Ballmer Tells Yahoo! That Time Is Running Out

Craig · #1 (**permalink**) 04-06-2008, 02:36 PM

Steve Ballmer, CEO of Microsoft, yesterday wrote a pointed and frank letter to the board over at Yahoo! where he outlined that his patience is running out for serious negotiations to take place to discuss Microsoft's acquisition of Yahoo!. Basically, he tells Yahoo's board that they either accept the offer, or he is taking it directly to the shareholders in an attempt to oust Yahoo's board and replace them with another, more willing partner in the deal.

Quote:

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.

Microsoft is not f00king around...they want Yahoo!, and badly it seems. This is going to get interesting to say the least.

ech0 · #2 (**permalink**) 04-06-2008, 02:41 PM

I don't think they'll get that much gain if they acquire Yahoo! They're offering ALOT of money and I doubt they'd make that deficit back because of Yahoo! But its about expanding right?

Teck · #3 (**permalink**) 04-06-2008, 04:05 PM

wow... they are getting hardcore...

Now... I wouldnt have a problem with Google buying out Yahoo... hehe

CoffeeShark · #4 (**permalink**) 04-06-2008, 05:46 PM

Yahoo has less to offer to Google than it does to Microsoft.

Microsoft is overpaying, and Yahoo's board knows it. So do their stockholders.

Yahoo should be selling out like mofos.

Craig · #5 (**permalink**) 04-06-2008, 06:39 PM

I think they will...in the end, MS still has a shatload of cash and influence in the industry. Google is the only person they cannot strongarm...and they're buying Yahoo! in the hopes that someday they WILL be able to rough up Googleville

VincentVega · #6 (**permalink**) 04-06-2008, 07:38 PM

I never liked yahoo. Microsoft has huge capital and talented people out the ass. Why don't they just focus on building up LIVE? That's what the whole thing was for. It didn't get the market share they wanted.

So now why go after yahoo? They don't have nearly the search market share taht google does. Even Yahoo! + Live search don't come near google. You don't see M$ buying kernels for Windows 7 from other people. They should stick to what they're good at, in house development.

Tulkas · #7 (**permalink**) 04-06-2008, 09:58 PM

Perhaps you guys are not aware, but I believe yahoo bought a company that controls the majority of online advertising in most of asia.

This is probably what microsoft is after.

I'm pretty sure at least...

Edit: maybe I'm wrong, but it would still increase microsoft's online advertising...yahoo has a lot to offer, and it's one less major company microsoft will have to compete against

Teck · #8 (**permalink**) 04-06-2008, 10:32 PM

Quote:

Originally Posted by CoffeeShark

Yahoo has less to offer to Google than it does to Microsoft.

Microsoft is overpaying, and Yahoo's board knows it. So do their stockholders.

Yahoo should be selling out like mofos.

Your right, but Yahoo + Microsoft could one way compete with Google... I would have thought that if Google believed that such a thing was likely that they would have stepped in and bought Yahoo! out...

In the end I'm sure that Yahoo will merge into Microsoft soon...

Teck · #9 (**permalink**) 04-06-2008, 10:36 PM

Quote:

Originally Posted by CmdrTulkas

Perhaps you guys are not aware, but I believe yahoo bought a company that controls the majority of online advertising in most of asia.

I remember that...
Links:

Quote:

Originally Posted by Yahoo! Buys Advertising.com Jr. - A.K.A. BlueLithium

As predicted in our July 24 post, the online advertising company consolidation continues. Last night, Yahoo!, on the heals of its $850 million payout for the Right Media advertising exchange, pocketed BlueLithium for $300 million.

Blue Lithium is one of the larger ad networks behind giants like Advertising.com and ValueClick and specializes in behavioral targeting for direct response advertisers across the remnant inventory of larger sites.

Word is the $300 million deal valued BlueLithium at 4-5 times revenue. That would put the company is a revenue range of $60-75 million, although alarm:clock reports 2006 revenue at $100 million. Back in April word was the company was on an IPO track.

It is refreshing to see Yahoo! take action to build network and exchange businesses, especially as portal ad buys continue to come under pricing and performance pressure from network and exchange businesses. CEO and Chairman Gurbaksh Chahal took the behavioral black box idea from Advertising.com, hired 120 people and created scale.

Themes we see in the Yahoo! – BlueLithium transaction and our take:

1. Behavioral targeting. (ContextWeb = Contextual)
...

2. Remnant inventory and DR advertisers. (ContextWeb = Premium Inventory, Brand Advertisers)
...

3. Large sites. (ContextWeb = Large and small, quality content sites)
...

CoffeeShark · #10 (**permalink**) 04-06-2008, 10:49 PM

Quote:

Originally Posted by VincentVega

I never liked yahoo. Microsoft has huge capital and talented people out the ass. Why don't they just focus on building up LIVE? That's what the whole thing was for. It didn't get the market share they wanted.

So now why go after yahoo? They don't have nearly the search market share taht google does. Even Yahoo! + Live search don't come near google. You don't see M$ buying kernels for Windows 7 from other people. They should stick to what they're good at, in house development.

They are building up Live, it is part of the future of the MS Cloud. Live will be the single sign-on for everything in the cloud, including Windows itself. It will be, in essence, the internet Sharepoint for everything - social, business, etc.

Live's not going away.