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Microsoft drops Yahoo! bid

Brinke Guthrie [PersonRank 10]

Sunday, May 4, 2008
11 years ago4,412 views

msnbc.com: BREAKING NEWS: Spokesman says Microsoft is walking away from offer to buy Yahoo

techcrunch:
Microsoft will announce shortly that they have withdrawn their offer to acquire Yahoo. Talks between the two companies and their advisors broke down earlier today, according to a source close to Microsoft, after a failure to come to agreement on price and other terms.

A final meeting occured today at Microsoft headquarters in Redmond, between Jerry Yang, David Filo, Kevin Johnson and Steve Ballmer, where they failed to reach agreement. Yang and Ballmer spoke by phone later today; at that time Ballmer withdrew the offer.

Ionut Alex. Chitu [PersonRank 10]

11 years ago #

Finally some common sense.

Brinke Guthrie [PersonRank 10]

11 years ago #

May 3, 2008

Mr. Jerry Yang
CEO and Chief Yahoo
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089

Dear Jerry:

After over three months, we have reached the conclusion of the process regarding a possible combination of Microsoft and Yahoo!.

I first want to convey my personal thanks to you, your management team, and Yahoo!’s Board of Directors for your consideration of our proposal. I appreciate the time and attention all of you have given to this matter, and I especially appreciate the time that you have invested personally. I feel that our discussions this week have been particularly useful, providing me for the first time with real clarity on what is and is not possible.

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

In our conversations this week, we conveyed our willingness to raise our offer to $33.00 per share, reflecting again our belief in this collective opportunity. This increase would have added approximately another $5 billion of value to your shareholders, compared to the current value of our initial offer. It also would have reflected a premium of over 70 percent compared to the price at which your stock closed on January 31. Yet it has proven insufficient, as your final position insisted on Microsoft paying yet another $5 billion or more, or at least another $4 per share above our $33.00 offer.

Also, after giving this week’s conversations further thought, it is clear to me that it is not sensible for Microsoft to take our offer directly to your shareholders. This approach would necessarily involve a protracted proxy contest and eventually an exchange offer. Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo! undesirable as an acquisition for Microsoft.

We regard with particular concern your apparent planning to respond to a “hostile” bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo! today. In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo! undesirable to us for a number of reasons:

• First, it would fundamentally undermine Yahoo!’s own strategy and long-term viability by encouraging advertisers to use Google as opposed to your Panama paid search system. This would also fragment your search advertising and display advertising strategies and the ecosystem surrounding them. This would undermine the reliance on your display advertising business to fuel future growth.
  
• Given this, it would impair Yahoo’s ability to retain the talented engineers working on advertising systems that are important to our interest in a combination of our companies.
  
• In addition, it would raise a host of regulatory and legal problems that no acquirer, including Microsoft, would want to inherit. Among other things, this would consolidate market share with the already-dominant paid search provider in a manner that would reduce competition and choice in the marketplace.
  
• This would also effectively enable Google to set the prices for key search terms on both their and your search platforms and, in the process, raise prices charged to advertisers on Yahoo. In addition to whatever resulting legal problems, this seems unwise from a business perspective unless in fact one simply wishes to use this as a vehicle to exit the paid search business in favor of Google.
  
• It could foreclose any chance of a combination with any other search provider that is not already relying on Google’s search services.
  

Accordingly, your apparent plan to pursue such an arrangement in the event of a proxy contest or exchange offer leads me to the firm decision not to pursue such a path. Instead, I hereby formally withdraw Microsoft’s proposal to acquire Yahoo!.

We will move forward and will continue to innovate and grow our business at Microsoft with the talented team we have in place and potentially through strategic transactions with other business partners.

I still believe even today that our offer remains the only alternative put forward that provides your stockholders full and fair value for their shares. By failing to reach an agreement with us, you and your stockholders have left significant value on the table.

But clearly a deal is not to be.

Thank you again for the time we have spent together discussing this.

Sincerely yours,

Steven A. Ballmer
Chief Executive Officer
Microsoft Corporation

Ionut Alex. Chitu [PersonRank 10]

11 years ago #

Another Victory for the Boy Fuhrer from Duncan Hines!: reader comment from Sumatra-Bosch
Posted on: May 3, 2008, 5:14 PM PDT
Story: Microsoft pulls its Yahoo offer

Brilliant, Steve, brilliant.

First, it was an idea only you could hatch with a straight face.

Second, it was a really stupid idea.

Third, only one company hates MSFT more than Yahoo! and only
now coming to the conclusion that the company was "unlikely to
achieve a friendly integration process" is really a sign of early
onset Alzheimers. Consult with your doctor.

Steve, hello. Clue. Yang is a Lotus guy. Remember all those
underhanded schemes MSFT used to kill Lotus Smart Suite, you
know, the ones for which MSFT had to settle with IBM some
years back? Think this might have influenced Yahoo!'s culture
and have something to do with the fact that everyone at Yahoo!
who can put on their socks without pictorial instruction would
rather go on a diet of camel smegma than work for MSFT?

Anyway, congrats on another disaster that could not have been
more calamitous if you'd planned it.

(news.com/5208-13860_3-0.html?f ...)

Brinke Guthrie [PersonRank 10]

11 years ago #

Yahoo! Issues Statement in Response to Microsoft

SUNNYVALE, Calif., May 03, 2008 (BUSINESS WIRE) — Roy Bostock, Chairman of Yahoo! Inc. (Nasdaq:YHOO), a leading global Internet company issued the following statement today in response to Microsoft Corporation’s announcement that it has withdrawn its proposal to acquire Yahoo!:

“We remain focused on maximizing shareholder value and pursuing strategic opportunities that position Yahoo! for success and leadership in its markets. From the beginning of this process, our independent board and our management have been steadfast in our belief that Microsoft’s offer undervalued the company and we are pleased that so many of our shareholders joined us in expressing that view. Yahoo! is profitable, growing, and executing well on its strategic plan to capture the large opportunities in the relatively young online advertising market. Our solid results for the first quarter of 2008 and increased full year 2008 operating cash flow outlook reflect the progress the company is making. Today, Yahoo! has:

– a refined strategic focus to drive enhanced volume and yield;

– reorganized to focus its efforts on its most promising products and services;

– invested in innovations designed to revolutionize display advertising and facilitate closing the competitive gap in search; and

– enhanced expense and resource management to support improved profitability.”

Jerry Yang, co-founder and chief executive officer, Yahoo! Inc. added, “I am incredibly proud of the way our team has come together over the last three months. This process has underscored our unique and valuable strategic position. With the distraction of Microsoft’s unsolicited proposal now behind us, we will be able to focus all of our energies on executing the most important transition in our history so that we can maximize our potential to the benefit of our shareholders, employees, partners and users.”

Niraj Sanghvi [PersonRank 10]

11 years ago #

This article does a good job of explaining how this outcome is good for Microsoft and bad for Yahoo:
gigaom.com/2008/05/03/microsof ...

David Hetfield [PersonRank 10]

11 years ago #

Finally this story is over..!

David Mulder [PersonRank 10]

11 years ago #

Typical that there were rumors only half a day ago that micro$oft would raise its bid: blogoscoped.com/forum/130271.h ...

Ianf [PersonRank 10]

11 years ago #

[put at-character here]Brinke Guthrie: we know you know how to select-all, copy and paste, but where are the urls?

[put at-character here]David Hetfield: alas, ain't over yet. Much as I like Flickr and yahoogroups.com, the two Yahoo! services I use will continue be free of Evil Empire, there are no clear-cut victors here. Kind of strange outcome, with Yang merely holding out for additional $4 a share ($29.5 initial, upped to $33, asked $37), and Ballmer just bailing out (I kind of hoped the two would devour one another in the merging process....)

More news: M$oft Withdraws Its Bid 4 Yahoo!
mobile.nytimes.com/2008/05/04/ ...

Brinke Guthrie [PersonRank 10]

11 years ago #

I prefer select-all and copy paste. Google it if you want the URL, it would take about .5 seconds.

Here's Ballmer's internal memo.

This afternoon I sent the attached letter to Jerry Yang announcing that Microsoft has withdrawn its proposal to acquire Yahoo. We proposed the deal in the belief that a Microsoft-Yahoo merger would create a combined company with the resources and assets to win in the fast-growing market for advertising and online services.

Although the acquisition of Yahoo would have accelerated our ability to deliver on our strategy in advertising and online services, I remain confident that we can achieve our goals without Yahoo. We have a strategy in place to do so and we will continue to expand on this strategy and accelerate our progress.

Our strategy has three components:

Deliver on the basics. We will continue to improve search relevance and build out our ad platform.

Change the game through innovation. We will expand investments in engineering and deliver transformative tools and Web experiences.

Expand our global scale and focus. We will pursue partnerships and investments to realize the competitive advantages that come with scale.

At the heart of our strategy is a commitment to bring the benefits of competition, choice, and innovation to everyone who uses the Internet--from consumers to content creators to advertisers.

We are 100 percent focused on executing on this strategy and we have made good progress in a very short time. We've improved search relevance dramatically, introduced compelling new search verticals, successfully integrated aQuantive, and added nearly 100 new publishers to our ad platform. In the last couple of months we've rolled out new versions of key products including Internet Explorer and Silverlight, and introduced new technologies like Live Mesh. We now have over 430 million active users of our Windows Live services worldwide. And we continue to add new technologies with acquisitions such as YaData, which brings leading-edge behavioral targeting technology, and Caligari, which gives us advanced 3D modeling capabilities that will help us continue to improve Virtual Earth.

Ultimately, our goal is to build the industry-leading business in search, online advertising, media, and social networking.

We are absolutely committed to being the leader in each of these areas. Now is the time to do what we have always done best--be tenacious, focus on the long term, innovate, and keep working hard.

I want to thank all of you for your patience during this process and for your dedication and hard work across all of our businesses. We asked that you remain focused on our goals through these cycles, and you have done this extremely well. We are committed to making the investments that will enable us to compete and, ultimately, lead in the online services and advertising businesses. Together, I know we will succeed.

Steve

Philipp Lenssen [PersonRank 10]

11 years ago #

Can't say I see any clear winners or losers in this but it does show that only 1 of the 3 players isn't acting desperate: Google. Microsoft seems desperate because they want to buy Yahoo after having failed to lift their own search engine efforts, Live.com, to a real success. Yahoo seems desperate because they had to resort to Google to win a hostile takeover, if I understand things correctly.

Why doesn't Microsoft web-ify their office already? "Office Live" sounded like it but just by its name, it turned out to be something different, and Silverlight probably also won't get off the ground any time soon. What's Microsoft's strategy, except releasing new operating system versions that IMO are worse than their predecessor in terms of usability and offer low software backwards compatibility? (And except making big announcements via Steve about innovation or focusing on search?)
If they web-ified their office suite, they could then even offer a search engine close-by that location too, though that would probably be kind of monopoly behavior/ a cross integration trick. Someone once said they won't offer a web-ified office because it would cannibalize their market... hmm. But the longer they wait to jump on the "cloud" bandwagon the more Google Docs may build a user base (against MS desktop office), or not? Or will there always be two equally important markets, the cloud OS and the offline desktop?

Philipp Lenssen [PersonRank 10]

11 years ago #

Comment at TechCrunch, which has extensive coverage....

<<These is just part of the Microsoft plan:

(1) Retire the bid

(2) Yahoo share price declines to the floor

(3) Microsoft came to save the day (at a lower price of course)

Yahoo should accept the offer in first place… fight is futile :o)>>
-- javier rodriguez

techcrunch.com/2008/05/03/yaho ... Yahoo tough week ahead
techcrunch.com/2008/05/04/yaho ... Yahoo prepares for black Monday
techcrunch.com/2008/05/04/does ... Does Ballmer need to go?

David Hetfield [PersonRank 10]

11 years ago #

Didn't think of that..

I guess we'll just have to wait..

Ionut Alex. Chitu [PersonRank 10]

11 years ago #

yahoo has a great future ahead and it doesn't need an owner like ms that would ruin it

Juha-Matti Laurio [PersonRank 10]

11 years ago #

And "Yahoo Faces Shareholder Ire Over Failed Microsoft Bid":

"Two public pension funds from the city of Detroit plan to expand a complaint against Yahoo CEO Jerry Yang and other members of Yahoo's board of directors, saying they failed to act in the best interest of shareholders in rejecting Microsoft's bid to buy Yahoo.
.....
The actions taken by Yahoo's CEO this past weekend confirm that the company's board of directors pursued all manner of value-destructive third-party deals to fight off Microsoft's bid, lawyers representing the Police & Fire Retirement System of the City of Detroit and the General Retirement System of the City of Detroit said in a statement Monday."

Link:
pcworld.com/businesscenter/art ...

Bilal [PersonRank 10]

11 years ago #

The only winner is Google then in this story

Juha-Matti Laurio [PersonRank 10]

11 years ago #

I really dont't see any reasons why not to include a source URL, saying Just google it is not a good way to act.
With the URL readers can check the comments of the article, check possible updates and fixes to the article text, and share the information when _source_ URL is available.

Text is not our property in any way, we are just sharing the information.

Brinke, we really want to see the URLs. And remember the copyright issues as well!

Ianf [PersonRank 10]

11 years ago #

Robert X. Cringely, the tech-loudmouth of PBS, has this to say in regard to "Jonestownian ambience" (read: Kool-Aid of M$FT) surrounding now-aborted bid for YHOO :

"[...] people I know, who work at Yahoo are simply afraid of working for Microsoft, as though Ballmer and Gates eat their young.

This isn't so much a Yahoo versus Microsoft perception, by the way, as a Yahoo versus MSN. Compared to Yahoo, where life has been cushy for a LONG time, MSN IS a pretty Spartan place. More importantly, at MSN there is a culture of confrontation. Where at Yahoo people with bad ideas or bad attitudes are generally isolated, sometimes at great expense to the company, at MSN those people are fired and thrown out of the building. Maybe in Yahoo's general feeling of inadequacy compared to Google, the geeks figure they couldn't survive at Microsoft, hence the whole Jonestown ambiance we sense around these recent events.

What's ironic is that Microsoft actually WANTS some Yahoo DNA, but the Yahooniks have been brainwashed not to believe it. [...]"

& the rest here:
pbs.org/cringely/pulpit/2008/p ...

Ianf [PersonRank 10]

11 years ago #

[put at-character here]Brinkie Guthrie "if you want the URL, it would take about .5 seconds" [ [Up] blogoscoped.com/forum/130278.h ...]

.5 secs you say? Man, you rule, easy. Do upload a video showing how you do it so fast: [1]select and [2]copy some suitable paragraph or phrase; [3]paste into Google's search field ([4]assume you already have that onscreen); [5]hit "Search" or "Lucky"; [6]visually scan response page to detect, confirm and/or decide whether it *may be* the sought source; [7]if not, go back to [6]; until [8]satisfied.

I *REALLY* would like to learn your technique, honest. So, don't bogart that k#n#o#l, pass it over to us....

Philipp Lenssen [PersonRank 10]

11 years ago #

Brinke also emailed me asking about this thread's discussion on posting style. Here's the approach I think makes some sense – but it's open for discussion by everyone and nothing is cast is stone!

- Every well-intended post is appreciated as it helps shed light on search news.

- When something is missing, like a snippet has no link, or a link has no snippet, I often add it in a follow-up comment, so it's a bit of team work. (A link without a snippet can take longer for people to decide if they're interested in this, and a snippet without a link can take longer for people to find the source, and it's also nice if the source article can get their link in terms of credit. Note all links are nofollowed the time they are posted, but the nofollow is then automatically removed after some days passed, provided the link stayed in – as that indicates the link is likely not spam.)

- When the title is not self descriptive, a moderator can edit the title indicating the edit in square brackets [like this]. For instance, a typical title of an official Google blog post may be "Sometimes the World is Flat!" and then it may introduce, I dunno, an export option from Google Earth 3D to a 2D PNG file. However, that title would help others scan it more easily if it would be "Google Earth Has New 2D Export Option". (This was just a random hypothetical example.) This is also helpful because if you use this forum's search, titles will be used in years from now to quickly find something to reference it or look it up.

- When the quote is too long – with some exceptions: press releases, clearly "press"-targetted information – one of the moderators may snip it and indicate the snippet, to make it more "fair use" in terms of copyright. But again press releases are considered to be OK for long quoting, they're produced to be spread wide and far, and depending on your view you may even consider e.g. the official Google blogs some kind of press release approach, i.e. they're happy if their texts spread wide and far (though I can't tell for sure, and snippets would always err on the safe side...).

- When the post is a new thread but may fit in with an old one, one of the moderators here can move it to the old thread. Such a move is NOT meant as a complaint – it is not the poster's fault this forum has a sub-optimal duplicate checker, and it also can't be expected of everyone to always conduct extensive archive searches or to read and memorize every single thread. Of course, if you do search before posting to check if it's been covered, that is very much appreciated as well! (On that note, the enhanced blog + forum search is still on my todo list – I wanted to add a straight database search as well, because the Google-indexed-pages-only approach can sometimes cause "memory holes" as not all pages are in Google.)

- And of course sometimes the article linked to needs commentary so it's always great when we add our own insights, which often in combination leads to a much expanded view on things.

Then when we read through threads we can also all learn from each other, e.g. adjust our posting style next time to help others and so on, as team-work.

But again nothing is cast in stone, and this is open for discussion so we find the best ways.

In general, I wanted to add I think the level of discussion and friendliness, and the speed in which news break in this forum is exceptionally high, thanks to all participating!

/pd [PersonRank 10]

11 years ago #

I am hearing that that Carl Icahn is considering attempt to oust Yahoo board and then bring MSFT Back to the table again.. big big strategy at play happening.. MSFT have not backed out at all, they are using a different approach I believe

biz.yahoo.com/ap/080513/yahoo_ ...

This thread is locked as it's old... but you can create a new thread in the forum. 

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