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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.'"
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Yahoo Sued for Spurning Microsoft

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  • by seifried ( 12921 ) on Saturday February 23, 2008 @02:48AM (#22524974) Homepage
    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).
    • by LiENUS ( 207736 ) <slashdot&vetmanage,com> on Saturday February 23, 2008 @03:02AM (#22525026) Homepage
      It's bad that they're doing this. I would suspect that Yahoo! has a good reason for refusing the takeover attempt (possibly trying to prop the companies financials up to leverage a higher bidfrom Microsoft). In suing the board members they stand to earn what they would have earned should Microsoft have succeeded in the bid. However if they laid and waited patiently there would be a good chance of Microsoft offering a higher bid. Theres also the possibility of them getting no future bids from Microsoft at all, however I believe the potential for rewards far outweigh the risks. Microsoft wants Yahoo! for a reason and it's not just that Yahoo! is a search company. It's the whole package the search, the messenger and
      • by jez9999 ( 618189 ) on Saturday February 23, 2008 @04:58AM (#22525454) Homepage Journal
        It's the whole package the search, the messenger and

        ... looks like it's not the whole package after all.
      • by SgtChaireBourne ( 457691 ) on Saturday February 23, 2008 @11:54AM (#22526996) Homepage

        It's more than a case of killing the goose that lays the golden eggs. Gatesists made clear that they would not take "no" for an answer [searchenginewatch.com] and would continue their plans against Yahoo one way or another. These so-called pension funds are likely part of that approach and just softening up Yahoo, while setting the media against the board in prep for its ousting. One point which is unlikely to ever make many mainstream news sites or forums, even open source ones like Slashdot, is that Microsoftologians are likely to try to replace Yahoo's board [vnunet.com]. Poisoning the press against the board is a first step.

        Later, preventing the Yahoo employees from jumping off with golden parachutes might be a repeat of what MS did to Borland [news.com], except against key open source projects. Yahoo contributes in a big way to many open source projects, PHP and BSD being two Very Important (tm) ones. Getting Yahoo would crush a competitor to the spectacularly failed MSN. So without the 'chutes many would have to stay and MS could simply have them sweeping floors or making coffee.

        There is also the question of Zimbra [zimbra.com], which was recently purchased by Yahoo. MS Exchange is about the only thing that ties Windows into either/both the desktop and the server room. Zimbra is one of the few competitors to MS Exchange, besides Kolab [kolab.org] and Citadel [citadel.org], none of which get much press. Quite a few shops would stop or drastically decrease use of MS products without MS Exchange. Zimbra is currently not GPL. Buying Yahoo would allow Zimbra to be put on ice as MS did with FoxPro [foxprohistory.org]

        Advertising, aka tracking users, is another problem. MS execs want into advertising. Controlling the adservers allows a chance, finally, at income. It also allows access to be tweaked. Ads get served up first before content and delay, especially at the beginning, drastically reduces viewing time and thus mindshare. The first moments are crucial and studies show that the cap is set at 20s. A delay, on purpose or by accident, of even a fifth of a second x one million page views is hundreds of lost viewing hours. So the potential for severe abuse is there in addition to the technical problems MS services and servers are known for.

        At the bottom is also a question of money. Many articles somehow neglect that much of the initial offer was funny-money, aka MSFT stock, which MS prints on demand. The noise and smoke about the attempted take over does well at drawing attention away from what must be some rather 'creative' book keeping there in Redmond.

        There are plenty more possible reasons to go after Yahoo's board. Having sockpuppets poison the press makes sense for many of them.

        • Re: (Score:3, Informative)

          by SerpentMage ( 13390 )
          What a pile of BS you just wrote.

          >Many articles somehow neglect that much of the initial offer was funny-money, aka MSFT stock, which MS prints on demand.

          You got proof of this? If not you know I could charge you with a felony! The SEC does not take kind to this type of talk because it is called talking up or down a stock. The real reality is that Microsoft offered a deal where the takeover would be up 50% cash, and 50% Microsoft stock. Secondly nowhere has Microsoft said that the stock would be the resul
          • Re: (Score:3, Insightful)

            by Sir Homer ( 549339 )
            Lunacy of the paranoid? Microsoft is a business, not a charity, or a good Samaritan. They're objective to maximize profits and eliminate competition. If you believe anything else, you are a fool.
          • Re: (Score:3, Interesting)

            Quite a few shops would stop or drastically decrease use of MS products without MS Exchange. Zimbra is currently not GPL. Buying Yahoo would allow Zimbra to be put on ice as MS did with FoxPro

            Again you got proof? You are making allegations because MS did something with one product. I could prove you wrong when Microsoft takes over companies with two notable examples being FrontPage and Visio. Both of these products were purchased and they were anything but buried in the Microsoft hierarchy. When I read your post I read the complete lunacy of the paranoid.

            Presumably you can tell me what Microsoft products were canned in favour of the newly acquired FrontPage and Visio as would have to happe

          • Re: (Score:3, Insightful)

            by falconwolf ( 725481 )

            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.

            Falcon

    • Re: (Score:2, Offtopic)

      Wheeeee, I won $50 on a bet that this would happen within 30 days of the offer, because Yahoo would turn the offer down.
    • by nbert ( 785663 ) on Saturday February 23, 2008 @03:22AM (#22525112) Homepage Journal
      As an individual shareholder I probably would not sue, at least if I'm interested in long-term profit. I personally don't see how Yahoo can generate more wealth if they belong to a company which has managed to gain around 6% market share by investing billions. The logic behind it seems to be very flawed.

      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: (Score:3, Interesting)

        by umghhh ( 965931 )
        It is funny to look at it from perspective especially historical. I admit I may be mistaken here but I was always convinced that the purpose of shares existing in the first place was to have a possibility of shared ownership for many indihviduals. This is not really the case anymore and it is mostly used for pure speculative purposes that hardly have anything to do with reality of anyone company making profits or not. OTOH this is the only remaining option for owners to get managers to do what they want.
        So
        • Re: (Score:2, Interesting)

          by hitmark ( 640295 )
          iirc shares are a legal variant of a scam...

          some SOB was selling parts of a company or property in southeren USA to different people around the nation. over time it was found that he had sold of more then 100% of the company or property...

          thing is that the US government found it to be a nice way to raise cash if it was controlled somehow, so they created laws for how this was to work legally. over time, it spread around the planet...
        • Re: (Score:3, Interesting)

          by nbert ( 785663 )

          This is not really the case anymore and it is mostly used for pure speculative purposes that hardly have anything to do with reality of anyone company making profits or not.

          Many countries have or had a "speculation tax" to counter this development. In Germany for example you have to pay income tax if you sell shares which you held for less than one year. Of course this isn't a very practical measure anymore because it only affects people who pay taxes within the country (opposed to foreign investors, who

          • Re: (Score:3, Insightful)

            by timeOday ( 582209 )

            any profits from selling shares is basically tax free, thereby turning a progressive tax system upside-down.
            The US is similar. The tax rate on capital gains is on average less than the tax on earned income. The best way to get money is to already be rich.
        • I admit I may be mistaken here but I was always convinced that the purpose of shares existing in the first place was to have a possibility of shared ownership for many indihviduals.

          It's understandable but you're wrong. The original purpose of issuing shares in a corporation, and the purpose of the corporation itself, was to limit liability. Corporate Charters were first issued to limit the liability of investors to just what they invested in the corporation. The first two corporate charters were grant

      • by marcello_dl ( 667940 ) on Saturday February 23, 2008 @05:17AM (#22525518) Homepage Journal
        > As an individual shareholder I probably would not sue, at least if I'm interested in long-term profit. I personally don't see how Yahoo can generate more wealth if they belong to a company which has managed to gain around 6% market share by investing billions. The logic behind it seems to be very flawed.

        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: (Score:3, Insightful)

          by ewrong ( 1053160 )
          But once they have sold their shares to Microsoft, by default, they wouldn't own shares in Yahoo anymore so why would they care what happened next?

          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.
      • by ocbwilg ( 259828 ) on Saturday February 23, 2008 @09:23AM (#22526270)
        As an individual shareholder I probably would not sue, at least if I'm interested in long-term profit. I personally don't see how Yahoo can generate more wealth if they belong to a company which has managed to gain around 6% market share by investing billions. The logic behind it seems to be very flawed.

        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.
    • by JordanL ( 886154 )
      How long until someone trys to say that this is really a front operation from Microsoft?
    • by Kohath ( 38547 ) on Saturday February 23, 2008 @06:37AM (#22525776)
      No. Shareholder lawsuits are not about investors. Shareholder lawsuits are about lawyers.

      Shareholder lawsuits are guaranteed to occur any time a company does (or declines to do) any significant action that might affect the price of the stock. They are not an event. They are not newsworthy except as an indication of our broken legal system.
    • Re: (Score:3, Insightful)

      by griffjon ( 14945 )
      You'd only be rolling around if you sold your shares immediately afterwards. Yahoo's been gaining ground by playing nice with open source and open standards; not something I imagine MS will continue to do. Short term profit? Yes. Long term prospects? Well, I hope you sold your shares for that short-term bump.
    • Re: (Score:3, Insightful)

      by falconwolf ( 725481 )

      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 breac

  • by Protonk ( 599901 ) on Saturday February 23, 2008 @02:50AM (#22524980) Homepage
    IANAL.

    My take is that shareholder lawsuits are never a given in this country. There is a good possiblity that Yahoo will just show in court that their managerial view of the long view showed greater long term shareholder value in avoiding the merger. there is a good possibility that the suit might be dismissed on face. However, this doesn't always happen. If these investors are large enough, or find other plaintiffs who are, the mere public pressure of the suit could pressure the Yahoo board to do a few possible things:

    1. Make a deal with microsoft to put it up to a vote of shareholders.

    2. Just go ahead with the deal anyways.

    I can't remember the last time a lawsuit like this went through off the top of my head. But I know that the record on them is not completely one-sided. I'll do some digging and be back
    • by MistaE ( 776169 ) on Saturday February 23, 2008 @03:09AM (#22525062) Homepage
      Well, IAALS, and I'm pretty damn sure this will not pass muster.

      First off, like all corporations, Yahoo is incorporated in Delaware, which is very corporation friendly (hence the proliferation of most companies incorporating there, regardless.

      Second of all, courts will normally give the board of directors the initial benefit of the doubt by utilizing something called the Business Judgment Rule (it's on wikipedia), which basically says that the courts will very rarely second-guess the actions of the board providing that the actions taken were 1. In good faith. 2. Done with the minimal care that an ordinary person in the board's shoes would have done and 3. Done with a reasonable belief that it was in the best interest of the company.

      In other words, short term investors simply being pissed off for not making money is not a good enough reason to bring this suit passed the initial phase.

      Finally I know I'm probably wrong since I didn't get a good grade in business associations, but real law folk feel free to correct if needed.
      • by Protonk ( 599901 )
        IAALS.... I am a legal secretary?

        Yeah, I'm tooling around wikipedia now. I suspected that there wasn't going to be too much coming from this. Like I said in the post above, it might just be the public pressure that influences people (though the number of shareholders 'pledged' is low in percentage terms).
      • Re: (Score:3, Interesting)

        by metlin ( 258108 )
        I'm not a lawyer, but I am fairly interested in finance and business, so let me offer my two cents.

        If Yahoo can effectively prove that the 62% premium offered by Microsoft undervalues the company, then they are on good ground. And indeed, in the past 52 weeks, they have been over that, so that is in their favor. In fact, right now they are trading fairly high post-Microsoft offer, which is also a good thing for them.

        Now, the problem may be with this statement that one of the pension funds made:

        "The Yahoo bo

      • IANAL, but I thought the exact same thing. It's pretty easy especially when its legit, that they can prove that this is a sound business decision. Hell I know how easy it is for illegit business decisions to call it a sound business decision. I don't know if this would solidify the board of directors further (from being kicked out at the end of the year) but I would not doubt that if all things are traced, that MS is behind this. Remember, they own shares, they could have incited this themselves. Meanwhile,
      • by OakLEE ( 91103 ) on Saturday February 23, 2008 @03:52AM (#22525222)
        Regular Business Judgment Rule (BJR) does not apply in hostile takeovers. In these instances the Enhanced Scrutiny Standard [findlaw.com] or Unocal Test applies.

        Under this standard the Corporation's Board of directors is presumed self-interested, and must show (1) reasonable grounds for believing the taker over is dangerous to corporate policy and effectiveness, and (2) that their defense against the takeover is reasonable in proportion to the threat posed. Only if these two things are shown will the BJR be applied.

        While it is definitely harder to satisfy than the BJR, I still think Yahoo can make some credible arguments to satisfy the Enhanced Scrutiny Standard, especially with respect to how Yahoo would fit within the greater Microsoft corporate structure.

        However, what's more interesting is whether Yahoo's comments about wanting a $40 per share price constitutes an attempt by the board to actively sell the corporation. If the that's the case, the Board has effectivley put itself in an situation where it has a duty to get the best price possible for its shareholders and act in good faith with respect to obtaining that price. This the so called Revlon Rule.

        Given the available information, it's arguably clear that $40 per share is just a pipe dream, especially since Microsoft is the only bidder. Yahoo's Board, by rejecting Microsoft's offer and countering with an unreasonable offer is arguably acting in bad faith, especially if the $40 offer is just a ploy and not a real negotiating strategy. Given that Yahoo is also attempting to entrench their employees [informationweek.com], their overall course of conduct does not appear to be proper and in the interest of maximizing shareholder value for a company that is essentially putting itself up for auction.

        In sum, Yahoo's board is going to argue for enhanced scrutiny to apply, while the plaintiffs will be arguing for Revlon to apply, and both probably have good arguments as to the matter. It'll be interesting to see how the court draws the line on this one.
        • Re: (Score:3, Interesting)

          by khallow ( 566160 )
          Another thing to keep in mind is that we don't know whether the Microsoft offer is sincere. It's very possible that Microsoft's offer is spurious and was extended only to cause the kind of conflicts that we are seeing. Still poison pills aren't the sort of activity that increase shareholder value, I must agree that Yahoo seems in the wrong here.
        • Re: (Score:3, Interesting)

          by azrider ( 918631 )

          Given the available information, it's arguably clear that $40 per share is just a pipe dream

          According to some news reports, $40 per share was what was on the table when MS tried this last year. If that is the case, this is not a pipe dream or ploy. This is what MS was willing to pay at that time. The board can argue that this is a legitimate counter, without actively courting another suitor.

          Since this was not a purchase that Yahoo was looking for, "maximizing shareholder value" requires that they look

      • Since when have pension funds been considered short term investors?
    • by Z00L00K ( 682162 )
      Wouldn't the lawsuit be counter-productive and trigger a drop in market share price? Even if it's short-term the funds may actually gain by buying shares then and even if the lawsuit is dismissed they have made a gain?

      Seems to be some kind of inside affair tweak in the public.

      • by Protonk ( 599901 ) on Saturday February 23, 2008 @03:41AM (#22525174) Homepage
        No, and here's why. The idea isn't that the price is a problem, although it might be for some investors. They feel that any takeover bid from microsoft might be worth more than their stock is liable to be in the near future. They also feel that there are two possible outcomes for their suit. If it is a threat, Yahoo will cave to the deal and they will get their desired price. If it isn't a threat, the markets will not regard it as such and their stock price will not go down.

        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.
    • My take is that shareholder lawsuits are never a given in this country.

      I'm not very involved in issues related to high finance, but this strikes me as similar to when SuperValu [wikipedia.org] tried to buy out Boise, ID based Albertsons [wikipedia.org] LLC, a group of share holders thought they had gotten an unfair offer the board had accepted (yes kind of opposite of the issue at hand), however if memory servers the lawsuit didn't succeed in preventing the buyout. Even with a groundswell of local support (including Idaho based investors) wishing to keep the company instate and/or increase the gain to share

  • by skogs ( 628589 )
    Greed. Always astounds me. You'd think eventually I'd just expect everybody to be greedy and the world to implode because of it.
    • by EEPROMS ( 889169 )
      Greed is one thing but to short change someone's retirement funds for symbolism is stupid.
      • If these funds have all their money tied up in yahoo stock they deserve the hit for being stupid.
        • Re: (Score:3, Insightful)

          by timmarhy ( 659436 )
          you mean the fund managers. unfortunately nothing will happen to them it's people retirments that will be hurt and these assholes will roll off into the sunset in their porsches, laughing.
      • Re:Wow (Score:4, Interesting)

        by skogs ( 628589 ) on Saturday February 23, 2008 @03:18AM (#22525092) Journal
        There is no retirement fund in the world that should be invested in Yahoo. Retirement people...when you are nearing retirement age you want to have little to no risk. Nobody will be losing any money in their golden years because of this except the idiots that put the money there in the first place.

        This is more likely a long term outlook 'retirement fund'...a pair of funds that right now are in their 'high risk' or 'moderate risk' spans of time. The folks putting in to these funds right now should be in their 20's to 40's. A small hiccup now is not going to be a major factor 30+ years from now...these idiots are just trying to sue their mistakes away because they've already made too many poor investments.
        • I'd say if you're running a big enough pension plan, individual stocks are definitely on the table.
        • Re: (Score:3, Informative)

          by OakLEE ( 91103 )

          There is no retirement fund in the world that should be invested in Yahoo.

          Pension funds have lots of constituents at differing points in their life. They have to pay out money to pensioners who have already retired, and they have to make sure there is enough money to pay out those people who will be retiring 5, 10 or 20 years from now. Thus they do have to worry about growing their funds size, which makes growth companies like Yahoo worthwhile investments. While I agree with you that Yahoo itself is a r

        • What about my retirement fund? I'm 21 and I'm willing to accept some moderate risk at this point in the game. Retirement funds aren't all started when you're 40. I would hope that the firefighters and police officers who are just coming out of the academy would be doing the same since like you said this would only be a minor hiccup.
      • Gambling vs Investment:

        What is stupid to me is how people continue and persist in functionally deny what "investing" in the stock market is. It's GAMBLING. It always has been and always will be. I have to wonder if anyone ever sued a casino and won? "The blackjack dealer should have told me not to double down!" Markets rise and fall and they even crash. They fluctuate.

        There are no guarantees that any investment will pay off, especially in short terms... or even in long terms... just ask SCO investors!
        • Re: (Score:3, Insightful)

          by Protonk ( 599901 )
          It seems stupid and ignorant to me that people who don't understand something can see fit to pass judgment on it. SO what exactly qualifies you to make this blanket pronouncement that gambling is the same thing as investing in the stock market? It it your feeling that the absence of a sure thing equals 100% risk? that is what it sounds like.

          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
          • Re: (Score:3, Insightful)

            by erroneus ( 253617 )
            There's only one word that has to be applied that blows your whole response away:

            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
      • not symbolism (Score:2, Insightful)

        by reiisi ( 1211052 )
        This is war.

        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
    • Re:Wow (Score:4, Insightful)

      by Protonk ( 599901 ) on Saturday February 23, 2008 @03:07AM (#22525054) Homepage
      Everyone is greedy, by and large. Get over it. Most of us are. In the long run, both sides are about greed. Yahoo is (presumably) makign the argument that shareholder value will be hurt by the merger and these guys are making the value that it will be hurt by avoiding the takeover. Both sides are greedy, fundamentally.

      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.

    • You think you can save the world by giving away MY money? Guess it's a good thing we got generous folks like you around...
  • If I were a Yahoo shareholder, I'd be excited to be able to convert that into Microsoft stock. To have someone deny me that chance based on a childish rivalry would really upset me.
    • by weston ( 16146 ) <westonsd@@@canncentral...org> on Saturday February 23, 2008 @04:17AM (#22525308) Homepage
      To have someone deny me that chance based on a childish rivalry would really upset me.

      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.

      • by OakLEE ( 91103 ) on Saturday February 23, 2008 @09:07AM (#22526210)
        Yahoo's brand name is probably second only to Google on the internet, and if they would properly make use of it, they could probably top Microsoft in market cap. However, that said, Jerry Yang, and the last two CEOs have done a shit poor job of running the company, and Yahoo will not realize its full potential as long as Yang and the rest of the old Yahoo vanguard control the board. The company gets many more page views than Google, and has a larger registered user base, yet Google has been much more successful in on both the technical and business fronts.

        Yahoo, as evidenced by the chronic underperformance (they can't even consistently meet their OWN guidance, let alone Wall Street's), is not a well run company and certainly is not living up to its potential. While I'm not convinced Microsoft can fix what's wrong with Yahoo and certainly not convinced it wants to buy Yahoo for only that purpose, I am convinced that the board and management have no clue what they are doing, and clearly at the very least is ambivalent toward their shareholders. I'd go so far as to venture that Yahoo's board has contempt for them. If Yahoo does remain independent, it wouldn't surprise me to see a revolt against the board at the next shareholders meeting.
  • by Anonymous Coward
    At a certain set point, Microsoft has to make the same offer to all shareholders. Yahoo can't prevent Microsoft from buying shares from any shareholders as long as Microsoft follows the rules.

    What Yahoo management can do is thwart Microsoft by making it too expensive to buy up all the shares. Such a tactic is called a poison pill:

    The poison pill was invented by noted M&A lawyer Martin Lipton of Wachtell, Lipton, Rosen & Katz, in 1982, as a response to tender-based hostile takeovers. Poison pills b

  • by Anonymous Coward
    "I have an offer you can't refuse"
    • Re: (Score:2, Funny)

      by gowen ( 141411 )
      That's not a trilogy. Godfather, Godfather Pt II. That's all they made. There is no terrible, ill-conceived third Godfather film. Didn't happen. And there's certainly no implausibly-plotted, badly written, third film with Frances Coppola's immediate family stinking up the acting joint. Not listening. Na-na-na-na-na-can't-hear-you.
    • by Chas ( 5144 )
      Next thing you'll see is one of the board members of Yahoo waking up with a horse's head in his bed, the forehead caved in by a thrown chair....
  • I'm sure Yahoo would have been sued had they taken the Microsoft offer ("You're selling yourselves too cheeep!!!1!!one").

    The end result will be that lawyers will make some money, and noone else.
    That's the way it has been; that's the way it always will be....

  • I am probably a minority here, but as a yahoo shareholder, I for one support the merger. From a stock holder's perspective -- this is the only way. The stock, prior to the merger announcement was trading at a paltry 20 dollars a share, and had a jump of 50% to 30 a share after the merger was announced. Yahoo's loosing its traditional bread and butter: being a search engine. And with that onslaught all the other yahoo online properties are slowly loosing market share...

  • Derivative lawsuits are the bread and butter of some lawyers lives. Once you have a contested decision by any company's board of directors, the lawyers come in to make their $$.

    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,

  • Lets start with the fact that the market is under valuing yahoo. Compounded with Greedy pension funds that are not financially sound do to miss management, They see prey and pounce.
    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....
    • Re: (Score:3, Insightful)

      by Xuranova ( 160813 )
      Something is only worth what people are willing to pay for it. The stock price got the way it was because thats what people wanted to pay for it.
  • michiganese (Score:5, Funny)

    by Eil ( 82413 ) on Saturday February 23, 2008 @04:04AM (#22525270) Homepage Journal
    Here in Michigan, we have a term for things like this.

    Yahoo just got "Detroited."
  • I think from the point of view of Yahoo stockholders, turning down the offer really was a bad choice; I don't see Yahoo making such big gains on their own any time soon.
  • by 91degrees ( 207121 ) on Saturday February 23, 2008 @04:11AM (#22525284) Journal
    The myth of shareholder primacy [onlineopinion.com.au]

    Granted, this is about Australian law, but American law isn't substantially different. Microsoft want to swallow up Yahoo. The company would no longer exist. It's relevant.
  • by MrCopilot ( 871878 ) on Saturday February 23, 2008 @08:08AM (#22526042) Homepage Journal
    We won't be seeing these types of stories at Yahoo news anymore.

    Here is a MicroHoo related stories box at MSNBC @ http://www.msnbc.msn.com/id/23237868/ [msn.com]

    Microsoft: Yahoo would stay in Silicon Valley
    Microsoft bid 'unnerving' to Google co-founder
    Analysis: Microsoft will win proxy battle
    Microsoft to authorize Yahoo proxy battle
    Gates: Microsoft's offer to Yahoo is fair
    Yahoo's big investors may back Microsoft
    Yahoo's CEO explains Microsoft rebuttal
    Newsweek: Why this deal won't happen
    Why Google will remain king of search
    Vote: Can Microsoft-Yahoo beat Google?

    Guess which link doesn't work?
    Newsweek: Why this deal won't happen

    Page not found Our web servers cannot find the page or file you asked for. The link you followed may be broken or expired.

    http://www.newsweek.com/id/110796 [newsweek.com] Nope not expired, guess it was just misplaced.

    Oddly enough this link works fine Why Google will remain king of search [msn.com] I guess it was left to show that there are no antitrust issues.

    On the story itself
    The company also adopted new severance packages that would protect employees in the event of a Microsoft takeover, a move the lawsuit labels as a blatant effort to drive up the cost of an acquisition.

    It couldn't be an attempt to protect their employees, nah what does that have to do with profits?

    The company said in a Securities and Exchange Commission filing Tuesday that workers who lose their jobs without "cause" or quit "for good reason," as Yahoo defines it, would continue to receive their salary and medical benefits for four to 24 months, plus reimbursement for "outplacement services" for two years. A Yahoo spokeswoman would not say what might constitute good reason.

    I dunno, how about: I was purchased by a soul crushing monopolist.

  • Yahoo would vanish (Score:3, Insightful)

    by gilesjuk ( 604902 ) <<giles.jones> <at> <zen.co.uk>> on Saturday February 23, 2008 @08:57AM (#22526164)
    Yahoo would cease to be, everything would be rebranded Microsoft and much of the Yahoo staff would be laid off. Is it any wonder Yahoo would resist this? not to mention losing competitive edge by having to do everything the Microsoft way and avoiding open source.
  • not really news (Score:3, Insightful)

    by superwiz ( 655733 ) on Saturday February 23, 2008 @09:41AM (#22526336) Journal
    Everyone here doing what they are supposed to. This lawsuit (and its kind) were expected as soon as yahoo rejected the offer. But the pension plan is doing what they are supposed to as well. When someone offers them $10 for a $6 property, they are supposed to take it. Otherwise, they wouldn't be fulfilling their obligationgs to the pensioneers. The lawsuit will fail if the judge understands that the fact that Yahoo traded at a certain price, doesn't mean that it can be purchased in large amounts at that price. But so far, this is hardly newsworthy.
  • I agree! (Score:3, Funny)

    by Vexorian ( 959249 ) on Saturday February 23, 2008 @10:06AM (#22526450)
    1. Yahoo stockholders sue yahoo.
    2. Microsoft buys yahoo stocks.
    3. Yahoo stock goes up.
    4. Desperate stockholders sell
    5. Yahoo stock plummets.
    6. Microsoft loses millions in stocks.
    7. ????
    8. Profit!

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