Microsoft has responded to Yahoo CEO Jerry Yang after the Yahoo board rejected Microsoft's unsolicited — but not yet officially hostile — takeover bid. "It is unfortunate that Yahoo! has not embraced our full and fair proposal to combine our companies." Interesting choice of words there. "Unfortunate." "Embraced." Does somebody need a hug?
A Microsoft-Yahoo merger would give Microsoft control of more than 90 percent of email and instant messaging traffic worldwide. But when a reporter from AdAge asked Microsoft VP Yusuf Mehdi about it, he shushed her. "The core of the combination is around search and advertising," Mehdi said, "The other allegations are not there and not the focus of what we should be talking about in this combination." We'll ignore that advice, but agree with the sentiment. Last we checked, email use was in decline relative to other forms of online communication, such as social network messaging. (Photo by richard winchell)
In-the-know journalists like to tell readers that the Microsoft-Yahoo merger has been plotted out in advance. "Microsoft executives have followed a carefully crafted script to woo Yahoo's board and management," writes the Wall Street Journal. "Yahoo's directors must follow closely a long-established script," a story on CNNMoney informs us. The notion of a script — understood by elite reporters and insiders who graciously expatiate it to their eager readers — is appealing. But as the writers' strike proved to us, we live in an unscripted era. The Microsoft-Yahoo deal is M&A in the age of reality TV.
Just two months after filing for an IPO, Danger, Inc. has been purchased by Microsoft for an undisclosed amount. Microsoft says the acquisition is part of a larger push into the low-end consumer smartphone market, where Danger was dominant until the advent of the iPhone. Danger, maker of the popular Sidekick, controls every phase of the user experience. All ringtones, applications and Internet traffic on its phones flow through Danger's servers. Sounds like something Microsoft can embrace. (Photo by AP/Lucas Jackson)
Goldman Sachs and Lehman Brothers advisers have CEO Jerry Yang and the Yahoo board of directors talking a merger with AOL, according to the Times of London. Last week, new Time Warner CEO Jeff Bewkes announced plans to formally split AOL from its ISP business, in a move that he said would "increase AOL's strategic options." The Times also reports Yang and company plan to test interest from Disney.
"Not all the advertisers we've talked to are happy about this," AdAge reporter Abbey Klaassen told Microsoft VP Yusuf Mehdi in an interview published today. Klaassen said these advertisers don't like the idea of one fewer option on the market. Here's how Mehdi tried to sell a Microsoft-Yahoo merger to the moneybags on Madison Avenue.
Steve Berkowitz is out as senior vice president of Microsoft's Online Services Group, BoomTown reports. In April 2006, Microsoft lured Berkowitz away from Ask.com, where he was CEO, and charged him with running MSN's ad sales, marketing, and business development. Yep, all the stuff that's failed bad enough that Microsoft now wants to pay $44.6 billion for Yahoo. BoomTown said sources couldn't confirm whether Berkowitz is out of the company or just out his job.
In this "internal" memo — actually Yahoo CEO Jerry Yang's latest filing with the SEC — Yang reveals that Yahoo's board unanimously rejected Microsoft's offer. He writes that with access to 500 million Internet users, Yahoo's brand, financial strength and technology show the company is "on the move." Presumably, he means in a different direction than the one Yahoo's share price has gone for the the last four years. Here's the whole memo.
Yahoo issued a press release this morning to confirm the weekend's news. Yang and the board think Microsoft's offer is too low. So is Microsoft willing to borrow more money to raise its offer and make the Yahoo deal happen? "Without a question," Microsoft VP Yusuf Mehdi told AdAge in an interview published today.
Belief is a powerful thing in this valley of hopes and dreams. Yahoo's board is set to reject Microsoft's offer to buy the company at $31 a share. Instead, Jerry Yang and Yahoo's other directors are seeking at least $40 a share, or nearly $60 billion — a price Microsoft may not be willing to pay. This is incredibly gutsy. It may wreck the hopes of a deal. And yet it may save the company.
It's puzzling why big companies like Microsoft hire expensive investment bankers to advise them on deals, when clever journalists like BusinessWeek's Arik Hesseldahl are willing to tell them what to do — for free! Of course, Hesseldahl takes three pages to get to the point on what Microsoft should do with Yahoo. Why do bankers get paid so much? Because they don't waste a busy CEO's time. Here's a readable version of Hesseldahl's memo.
Yahoo's board of directors will speak today, but over the phone. An in-person board meeting won't take place until next Wednesday, BoomTown reports. Meanwhile, thanks to Silicon Alley Insider's handy calculator, I know how much the board's delaying tactics have cost Yahoo shareholders: Some $2.8 billion.
Pop quiz: What's the most popular way to store photos in the world? If your answer was Flickr, you're wrong. It's Microsoft Windows, duh. Commentards are cracking jokes about "Microsoft Flickr 2011 Home Premium Edition." Well, let's talk about Flickr. Flickr has a hardcore base of users prone to complain about anything and everything, and the Microsoft deal is no exception. But Flickr's biggest competitor isn't Shutterfly or Smugmug or Snapfish; it's indifference. Most photos lie unseen and unloved on PC hard drives, if the shooter has even bothered to upload them. Think about Flickr being built into the next version of Windows. That would actually be a reason to upgrade. (Photo by dr_lopbot)
On Madison Avenue, people still talk about the disgraceful way Wenda Harris Millard was ushered out of Yahoo. The short version: Millard called Sue Decker, Yahoo's president, to turn down her offer of a job running international sales and let her know she was taking a top job at Martha Stewart instead. Decker reacted furiously, locking Millard out of her office and issuing a press release which made it sound like Millard had been fired. Now Millard is having the last laugh, as it's Decker's job which looks to be on the line. At an advertising conference in New York this week, Millard explained how Yahoo went astray by favoring technology over salesmanship, leaving the door open for Microsoft:
"Yahoo, the brand, will live," Microsoft CEO Steve Ballmer told BusinessWeek in recent interview. He also said, "The ability to do more, that's fantastic." And that's it. It's not much of interview, but that one subordinate clause — "the brand" — is probably enough to scare the bejeezus out of any Yahoo. No wonder senior executives are scrambling to find a deal which saves their jobs.
Microsoft's offer to buy Yahoo started at $31 per share. But because the deal is a half-stock, half-cash offer, it value has declined along with Microsoft's own share price. Silicon Alley Insider has a calculator to keep you updated as to exactly how much Microsoft's offer is worth, right now. [SAI]
Yesterday, First Round Capital VC Jeff Kopelman posted to his blog what he thought was clear evidence that Yahoo employees are planning a mass exodus. Through his venture firm, he bought Facebook ads with the message "Leaving Yahoo?" in November and again this week after Microsoft announced its intentions to buy the company. Clickthrough rates on the ads were up 300 percent this time over last, Kopelman said. What Kopelman didn't say was that this time the ads included Facebook profile pictures of current Yahoo employees. The pictures appeared because the Yahoos had joined First Round Capital's Facebook group — not because they'd left the company.
The Yahoo board of directors will meet today to finally determine whether or not to accept Microsoft's acquisition bid, according to TechCrunch. Outside advisors tell Yahoo's board to take the $44.6 billion offer. Yahoo senior executives — desperate to save their jobs — are begging the board not to.
