Yahoo Sued for Spurning Microsoft 284
tuxgeek writes "In the continuing saga of Yahoo resisting a Microsoft buy out, Yahoo is now being sued by its shareholders. 'Two Detroit pension funds have sued Yahoo Inc. and its board of directors, saying they breached their duties to shareholders in trying to thwart a takeover by Microsoft Corp. The lawsuit was filed in Delaware Chancery Court on Thursday by lawyers representing Detroit's police and fire retirement system and general retirement system, as well as 'all other similarly situated public shareholders.'"
Beholden to short term investors (Score:5, Insightful)
Re:Wow (Score:4, Insightful)
the managers may feel that they want to take Yahoo in a certain direction not dictated by microsoft, and that is all well and good, but it sounds less noble when you realize that the money they are using to do that is not theirs. It is the money of the tens of thousands of investors in their company that has allowed them to do this. No one is a hero here.
Re:wait a minute? (Score:3, Insightful)
If you want a sure thing, get a Treasury Bond and STFU.
Re:Wow (Score:1, Insightful)
Re:Beholden to short term investors (Score:4, Insightful)
But like you said the pension funds don't seem to be interested in long-term growth - they'll most likely pull out the money right after the companies have merged (it's not that they hold the stock much longer in case they don't merge). I don't like to judge this behavior. Pension funds are obligated to do whatever is necessary to maximize the profit of their investment. One might argue that this is very much the same case if you hold stock as an individual, but I'd argue that there is less freedom of choice if you manage the money of maybe hundreds or thousands of individuals.
Re:Wow (Score:3, Insightful)
Re:wait a minute? (Score:2, Insightful)
about as far from a fucking gamble as you can get dumbass.
Re:this might be interesting (Score:4, Insightful)
But....
I don't think that is the whole story. It isn't an insider affair, IMO. What it might be is a hedge against volatility. The only thing better than knowing if your stock will suddenly increase in value is knowing WHEN your stock will suddenly increase in value. If you can force the issue via legal action (iffy) then you can justify the purchase of more shares on the notion that your lawsuit will result in a much higher share price ue to a buyout. So. Large firm sees buyout rebuffed. Large firm sees a chance to reap known profits via legal action. Large firm sues.
I am not suggesting that these firms bought Yahoo in order to bring this lawsuit. What I am suggesting was that it seemed to be a convenient way around future price fluctuations--not an insider job.
DUH . . . This was coming as soon as YHOO said no (Score:2, Insightful)
Just to avoid the costs of the suit they can get a nice settlement for themselves (aka nuisance value) - and when the deal is as big as this that will be a lot of cash.
Beyond that, they might even be able to win it. Then the lawyers are looking at tens of millions AT LEAST. In the end, the shareholders won't really get anything, but YHOO will pay the fees.
Re:I'd be angry, too. (Score:3, Insightful)
"the stock market is simply legalized gambling"
False. The stock market is very *complicated* legalized gambling; there's not much simple about it. And it's only gambling in the same sense as every purchase is. EVERY purchase. Even a bag of chips from the grocery store. It's just got a different risk/reward profile.
The board of directors is chosen to represent the interests of the shareholders. Failure to represent the shareholders is a dereliction in the same sense that a contractor's failure to fix your gas leak, or an auto-mechanic's failure to fix your brakes, or your grocer's failure to accurately represent the "best before" date on your milk, or your employer's failure to pay your wages is a dereliction; all can come to lawsuit.
How investors kill a product (Score:2, Insightful)
This is one of the things wrong with wall street.. Build a product get people to invest.. Good they invested... quick pull it all out....
Hardly just a childish rivalry (Score:5, Insightful)
There's *so* much more going on here than that.
The most important thing is that Microsoft would destroy the company as it's known now. They'll mess with the back-end technology, swapping in their own, they'll merge some stuff with Windows Live and vice versa, they'll kill anything that's a threat to their desktop hold or they'll limit its prime interoperability to Microsoft products. Features will become dependent on IE and Silverlight.
In short, its goals will go from being a premiere portal and online services company to being anything that can maintain and enhance Microsoft's dominance. Lots of people who work there would rather work for the former than the later (and it *will* hemorrhage key employees if they're bought for that reason). And some of them even have a damn good argument that the company is worth more long term if it serves the former goal. It's not unlikely they'll achieve it, and especially as the desktop becomes less and less relevant, I think they have the potential to outdo Microsoft in terms of their worth.
Short term, of course, you can get quite a good cash-out on the offer MS made... especially compared to anything else available while the markets in general are struggling. And lots of suits and shareholders don't know how to think any other way than short-term gains.
Yeah, like Bungie (Score:5, Insightful)
Re:Wow (Score:2, Insightful)
How in the WORLD does that go through your head?
Please explain to me in great detail how stocks are zero sum. Then explain why I care, assuming that I'm not the person losing the money in the future. THEN explain average stock market growth (including depressions) in the us of about 6-7% for the last 130 years. Then explain how lower risk investments have an obvious return of >0% (bonds, savings accounts).
fucking amaze me.
Re:How investors kill a product (Score:3, Insightful)
Re:Wow (Score:3, Insightful)
sure. Markets fluctuate. Countries default on debt. Banks fail. shit happens. When you invest in ANY investment it is always prudent to look at the kind of risk you are willing to accept and the timeline you have to invest. If you need the money on hand 10 years, it might be better to not invest in a group of stocks. If you don't need it for a while and you have a medium tolerance for risk, stocks are a GREAT investment. So good that you would be stupid to ignore them.
Look. The only investment with 0 risk offers a negative rate of return. You suffer little to no risk by putting your money in your mattress. It just will lose value due to inflation. If that is your investment strategy because of the undue risk of other investments, I'm glad I'm not your kids or grandkids.
not symbolism (Score:2, Insightful)
If Yahoo were in serious trouble of, not just ceasing to grow, not just losing some market share in a market that is close to saturated, but of suddenly imploding, it might be important to look at the value the buyer can bring to the table.
But even when we look at the value Microsoft is bringing to the deal, it's in "unspecified" changes to Yahoo's business plan, operating structure, etc. In fact, given Microsoft's history and Yahoo's history and Microsoft's current attitude, this deal cannot be seen as doing anything other than violence to Yahoo.
And that leaves the question of whether a company still under court scrutiny (and theoretical punishment) for monopoly practices should even be looking at expanding in a new market.
Gates, Ballmer, and that bunch have gone powerblind.
Re:Beholden to short term investors (Score:5, Insightful)
I would add that MS would be buying up a competitor, and it's all too common for companies to buy competitors to leave them to wither and then close them down after they sucked up all valuable assets and clients.
As an individual shareholder I'd be primarily worried about that scenario, and I wonder why a fund forgets about it.
I would also add that suing your own company brings bad publicity to it- are they interested in their company well being or what?
Sorry but conspiracy theorists linking such a move to MS pulling strings have the most reasonable scenario here.
Oh by the way, dear real shareholders: the minute you sell to MS I'm canceling my subscription to yahoo. I do not trust MS to do something different with yahoo than what they did to hotmail. Besides, since I am a linux user and hobby dev for OSS software, you'd basically sell my data to the enemy. Double plus ungood.
Re:wait a minute? (Score:4, Insightful)
Gambling doesn't require a house but most of the games we think of do. The reason people aren't usually out there making money on the craps circuit isn't because of the ups and downs. It is because the odds in craps are DESIGNED so that you will never win, on average. The expected value of one dollar played on a craps table over the long run is about 92 cents. In the end, you are losing money. On the contrary, there are games of chance that people do make a living on. Very famously, people have made a living on poker. In this case, the house takes a cut, but it doesn't impact the odds of winning or make it so that the expected value of a dollar in over the long run is less than a dollar out.
I will continue to say that it is ignorant of you to compare gambling to equity finance. Do you understand what portfolio diversification is? It is almost PRECISELY investing in the average stock in order to limit damage to the portfolio due to volatility. You find two investments (or more, really) that will respond differently to a single market change, and you invest a little in both. the ma expected return is lowered, but the variance is lowered even more. It's a fundamental tenet of smart finance and it is nothing like gambling at all.
Are there nonzero risks in the stock market? Sure. If you want to define gambling as taking risks beyond your control with your money than treasury bills are gambling. You said before that the US has never defaulted on its explicit debt and you are correct, but the risk is still there. If you want a risk free investment strategy, take your money and put it in a checking account. It is protected by the FDIC, some even offer a small rate of return, and there is no risk. Of course, you will barely beat inflation and you will forgo 100,000's of dollars worth in lost compounded interest, but it's your money.
I'm over forty, but I'm young enough that (Score:2, Insightful)
Seriously, I'm wondering if the whole financial world has fallen into the hands of a bunch of maniacs who are so high on _something_ that they don't think they are going to be around next year, not to mention ten or twenty years from now.
Re:Wow (Score:3, Insightful)
Risk.
You said it and you likely know what it means. *Any* amount of risk is a gamble.
Bonds, on the other hand are much less of a risk and are a contract to repay. Municipal bonds are good. I do appreciate what the intent of investment strategies are, but at the end of the day, the core of it is risk. Even if one in ten thousand risks taken goes bad, it's still risk. I just don't see how people can fail to wrap their heads around the concept.
The whole shareholders suing the board of directors has little chance of success and if you ask me (and I know you're not) I'd say this was something started by Microsoft as a means to make any other company that fights back against their will to think twice before refusing their offer. They have a long history of buying other companies out. It usually turns out badly for the other companies. And it seems lately (at last!) people at all levels, from consumers to investors are finally having to face the facts about Microsoft; their practices, their successes, their failures, the road their following and where they are headed.
Microsoft is a dirty player and time and time again it has been shown where they have pulled some very ugly stunts in attempts to get their way. (Need examples? I hope not... but recently, trying to buy votes and manipulate the process surrounding the whole OOXML for ISO mess, the varieties of connections indicating Microsoft funding being behind the SCO lawsuits, and various other anti-competitive behaviors that have been documented in court and other legal documents over the past few years.)
Re:Beholden to short term investors (Score:3, Insightful)
Not saying it's right, just that the subsequent success of the deal is an irrelevance to the process of making a quick profit on the stockmarket.
Yahoo would vanish (Score:3, Insightful)
Re:Beholden to short term investors (Score:5, Insightful)
Yes, the logic is flawed, but it's your logic. It doesn't matter what sort of wealth Yahoo can generate long-term if they are owned by Microsoft because the current Yahoo shareholders will not be shareholders at that point. Basically the logic to the lawsuit goes like this:
Yahoo was trading around $19 a share, with little prospect of going up and a high likelihood that they will continue their slide.
Microsoft offered $31 a share for Yahoo.
Yahoo is unlikely to hit $31 a share in any situation other than a buyout offer.
Yahoo shopped around and played coy to see if they could get a comparable or better offer from anyone else, and they didn't.
Therefore, in order to maximize their investment a Yahoo shareholder should take the $31 offer and run.
After that, Yahoo is a wholly owned subsidiary of Microsoft and the current shareholders own none of it, so how much value Yahoo can generate at that point becomes irrelevant.
Now it's true that since the offer Yahoo's share price has jumped up to around $28 a share. But since Yahoo has done nothing to improve their outlook in the past month it's safe to assume that this jump is due to Microsoft's offer. If Yahoo were to ultimately reject the offer and Microsoft would back down, you'd probably see Yahoo's stock price drop to a level even lower than it was at the time the offer was made as many investors will probably write the company off as a lost cause.
At any rate, it's all proceeding according to plan. Yahoo will ultimately accept the offer, or they will face even more shareholder lawsuits. If they still refuse to sell they will most likely face the replacement of their board of directors with a group who are MS-friendly. As I said here [slashdot.org], it's the shareholders who have the final say on this deal, and they'll say yes.
Re:Beholden to short term investors (Score:2, Insightful)
Please keep in mind that Detroit is amazingly corrupt and generally ignorant
Yahoo has made a pretty clear declaration that they feel they are worth more than what Microsoft has offered. That's fare. And I don't think they are too out of line given the industry at the moment.
Detroit is a town made up of bungling fools, thugs, gangsters, and generally fellonious criminals who believe in entitlements and hand-outs and have no concept of self responsibility or accountability. Don't believe me, take a look at the recent activities of the Mayor, Police Chief, and countless others. Last year they lost 9 million dollars because they fired the police who where investigating the murder of a stripper at a Mayors Mansion party that for some reason, no one recalls ever happening. So, they have murder, drugs at the Mayors house, police who fire honest police to cover the mayor. And most recently, they covered up affairs in the Mayors office that would have come up in the trial and rather figured they could lie their way out of it.
Detroit is top of the list of loser villages in this country. Recognize it as that.
Maybe Yahoo should pay them off directly and allow them to cut and run.
not really news (Score:3, Insightful)
Re:Beholden to short term investors (Score:3, Insightful)
Re:Beholden to short term investors (Score:3, Insightful)
Conflict of interest (Score:2, Insightful)
Conflict of interest is the first possible reason which comes to mind.
Scratch the surface, and it might be found that those making or at least influencing the decision turn out to have very strong ties to MS.
It's common for MSFTers to try to dismissing criticism by calling the critics conspiracy theorists and other names. That's a form of flawed logic, called an ad hominem [csun.edu] fallacy. Name calling works in the forum of public opinion, but it does not change the underlying facts. In this case, there is a strong possibility of a conflict of interest, regardless of the names the messengers get called.
Re:Yeah, like Bungie (Score:1, Insightful)
Re:Killing the goose that lays the golden eggs (Score:3, Insightful)
typical investor mentality (Score:2, Insightful)
Re:Killing the goose that lays the golden eggs (Score:3, Insightful)
Probably they could, but the question is if they would. MS appears to be about the advancement of a group and an ideology as much if not more than running an actual business. Based on its demonstrated ideals and values, one could call that MS movement an anti-American political agenda. If it were about profit or technology then MS shareholders could sue over any number of failed initiatives like MS Bob or WinME or Win98. Or about failing to deliver security, performance or even touted features. WinFS has been used in advertising since W95.
Probably the biggest gripe that MS shareholders could have would be constantly treating design flaws and security problems as public relations problems. MS doesn't even do much of its own marketing and lobbying, that's outsourced to the experts. However, these experts do a good job at spinning the design and production failures back onto the customer.
Re:Beholden to short term investors (Score:3, Insightful)
Lovely, some short term investors would liek to crack open the golden goose and get allt he eggs now. Which may not be a bad idea (I can't imagine Yahoo!'s share price going up very significantly unless they have something very surprising in the works. If I was a shareholder I'd probably want to sue them too, but I'd feel dirty about it (but rolling around in money would probably cure that).
I think this lawsuit is wrong. If I were a Yahoo! stockholder and management had taken the offer I'd sue for breach of fiducial responsibility for not demanding a higher price.
FalconZimbra, Domino, Byarni, Groupwise (Score:5, Insightful)
Yep. With Zimbra, Kolab, and Citadel that makes six. However, the magazines and newspapers don't dare write a word about them, even if they would. In addition to being one of the last remaining advertisers, MS has fifth-columnists [groklaw.net] working against competition in many places. It's not a conspiracy, just greed and/or politics.
There fixed that for you. It's one aspect near the heart of the 10+ year anti-trust trial MS lost in 2004 [bbc.co.uk] and lost in appeal for in 2007 [arstechnica.com].
If Windows or any of the products worked with standards, then it would be possible to swap out components. One reason for the extreme suckitude is that the lock-in guarantees no competition. Old habits die hard and going way back, MS DOS 4 sucked rocks a market for DR-DOS which in turn caused MS-DOS 5 which unlike 4 was usable. Same for the Windows-Outlook-Exchange, except now there is lock-in to such an extent that businesses have to be quite serious about dropping MS and getting into functional products.
Re:Killing the goose that lays the golden eggs (Score:3, Insightful)
The reality is that the board is overstepping their boundaries and they are doing things that are not in the interest of the Yahoo shareholders.
BS! Now you're making things up. If I were a stockholder of Yahoo! and the board had taken MS's offer I may have sued them because in not demanding a higher price they would have shrugged off their fiducial responsibility to get as good a price as they could. As typically happens an acquirer usually raises their offer when the first offer fails.
FalconIf sincere.. (Score:2, Insightful)
Secondly, speculating that it is 'likely' that the pension fund shareholders are somehow part of the MS plan isn't slander, it's just speculation. I concur whether directly or indirectly, this plays into the plan well. Maybe MS didn't approach anyone specific, but it doesn't take much foresight to know such a superficially outrageous deal will either be accepted or outrage to the point of lawsuit some set of shareholders. I would wager MS did not approach a single shareholder, but I wouldn't be surprised if they fully expected a refusal to meet with litiguous action from enough of the shareholders.
As to burying work on BSD/PHP/Zimbra, It's an obvious conclusion. The difference with FrontPage and Visio was there were no MS products being threatened by it. FrontPage ties in with the IE strategy and Visio a logical complement for the Office offering. BSD work *obviously* is not in MS's remote interest to help out, as with PHP. BSD is a Windows competitor and PHP is too OS/http server indepedent for their tastes to bother when they have a host of things already. Similarly, Zimbra has nothing over Exchange MS wants. Zimbra allows independence from Windows on the server side and client side for any who implement it, but otherwise it doesn't offer that much different from Exchange. I would wager they would offer some special 'upgrade' deal to Zimbra commercial users to Exchange and then be done with it. BSD/PHP wouldn't die, but would suffer development issues. Zimbra given its nature would be killed outright.
I'm not saying MS was explicitly targeting BSD/PHP/Zimbra in its bid to fend off OS/language/Exchange competitors, it's clear the bid is a desperate move against Google. By the way, it comes off like an unhealthy obsession with Google on the part of MS leadership, more than a sound business decision. BSD/PHP/Zimbra are incidentals that demonstrate the sale should be blocked by regulatory agencies, but from MS's perspective, they are either not even on the business people's radar or are mere bonus afterthoughts. From a certain perspective, it may have been a wise thing to decline the initial outrageous bid, knowing it was high risk with respect to regulatory agencies, and then exploit the exposure to get a more likely, but less lucrative situation elswhere..
This is why our system is broke. (Score:2, Insightful)
No charge, I take cash! (Score:1, Insightful)
I could charge you with lunacy!
Unless you're a DA or a federal investigator, the only thing you'll be charging is some comic books to read in your mum's basement. Please try to stay on topic and debate and stop pretending to be the authorities here on
Be a good lad now. Off with you.