoft has had a major presence in nearby Ra'anana since 1989, and announced this week that they are opening an Israel Innovation Lab in Herzliyah Pituah, which will focus on applied research. It will be the only such Microsoft lab outside the U.S.

Aside from taking advantage of the rich field of R&D and internet professionals that Israel is known for, Yahoo! now has the chance to take advantage of a growing marketplace they've largely ignored. Microsoft invested more than $100 million over the past 20 years translating all its products to Hebrew—and it shows; nearly all Israeli companies host on IIS servers, write web sites in ASP and use Microsoft software exclusively. They partnered with popular Israeli brands, like Galgalatz, Israel's most popular radio station. Their search engine and MSN portal are among the most visited pages in Israel. Google may have arrived to the party a bit late, but they quickly made up for lost time. In less than two years, Google.co.il unseated local search engine Walla.co.il as the number one search engine used in Israel. Number three is Google.com.

Yahoo! has a lot to do to catch up. They still need to convert products to Hebrew, and still have ways to go in informing the Israeli public that they exist. While Google and MSN dynamically switch directions for Hebrew searches, Yahoo does not. And for a popular Hebrew search like ישךאל (Israel), no PPC ads appear in Yahoo while many appear in MSN and Google. Dr. Ronny Lempel, who will head the new Yahoo! office, said the engine had no plans to translate its home page.

While I applaud Microsoft and Yahoo! for taking advantage of the “fertile ground” in Israel for talented engineers and researchers, I think the strategy of giving back to the local environment is one that makes search leaders. Maybe that's why Microsoft boasted 12.4% Year over Year growth last month and Google garnered 50.3%, while Yahoo! gained nothing. If they don't start to change something—other than just new research centers—expect this trend to continue.

Posted by at 2:39 PM | Permalink

July 10, 2006

Yahoo Buys Land In Santa Clara

The San Jose Business Journal reports that Yahoo has purchased 42.5 acres in Santa Clara. The price of the land was not disclosed, but we do know they bought it from San Francisco's TMG Partners. Yahoo's CFO, Sue Decker, said: "We see this as an attractive asset that provides attractive additional capacity and flexibility for Yahoo's future. We are planning for future growth and will analyze several different scenarios over the coming year regarding the development of the property."

Posted by Barry Schwartz at 8:39 AM | Permalink

June 14, 2006

A Look At Google's Oregon Operation & Yahoo Leaves Pasadena

Niall Kennedy summarizes a NY Times article about Google's Oregon center and Yahoo and Microsoft's exploration in areas like that. The Google Oregon center would be one of the largest data centers, taking up about two football fields. The NY Times article also estimated Google having "450,000 servers spread over at least 25 locations around the world." Microsoft with an estimated 200,000 servers is expected to grow to 800,000 by 2011.

Yahoo is on the move as well, moving to Burbank by end of June. There is no doubt that energy costs will be on the mind of these search companies new locations.

Posted by Barry Schwartz at 9:26 AM | Permalink

June 13, 2006

Search Companies Energetically Seeking Electricity

The Wall Street Journal reports that the search companies, including Microsoft, Yahoo, Ask and possibly Google are looking to find cheap electricity to power all the computers and hardware that power the companies. The article says that one large data center can use as much energy as a city of 40,000 people! The search companies are looking for locations next to cheap energy sources such as former defense bunkers, near hydroelectric plants, and other locations where electricity is cheaper. Microsoft's data center consumption of power doubled over the past four years, so this is a serious concern for Microsoft and other search companies.

Posted by Barry Schwartz at 9:02 AM | Permalink

March 28, 2006

Yahoo & Microsoft To Build Storage Centers In Grant County, Washington

MoneySense.ca reports that Yahoo and Microsoft have plans to build huge data centers in Grant County, Washington. Tim Snead, city administrator, said in regards to Microsoft, "My understanding is their objective is to increase their capacity for the Internet, search engines." Yahoo reportedly has plans to purchase 50 acres in an industrial park in Quincy. What is attractive about this area is the amount of low-cost land available.

Posted by Barry Schwartz at 9:04 AM | Permalink

November 14, 2005

Yahoo Culture: Sunnyvale & Santa Monica

In Chris Gaither's LA Times (free, reg. required) article, Can Yahoo Sign On to Hollywood?, you'll read about the very different cultures at Yahoo's office in Santa Monica (aka Hollywood) versus their Yahoo HQ in Sunnyvale (aka Silicon Valley).

But as Yahoo strives to enter the league of Walt Disney Co., Viacom Inc. and other media giants, success hinges on its ability to merge two inherently different cultures: the brash, flashy ethos of entertainment executives and the rumpled, brainiac realm of computer nerds.

In the year since the company consolidated its Santa Monica office and began hiring a slew of former Hollywood executives bent on "convergence," Yahoo's leaders have sought to downplay the tensions. But the union has sometimes been rocky.

In Sunnyvale, it's "a cubicle society," said a person close to Yahoo, referring to the willingness of people at all levels to work in cramped workstations. Speaking on condition of anonymity for fear of retribution from Yahoo, this person said the Santa Monica office, by contrast, was about " 'How big is my office? Where is my parking spot? You report to me. I don't need to talk to you.' It's very much the studio hierarchy mentality."

Btw, the article also includes a quote from Senior VP of Search and Marketplace, Jeff Weiner on just what kind of company Yahoo is: "We're often asked, 'Is Yahoo a media company or a tech company?' said Jeff Weiner, a Yahoo senior vice president and former Warner Bros. executive who runs the search and marketplace groups. "The answer to that is: 'We're both. We're a media business that is technology driven.' "

Also on Search: Consequently, search has become a big part of Yahoo's media strategy ? it's the launch pad for many people to find video, music and websites ? and a big revenue generator. Yahoo is locked in a battle with Google to persuade movie studios and television companies to release their material to search engines ? one arena in which Yahoo's show-business connections are supposed to pay off.

A very interesting read.

Posted by Gary Price at 4:49 PM | Permalink

August 29, 2005

Yahoo Finds Office Space in San Francisco ; 966 Job Openings at Yahoo and Google

I've blogged several stories about Google looking for more office space both in and out of Silicon Valley. A new article in the SF Business Times: Yahoo search leads to San Francisco, reports that Yahoo plans to lease 20,000 sq. feet of office space in San Francisco. Doing so will make Yahoo the "biggest tech company" in the city. The article also points out that Yahoo currently has 612 job openings at their hq in Sunnyvale while Google has 354 open positions in Mountain View. These numbers don't include jobs at non-hq offices.

Posted by Gary Price at 11:33 AM | Permalink

August 3, 2005

Yahoo Opens Customer Calling Facility in Oregon

About 3 months ago I blogged that Yahoo would be opening a customer service office in suburban Portland, OR.

Oregon Public Radio reportsthat the office new facility opened yesterday and Yahoo co-founder, Jerry Yang, was in attendance.

About 50 people now work in Hillsboro, OR. Yahoo plans to add up to 180 employees within the next year. During a recent job fair, more than 1,500 people applied for work.

Google also has plans to open a technology facility (it might be open already) in The Dalles, OR.

Posted by Gary Price at 12:37 PM | Permalink

May 3, 2005

Yahoo Plans to Increase Number of Engineers at Software Subsidiary in India

Computerworld Singapore reports that Yahoo is planning to add 200 new product engineers and support staff at its subsidiary, Yahoo Software Development India, located in Bangalore.

Yahoo Software Development India Pvt Ltd, a subsidiary of Yahoo Inc. created two years ago, currently employs over 300 engineers, Venkat Panchapakesan, the subsidiary's chief executive officer, said on Saturday. The new staff will be added by the end of 2006, he added. The Indian subsidiary is the only Yahoo operation outside of its Sunnyvale, California, headquarters that does product engineering, Panchapakesan said. Yahoo's blogging software was built in India and first deployed in Korea in 2003, he said. The blogs platform is now part of Yahoo 360, a social networking and blogging service that went into beta testing in March.

Posted by Gary Price at 12:38 PM | Permalink

May 2, 2005

Yahoo Plans Customer Service Center in Oregon

News from Oregon that Yahoo is planning to open a customer service center in the Portland suburb of Hillsboro. The story says that the center will employ about 170 people.

Last week, we blogged about Google's plan to open a tech center in The Dalles, Oregon.

Posted by Gary Price at 4:47 PM | Permalink

February 15, 2005

Yahoo! Goes to Ireland

Yahoo! is announcing an expansion of their European operations by adding more than 400 new jobs in Dublin, Ireland. According to the article the jobs will involve financial, web hosting and customer support. More in the RTE story: Yahoo HQ to create 400 Dublin jobs. Google opened their European HQ in Dublin in October 2004.

Posted by Gary Price at 10:44 AM | Permalink

December 16, 2004

Yahoo! About Ready to Open Development Centre in India

ExpressIndia lets us know that Yahoo will open a development centre in Chennai, India on December 24th.

Posted by Gary Price at 7:24 PM | Permalink

November 10, 2004

Overture Planning to Move HQ

The Pasadena Star-News reports that Overture will move their headquarters from Pasadena to larger offices in Burbank, California.

A source close to the company said Overture would move all of its approximately 1,000 workers to the site, possibly when Overture's current lease expires in late 2005. The unfinished, custom-built campus would consist of two large buildings housing an employee gym and an on-site cafeteria.

Posted by Gary Price at 11:54 AM | Permalink | Comments (0)

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