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Yahoo! Rejects Microsoft's Offer, Says 'Still An Option' 213

Posted by Zonk
from the oh-just-get-a-room-already dept.
mikkl666 writes "In response to an open letter from Steve Ballmer, Yahoo! posted a press release claiming that Microsoft's offer 'substantially undervalues Yahoo!' and is therefore not in the best interest of the company. They also bemoan that the letter 'mischaracterizes the nature of our discussions' and that the threat to make an offer directly to the shareholders is 'counterproductive and inconsistent with the stated objective of a friendly transaction'. Nevertheless, they explicitly point out that a transaction with Microsoft is still an option, but only if they are willing to pay 'a price that fully recognizes the value of Yahoo!'"
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Yahoo! Rejects Microsoft's Offer, Says 'Still An Option'

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  • crack smoker (Score:5, Interesting)

    by timmarhy (659436) on Monday April 07, 2008 @09:37PM (#22995756)
    MS are offering 2x the going share price. what secret pot of gold does yahoo managment think they have that's worth so much?

    oh and he must be pretty dense to think "friendly negotiations" are still an option if MS goes to the shareholders directly.

    • by morgan_greywolf (835522) * on Monday April 07, 2008 @09:42PM (#22995790) Homepage Journal
      Hello? Rob Enderle? Is that you?
      • by Z34107 (925136)

        Hello? Morgan Greywolf? Is that you?

        OK, it is. Just checkin'.

        If someone's ever not Morgan Greywolf, plz to let me now kthx.

    • Re:crack smoker (Score:5, Insightful)

      by d3vi1 (710592) on Monday April 07, 2008 @09:59PM (#22995910)

      I think that it's just another nice way of refusing.

      I think that the Yahoo! folks realize that Yahoo! and Microsoft don't really mix together.

      Microsoft only wants the userbase and the brand, not the products. If Microsoft were to acquire Yahoo!, all their technology (Apache, Oracle, MySQL, PHP, Java, etc running on top of Linux and BSD) would be replaced by Windows servers running IIS. That would make most of the Yahoo! engineers redundant.

      I am pretty sure that they would just add the missing features to their Live products, and rebrand them as Yahoo! The Yahoo! products will start a short (i.e.: 1-2 years) death as soon as Microsoft buys them, to make room for Yahoo! branded MSN/Live ones.

      Imagine a .NET/Mono based Zimbra.

      Furthermore, I assume that at that level all negociations are 'friendly'. Unless they fail, when they become friendly only for the winning side.

      Finally, I do believe that Yahoo! is worth more than that ammount, because there are countries where no competition exists (see Romania). In a blog from one of the Fedora Art Group members, the blogger said that over 90% of the email addresses in Romania were Yahoo! ones. I can confirm this with the Messenger part. I've never seen anyone giveout a GTalk or MSN id in Romania, only Yahoo!.

      • by tepples (727027) <tepples&gmail,com> on Monday April 07, 2008 @10:23PM (#22996050) Homepage Journal

        the blogger said that over 90% of the email addresses in Romania were Yahoo! ones. I can confirm this with the Messenger part. I've never seen anyone giveout a GTalk or MSN id in Romania, only Yahoo!.
        So that's what the Numa Numa guys were singing about: "My yahee, my yahoo."
        • In other words, eastern Europe runs on Yahoo! and LiveJournal, and the US runs on Gmail and WordPress.

          At least we all use the same alphabet... oh, wait.
      • Re:crack smoker (Score:5, Interesting)

        by Mongoose Disciple (722373) on Monday April 07, 2008 @10:27PM (#22996084)

        Microsoft only wants the userbase and the brand, not the products. If Microsoft were to acquire Yahoo!, all their technology (Apache, Oracle, MySQL, PHP, Java, etc running on top of Linux and BSD) would be replaced by Windows servers running IIS. That would make most of the Yahoo! engineers redundant.


        Ok, so devil's advocate / tinfoil hat time.

        I'm not exactly going to predict this because, come on, Microsoft, but I could sort of see them leaving Yahoo! alone technologically, at least in the short term.

        Let's assume there's some viable evil reason for Microsoft to want expertise with PHP/MySQL/etc. in their stable. Microsoft basically cannot grow something like that organically from within. You can't create Microsoft MySQL without essentially admitting there's something wrong with SQL Server, etc.

        But you could plausibly buy Yahoo, point to the past migration nightmares of Hotmail, and say that you were wisely letting Yahoo continue with their current technologies due to those experiences.
        • Re:crack smoker (Score:5, Insightful)

          by liquidpele (663430) on Tuesday April 08, 2008 @12:03AM (#22996580) Journal
          No, they'll do what they did with hotmail.
          They'll leave them alone until it makes sense to move over to windows/IIS. Hotmail stayed on BSD for years, but it's been IIS for quite a while now. they're not stupid, they'll treat it as business and move them over when it makes sense to do so. But the Golden rule in most markets is you sure as hell better eat your own dogfood if you expect your customers to, and eventually they'll have to move Yahoo! over if they do buy them.
          • by Mark_in_Brazil (537925) on Tuesday April 08, 2008 @08:41AM (#22998988)

            No, they'll do what they did with hotmail.

            They'll leave them alone until it makes sense to move over to windows/IIS. Hotmail stayed on BSD for years, but it's been IIS for quite a while now. they're not stupid, they'll treat it as business and move them over when it makes sense to do so. But the Golden rule in most markets is you sure as hell better eat your own dogfood if you expect your customers to, and eventually they'll have to move Yahoo! over if they do buy them.
            While it is true that Hotmail remained on BSD and Solaris for a long time, that's not because of some kind of smart business decision made by Microsoft. It's because Windows and IIS, even backed up by Microsoft's vast financial resources (permitting, for example, a much larger server farm with a much larger operating team and additional security measures), simply wasn't up to the task of hosting Hotmail.

            Hotmail was launched on the 4th of July of 1996 and was bought by Microsoft in December of 1997. Microsoft believes strongly in the concept of "eating one's own dog food" (please note: this is a common term for using one's own products internally), and so immediately started making announcements that Hotmail would be migrated to Windows NT. The NT migration utterly failed, and there were even problems with the Windows 2000 migration. In June of 2001, Microsoft announced it had migrated the BSD portion of Hotmail to Windows 2000, but was forced to retract that statement a few days later. The final migration of all of Hotmail to Windows wasn't completed until 2003.
            Not only because of Microsoft's belief in the "eat your own dog food" principle, but also because Microsoft had made public statements saying it was going to migrate hotmail to Microsoft operating system and web server software, it is clear that Microsoft really wanted that migration to work, but it still took over five years and three versions of Microsoft's server software.
            • Re: (Score:3, Interesting)


              Not only because of Microsoft's belief in the "eat your own dog food" principle, but also because Microsoft had made public statements saying it was going to migrate hotmail to Microsoft operating system and web server software, it is clear that Microsoft really wanted that migration to work, but it still took over five years and three versions of Microsoft's server software.


              You know, for the first time you've made me wonder if Microsoft actually did make the long-term smart move by migrating Hotmail.

              I mean
              • by Mark_in_Brazil (537925) on Tuesday April 08, 2008 @12:44PM (#23001866)

                yet... Windows Server got a lot better during that time frame, and I have to wonder how much of that was driven by trying to do projects like Hotmail on it and paying attention to the ways in which they spectacularly failed.
                Ehhhhh...
                While the parent post doesn't quite reach the level of astroturfing, it does feel like an attempt to find a silver lining in what really was an unmitigated fiasco for Microsoft. The company announced quite loudly that it would be migrating to NT, then failed repeatedly. It then more quietly began migrating to Windows 2000, then announced success, then had to retract that. It then issued a white paper on the migration, arguing that Windows 2000 was a better platform than UNIX, even though there were still Solaris and even BSD servers being used until 2003, well after the white paper was issued, and in many cases, BSD code was used to replace the parts of the Windows server OS that just weren't up to hosting a major application like Hotmail.
                Please note that I am not saying there is anything wrong with Microsoft using BSD code - the BSD license clearly permits that. The point is that for whatever reason, despite immense financial resources and huge financial and PR incentives, Micrsoft appears to have been completely incapable of making an industrial-strength OS as late as 2002 that could match the power and security BSD and Solaris had in 1997, and when it did have success, it was by simply appropriating the superior code from the BSD base.
                Additionally, and actually this is my main point in writing this post, whether or not Microsoft had bought and tried to migrate Hotmail, the evolutionary pressure to improve its OS's security and scalability would have been just as strong. So I really don't see the silver lining in this story the way the parent post does. If there is a silver lining for Microsoft, it's that they learned that BSD code is often just plain better than Microsoft code, and simply taking the BSD code is more effective and a lot cheaper than trying to catch up. One wonders why they don't take something like OpenBSD and make a Microsoft front end for it. Windows would then basically be a window manager, a lot cheaper and simpler to maintain, and the heavy lifting would be done by a system that has time and time again been shown to be better than any Windows ever built, especially in terms of security, which is really the biggest issue with Windows these days, what with there being multiple botnets of hundreds of thousands of Windows machines out there eating massive amounts of internet, LAN and machine resources.
        • by HalAtWork (926717)
          It's possible that they've already done stuff such as made a Yahoo-like front end to their Live mail web software, and other such stuff in preparation for this.
        • The thing is, neither PHP nor MySQL are actually any better than Microsoft offerings. Microsoft doesn't need to "grow them from within" - it has something much better already. Java, now that's the real competition - but I don't recall Yahoo being particularly associated with that, and anyway, Microsoft has already dropped J# in VS2008, which was the last Java-related thingy in the Microsoft land; why would they suddenly turn back to Java now?
          • You're probably right about PHP. I haven't used it enough to fairly judge its shortcomings or strengths.


            Java, now that's the real competition - but I don't recall Yahoo being particularly associated with that, and anyway, Microsoft has already dropped J# in VS2008, which was the last Java-related thingy in the Microsoft land; why would they suddenly turn back to Java now?


            Yeah, I don't know. I can't see them really going back to Java either. C# is really their answer to Java. Syntactically, the two langu
      • Re: (Score:3, Insightful)

        by imstanny (722685)

        Finally, I do believe that Yahoo! is worth more than that ammount, because there are countries where no competition exists (see Romania). In a blog from one of the Fedora Art Group members, the blogger said that over 90% of the email addresses in Romania were Yahoo! ones. I can confirm this with the Messenger part. I've never seen anyone giveout a GTalk or MSN id in Romania, only Yahoo!.

        Microsoft's original $31 per share offer represented a 62% premium to where Yahoo's shares had been trading before the offer. The market determines price, and they were valuing Yahoo at $19/share. Also, look at the current trading price = MSFT's offer is $31, yet YHOO is trading at under $28. By your logic it should be trading above $31, but it isn't because Market thinks it's worth less than what Microsoft is offering them, and if they keep rejecting Microsoft, then their stock will go down - regardless o

        • There are almost always stocks out there that the market undervalues. The market isn't all-knowing. Being a savvy investor is picking up undervalued stocks before the market determines their true (hopefully, higher) value. Example: I bought Google a couple of days after their IPO for around $220-$230/share. The market has valued it as high as $700+/share. Now, you're not always going to beat the market (actually, you'll probably lose more than you'll win), but if done properly you'll still be ahead dollar w
          • by wellingj (1030460)

            Now, you're not always going to beat the market (actually, you'll probably lose more than you'll win), but if done properly you'll still be ahead dollar wise.
            Off-topic but, the dollar is behind and falling quick so what does that mean?
            • It means that not every trade you make is going to be profitable, but if you know what you're doing, you should still come out ahead across all your trades. I wasn't referring to currency value (dollar vs euro vs yuan).
      • If you a job like that, wouldn't you want to keep it?

        If msft buys yahoo, msft won't need those execs anymore.
      • "Finally, I do believe that Yahoo! is worth more than that ammount," If that was true, Yahoo would already be valued at that much. While it may be true at some point in the future that may be the case, but if I was a Yahoo investor considering the economy is entering a recession and Google is starting to slow down I would take the money and find a better investment. The Yahoo board doesn't have its shareholders best interest in mind here. Whether it is good for the internet, computers, world peace, glob
      • Re: (Score:2, Insightful)

        by Kalriath (849904) *

        I think that the Yahoo! folks realize that Yahoo! and Microsoft don't really mix together.

        Doesn't matter. What does matter is whether the executives refusing this offer is in the best interests of the owners, which is to say shareholders, of the company. If "they don't mix well together" is the excuse for refusing the offer, then the Yahoo! board has just broken the law.

      • Re: (Score:3, Interesting)

        by jimicus (737525)

        Imagine a .NET/Mono based Zimbra.

        I think you may have hit the nail on the head there.

        Microsoft can't afford to lose their monopoly on the desktop because they don't have anything else viable as a business plan capable of generating that kind of revenue. Right now, about the only thing underpinning that monopoly that they have significant control over is Office - and specifically, the combination of Outlook and Exchange.

        Now, hold that thought for a minute.

        OSS can't be destroyed by Microsoft. But the major sources of funding can be - at l

    • the value of yahoo is a redirect to google and nominal competition.
    • Re: (Score:3, Interesting)

      by ozmanjusri (601766)
      MS are offering 2x the going share price. what secret pot of gold does yahoo managment think they have that's worth so much?

      For a start, it's nowhere near 2x, since the value of MS shares, and hence the offer have dropped since the initial approach.

      Microsoft have some interesting times ahead too, and Yahoo shareholders might be considering the risk of turning their Y. shares into MS ones.

      Microsoft's stock buybacks, for example, are being used to counteract stock options paid to executive employees. Th

      • Re:crack smoker (Score:4, Interesting)

        by dedazo (737510) on Monday April 07, 2008 @11:08PM (#22996228) Journal

        That's drawing down their cash reserve rapidly without generating much growth.

        That's an interesting soundbyte. Can you explain how stock options paid to executives (which executives?) are actually eating into a $30 billion dollar cash reserve? Those must be some pretty large stock grants.

        Add to that the failure of their flagship OS on the market

        Looks like someone is connecting all those Vista machines that are not being sold to the internet. [hitslink.com] I'd like to have me a few of those failures every decade or so.

        • Re:crack smoker (Score:4, Interesting)

          by DECS (891519) on Tuesday April 08, 2008 @12:22AM (#22996680) Homepage Journal
          It's the stock buybacks that are eating up MS' cash reserve. Buying back your own stock is an admission you have nothing better to do with your money that give it back to your shareholders

          Remember the words of Michael Dell wrt Apple? Apple isn't buying back its stock, it's buying new campuses, data centers, retail outlets, investing in building products to serve new markets, all of which are selling off the charts.

          Microsoft is failing in every consumer electronics arena it enters. It's brightest star is the xbox, which has only made a few million in the last quarter after billions of losses. Sales have now plateaued, forcing the company back to release a new xbox generation and start spending again.

          Video Game Consoles 2007: Wii, PS3 and the Death of Microsoftâ(TM)s Xbox 360 [roughlydrafted.com]

          Vista might be shipping on some new PCs, but remember that nobody ever questioned Windows' ability to sell. It's a monopoly! Everyone expected MS to sell Vista without any hiccups. It was the consumer business and Windows Media/PlaysForSure, Zune, WinCE/Windows Mobile, Windows Embedded that were all on fire and sustaining deep losses. Microsoft can't sustain mild sales on Vista after spending billions to develop it over the last 6 years and having nothing really to show for all that.

          Windows 7 won't show up for another three years, so Vista has to generate cash across that whole time period, not just ship on some new PCs. What's happening though, is that cheap PCs like the EEE and OLPC are running Linux, premium PC sales are getting eaten into by sales of Macs that are outpacing PC sales by 4x, and major vendors are begging to ship XP.

          Microsoft's flat stock has been placid for a decade during record earnings boosted by automatic OEM PC sales in a period where the PC-box was the only game in town and there was no effective competition. MS is now being hit by competition at the low end and the high end, while also finding the PC market itself coasting along statically. Sales volumes are shifting toward mobile devices.

          MS hasn't successfully delivered mobile devices anyone wants. UMPC was a huge failure, Windows Mobile is a joke. Now its facing the iPhone/iPod Touch and an array of smartphones from other vendors, without any viable game plan.

          At some point, you can't say MS will survive on its good looks and personality alone, because its business is facing several points of failures. Yahoo knows that. It also knows that a MS takeover would gut the company and destroy shareholder value.

          Why Does Microsoft Really Want Yahoo? [roughlydrafted.com]
          • I'd point out that Office still qualifies as a huge positive point in MS's favor right now, since people seem to have bought into the upgrade cycle, and even if you didn't, the price schemes are high enough with the 2007 version to ensure you put down at least a couple hundred on a new computer if you insist or get forced into using the Microsoft product. This may change of course, but you'd have to pound it into the heads of the PHBs that the cheaper option isn't worse first.

            Losses and competition in the
          • Re: (Score:3, Insightful)

            quote: It's the stock buybacks that are eating up MS' cash reserve. Buying back your own stock is an admission you have nothing better to do with your money that give it back to your shareholders

            Why is it bad for a company to return cash to investors? 'You invested in us, and now you get some of the profit' sounds like thouroughly sensible economics. I'd expect it if I invested in a company directly.
            • by z80kid (711852)
              >>Buying back your own stock is an admission you have nothing better to do with your money that give it back to your shareholders

              >'You invested in us, and now you get some of the profit' sounds like thouroughly sensible economics.

              Dividends are company profit shared with investors.

              Stock buybacks are just that - buying the stock back from the investors so that there are fewer shares in circulation. Each remaining share should then be worth more. If you've bought back a lot, and the remaining sha

        • Re: (Score:3, Informative)

          by ozmanjusri (601766)
          Can you explain how stock options paid to executives (which executives?) are actually eating into a $30 billion dollar cash reserve? Those must be some pretty large stock grants.

          It's a pretty big topic to summarise in a Slashdot posting, and you'd be a LOT better off doing your own research, if you're genuinely interested. But...

          Basically, stock options are a company's way of convincing employees to take less real wages. Paying in stocks has some advantages, but one in particular is that they don't show

    • by rainhill (86347) <[2rainyhill] [at] [gmail.com]> on Monday April 07, 2008 @10:23PM (#22996058)
      "what secret pot of gold does yahoo management think they have that's worth so much?"

      a CEO that does not jump [youtube.com] on stage and throw [theregister.co.uk] chairs
    • This has nothing to do with the value of Yahoo! to the market. It has to do with the value of Yahoo! to Microsoft. Yahoo! can smell the stench of desperation all over Microsoft, and as much as Microsoft is trying to play hardball, Yahoo! knows they can and will cave to any demands no matter how ridiculous.
    • Re: (Score:2, Insightful)

      by radl33t (900691)
      This argument is tired. Yahoo's share price was above the initial offer less than 6 months ago. Tech stocks were the 2nd largest hit recently next to financials. For comparison, Apple shit out almost -40% too, should shareholders support their buyout at the low market cap? Yahoo mgmt is right, the offer does undervalue their potential and they can offer their share holding investors greater value (key: if they can execute). Unfortunately, investors are outnumbered by gamblers these days.
    • newsprint publishers. yahoo does online advertising and is a portal. print news is dying and needs an update. if the printers bought a powerful portal it would give them a means of controlling new distribution online (a "get it from yahoo or don't get it at all!" attitude backed up by lawsuits would put a sudden halt on the news free-for-all on the internet. they could require a subscriber login for news and offer different tiers of advertising to content for different amounts. What does microsoft have
    • by jayminer (692836)
      If Microsoft tries to collect the shares from the market, the price will skyrocket, more than double.

      If they go to shareholders, the information will go public and the price will skyrocket, again.

      So there is no viable option to buy this company other than negotiating.
    • Re: (Score:3, Insightful)

      As a developer, Yahoo's work on their JavaScript library, ignoring their other freeware projects like the pattern library and Doug Crockfords talks on YUI Theater, is worth more to the web community than double the stock price. I can't expect share holders to know the good stuff Yahoo is doing for the community, and how things may change if Microsoft buys Yahoo. I think respect is what Yahoo Management thinks they have that is worth so much.

      I still use Google for search (and I don't use Y!UI), but I respe
    • by Yvanhoe (564877)
      If MS is going to buy 50% of Yahoo shares to stockholders directly, be sure that at the end the stock price will be far higher than two times the current price. Also you know MS, it would not be friendly if it was not in its best interest.
  • by rolfwind (528248) on Monday April 07, 2008 @09:38PM (#22995762)
    I thought Yahoo wanted more money, not less.
  • Premium Price (Score:3, Interesting)

    by eebra82 (907996) on Monday April 07, 2008 @09:41PM (#22995784) Homepage
    Taken from the open letter:

    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. 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.
    If Microsoft is willing to pay a 62%+ premium, why is this not enough for Yahoo and why are they not making a counter-offer? I am not an expert, but to me, this sounds like extremely personal business.
    • by DECS (891519)
      Because, somewhat obviously, Yahoo thinks it is worth more than its current market valuation.

      Next year, the market's hypersensitivity in the outlook for tech could be replaced with optimism that brings Yahoo back up. The board may have some insight as to future profit potential as well, although it looks like there are no magic rabbits to pull out.

      Today's value isn't the only thing they're looking at. If you were a homeowner sitting on a property greatly devalued by the current lending crisis, it wouldn't b
    • Taken from the open letter: If Microsoft is willing to pay a 62%+ premium, why is this not enough for Yahoo and why are they not making a counter-offer? I am not an expert, but to me, this sounds like extremely personal business.

      Nah, it isn't personal. The question is, a 62%+ premium over what? The current stock price? Yahoo! leadership might believe that the stock price is not indicative of actual worth. There could be many reasons for this, including the obvious one that the stock price only reflects what the market thinks Yahoo! is worth. The market, of course, is unaware of secret skunkwork projects going on in Yahoo!, of which there are presumably many (nothing special about that, the same is true for Google and Microsoft). P

    • Re: (Score:2, Interesting)

      Perhaps it's not spelled out well enough with the offer Microsoft is making, but Microsoft really needs (or at least, thinks it really needs) Yahoo!. Microsoft has been working since around 1996 to get into the internet game. They have spent billions of dollars (including all the IE stuff) in a bid to control the internet. And what has that lent them? A very far third place, with them only having any ranking at all because of the vast support from the actually successful divisions of Microsoft.

      More to t
      • Re: (Score:3, Insightful)


        what else would you call it when after ten years of competition, their brightest idea is to try to buy out the competition, not with money earned by fighting the competition, but by using their main cash cow as their own means to compete?


        I'd call that business as usual in this industry.

        Example: YouTube wasn't bought with money Google made off of Google Video. Microsoft, Google, and Yahoo all do this all the time.
  • by seanadams.com (463190) * on Monday April 07, 2008 @09:44PM (#22995806) Homepage
    This is like watching ugly people kiss.
  • by Whuffo (1043790) on Monday April 07, 2008 @09:47PM (#22995832) Homepage Journal
    What does Yahoo! have that Microsoft prizes so highly? Anything that Yahoo! has done successfully (although not often profitably) has already been "independently reinvented" by Microsoft.

    The most likely result of such a purchase would be that they'd try to turn Yahoo! into another Microsoft division and destroy what they were after in the first place.

    Seems a strange purchase to be chasing after so hard...

    • Re: (Score:3, Interesting)

      by Spy der Mann (805235)
      You're absolutely right. Part of the value in Yahoo! resides in that they're a Microsoft competitor (in Yahoo! mail, for example).

      If that transaction ever takes place, I'll immediately wipe my Microshoo! mail account.
      • Re: (Score:3, Insightful)

        by DECS (891519)
        And not just a competitor in selling similar products (search, email, etc), but also a competitive threat.

        Yahoo owns Zimbra, the FOSS threat to Exchange. This is a cheap way for Microsoft to destroy a wide swath of open source products and projects Yahoo contributes toward.

        The market has given Yahoo a low valuation based on its earnings and future outlook both as a company and in the current recession. It's the perfect time for Microsoft to exploit that to expand its monopoly power and kill off competition.
    • by truthsearch (249536) on Monday April 07, 2008 @09:52PM (#22995862) Homepage Journal
      Yahoo has more pages and traffic than just about any site on the internet. Yahoo and Google are Microsoft's only real competitors on the internet. So my guess is they simply want to absorb one of their competitors to leverage against the other. Microsoft's not gaining market or mind share on their own, so like usual they're trying to buy it.
    • by rolfwind (528248) on Monday April 07, 2008 @09:57PM (#22995902)
      Microsoft has a ton of cash it is sitting on and it's burning a hole in their pocket. They're also a company that has lost an overall focus and their major enemies from the past generations are gone. They are building up a new "feindbild" with Google in the lead role -- so to them taking over number 2 (Yahoo) would be a logical procession if they can't buy #1 (Google).

      Microsoft always needed an enemy to rail against (because they usually didn't innovate, rather copied and improved upon). They have been at this unfocused lash-out stage for quite a number of years.

      But really, this purchase is redundant. They're better off taking the excess cash, paying dividends, and let that be the end of it. The MS/Yahoo merger will be stillborn. The management there will be hostile and leave after the buyouts and the Microsoft drones won't be any better.
      • Re: (Score:3, Funny)

        by aztektum (170569)
        I am seriously expecting Ballmer to completely lose it any day now. He'll announce Microsoft's intention to buy Google for 1 million a share (in Monopoly dollars), while juggling chairs and developers.

        Say what you want about Bill, the company did nothing but grow under him (granted there was the .com to help). Under Ballmer MS is doing everything it can to piss anyone and everyone off and fuck itself into oblivion.
    • by Shipwack (684009) on Monday April 07, 2008 @10:02PM (#22995928)
      Yahoo is ahead of Microsoft in a few areas... Yahoo's search is worse that Google (IMO), but Microsoft search is worse. Yahoo has Flickr and the social network 43Things, neither of which have a Microsoft equivalent. There's Yahoo Mail and Yahoo Groups, both of which are superior to what Microsoft has. But I agree... Microsoft has a tendency to be heavy-handed with new acquisitions, not to mention the ones it drowns in the bathtub on purpose.
      • I'd say that Yahoo Video is also a stronger offering than anything in the MS stable at this point.

        It's no YouTube, but that's really a lot more about mindshare than quality per se. Google sure didn't buy it for the technology.
    • What does Yahoo! have that Microsoft prizes so highly?

      Probably a web portal that they've managed to not run into the ground quite as badly as MS [alexa.com].

      they'd try to turn Yahoo! into another Microsoft division and destroy what they were after in the first place.

      That, I totally agree with. I've already submitted a letter to Yahoo's feedback page letting them know that I won't be using their many services anymore if the MS deal goes through, because I know that a service decline is inevitable. What good can co

    • Re: (Score:3, Insightful)

      by 4D6963 (933028)

      What does Yahoo! have that Microsoft prizes so highly?

      Well see, the boxers I'm wearing right now are worth $2. But if you offered me to buy them for $3.24 (a 62% premium), there's no way in hell I would accept. Surely that's way more than they are worth though, but I still wouldn't accept. However, I would accept if you made an offer I would deem good enough, something way above my boxers' real value, somewhere around $50.

      So what's so worthy about my boxers so that I wouldn't let them go for less than 20

      • by MrNaz (730548) * on Tuesday April 08, 2008 @01:33AM (#22996984) Homepage

        my bloody underpants

        Hey look, I have no problem with women on Slashdot, but if you're going to hang out here you're going to have to learn to deal with the things that make you different from men.

      • See Yahoo is already bought and sold. That's what the stock market is. You are literally buying pieces of a company. So Yahoo is already bought and sold on the open market, and as such the market has set a price for what they are worth. Now MS is offering substantially more than that price. This is normal procedure when you are buying out a company, and yet Yahoo is still refusing.

        So this isn't like your underpants situation. This is like going in to a store that is selling something and having them refuse
      • $20?
  • because the chairs there are easier to throw.
  • by religious freak (1005821) on Monday April 07, 2008 @09:58PM (#22995906)
    Why on Earth would MSFT offer so much when they could/should develop the search technology, content, and customer base themselves? I don't think they can.

    Why would Yahoo refuse to accept an offer that is clearly more than they'd get from anyone else? Maybe management has its head in the sand as to its marketplace position.

    Going hostile on the acquisition is really, really stupid since one of the best parts of an IT company is the IT talent.

    Going hostile will antagonize the whole company, including the best IT talent, IMO.
    • by d3vi1 (710592)
      Because Yahoo! wants independence. Because Grandma considers Yahoo! Mail to be the only Email option. Or to put it more correctly, she thinks that the Email service and Yahoo! Mail are one and the same thing. She doesn't know that there are alternatives, and she doesn't care. She likes emailing other grandma's and she will follow the guidelines that I wrote on the side of her screen and only apply to Yahoo!
    • by DogDude (805747)
      You're right. I wouldn't be surprised if the shareholders file a class action against the board on this one. That's a huge premium to walk away from.
  • I think they're stalling why they try and figure out why the hell Microsoft would ever want to buy such a crappy company. I mean really, they've been sued for human rights violations and basically everything else you could think of, they've served up malware, they've rivaled AOL in annoyingness and quality of software and everyone with a brain hates them. I still can't even figure out why Microsoft would want them other than to just make them go away.
    • by jc42 (318812) on Monday April 07, 2008 @10:45PM (#22996142) Homepage Journal
      I still can't even figure out why Microsoft would want them other than to just make them go away.

      Bingo!

      The only motive here is the elimination of a competitor. Price is no matter; Microsoft wants Yahoo! destroyed because it's one of the two barriers in the way of Microsoft owning the search business.

      It's similar to back when Microsoft decided that Netscape had to die. It rapidly became clear that the leaks were true: Bill and Steve had decided that they would lose whatever money they had to lose to own the browser market. They succeeded, and although they've made no money from IE at all (i.e., they've sunk the entire cost of developing it), they are now firmly in control of what the majority of eyes see on the Web. Sinking a few hundred million into IE was a small price to pay for that power.

      Their goal now is to control what all those eyes see when they search the Web. Their problem is that most people think either "google" or "yahoo" is what you type to do a search. Not even MS fanboys like MS's search. They understand that they can't compete in the search arena on quality. So they're going to use their huge pile of money to destroy their remaining competitors. Yahoo is the easiest target, so they're going after it first. And they'll lose whatever they have to lose to kill it.

      Then it'll be google's turn in the crosshairs.

      • Don't forget Yahoo has a *really* large base of products, not just search. Del.icio.us, myspace, etc. That would all be microsoft's... They want the online presence and user base more than they want the competitor gone, because with that user base they can actually compete with Google in some areas. It's the foothold they need (although I bet 10 to 1 they screw it all up if they do buy them).
        • You might want to tell NewsCorp. They were under the impression that they, not Yahoo, were the ones that bought Myspace.

          del.icio.us has very little following outside the geek world, I hate to say, too.

      • Re: (Score:3, Insightful)

        Which is interesting because if Microsoft just wanted Yahoo to go away, the best thing they could probably do would be to drag this out as long as possible. Executive leadership would be distracted dealing with the proposed acquisition instead of focusing on their actual business, current employees would be planning their escape plan instead of being focused on their work and potential employees would steer clear of a company with such an uncertain future. Then, after dragging it out, Microsoft could just
  • by geoffrobinson (109879) on Monday April 07, 2008 @10:09PM (#22995960) Homepage
    When Microsoft burns through all of their cash buying Yahoo, they might be in a whole bunch of trouble. No more ability to absorb losses in business areas when trying to break into a market.

    So for this reason. I hope Yahoo accepts the deal.
    • Microsoft will NOT burn through their cash for this aquisition. It's not a cash-only aquisition AND Microsoft makes (roughly) $10.000.000.000/year, netto.

      This deal WILL NOT destroy Microsoft. I may wish it did, but I'm a realist.
    • by mgblst (80109)
      Yes, if everybody stopped buying anything from them, like Microsoft Windows or Office, then you would be correct.

      This is partly the problem with Monopolies, they make huge amounts of money in one market, they can unfairly influence other markets, destroying some great and worthwhile businesses.
  • I think that the main problem is--and correct me if I'm wrong--that Steve Ballmer is a great big douche bag, and that Yahoo can sense that if Ballmer sticks his nasty, greasy fingers into the Yahoo pie he'll turn it into shit just like they turned Hotmail into shit.

    I've already started moving my homepage rss feeds from my.yahoo.com to google in anticipation of the inevitable Microsoft fucking it up.

    I get my email from sbc^H^H^HAT&T/Yahoo DSL. It's always worked great. POP3, no problem. Don't have my
  • Yahoo has been discussing possible partnerships with other companies they are less afraid of. Yahoo wants no part of Microsoft. Price isn't an issue here. The stock went up with Microsoft's offer initially, but has gone done since then, and will likely continue to drift back down to the pre-offer value.
  • by imstanny (722685) on Monday April 07, 2008 @10:23PM (#22996054)
    Looks like Yahoo has a lot of computer programmers, and not enough financial analysts. Company's 'value' = that which others are willing to pay for. It's like me selling soap on ebay and asking for $50 when the highest bidder is only offering $15. Guess what, either I take the $15 or I don't sell my soap.


    If I was a shareholder, I would be very mad. If Microsoft is going to do a hostile take over by buying their shares on the open market, they'll probably get Yahoo for less than their current offer. Same thing happened with Cablevision a few months ago. When the Dolan family offered a buy-out for $36, some 'major' shareholders rejected the offer, pompously saying that Cablevision is worth more. Well guess what, the market didn't think so. The second the buyout was rejected, the stock plummeted below $30 and is now at $23!

    • Re: (Score:3, Informative)

      by mgblst (80109)
      So if I offer you $10 for your car and no one makes anymore offers, then your car is somehow worth $10???? This is idiotic.

      Yahoo believes that there company is worth more than market value, even more than market value +62%. They are choosing to to sell it as such, and will even try to convince the shareholders not to sell.

      Company's Value != what other are willing to pay for it, if you don't want to sell it.
      • Re: (Score:3, Insightful)

        by imstanny (722685)

        So if I offer you $10 for your car and no one makes anymore offers, then your car is somehow worth $10???? This is idiotic. Yahoo believes that there company is worth more than market value, even more than market value +62%. They are choosing to to sell it as such, and will even try to convince the shareholders not to sell. Company's Value != what other are willing to pay for it, if you don't want to sell it.

        You're not understanding how the market works. Yes, if you don't want to sell the car for $10 then it is because YOU think it's worth more than $10. However, there's more than 2 parties in this transaction. Yahoo doesn't control all shares of the company. Shareholders, the other owners, also control shares of Yahoo. If the Shareholders want to sell their shares for $31, or less, they will do so - and if Microsoft accumulates Enough shares of Yahoo, they will end up owning Yahoo whether or not Jerry Yang th

  • by stox (131684) on Monday April 07, 2008 @10:27PM (#22996080) Homepage
    Just think of how many FreeBSD/Linux servers would disappear from Netcraft if Yahoo went over to the Dark Side?

    Embrace/Extend/Extinguish
  • by Animats (122034) on Monday April 07, 2008 @10:43PM (#22996128) Homepage

    Yahoo's stock is way overpriced. They're a large, mature company, not a growth company. Revenue is down. So they should have a P/E ration in the 10-20 range, like IBM, Microsoft, Oracle, and SAP.

    But YHOO has a P/E ratio of 59 today. Which is far, far too high. Their market cap is around $37 billion. Divide that by 4 and you're close to what the company is really worth. Maybe $10 billion.

    This is why Microsoft's institutional shareholders are unhappy with the proposed deal. Microsoft is overpaying, and that makes Microsoft less valuable.

    Of course, if Microsoft just drops the deal, the bottom falls out of Yahoo stock, and it probably goes down to something closer to what it is really worth.

    Google is overpriced too, but not as badly. Their P/E is around $36, while their revenue is flat or declining slightly. The fundamental problem with Google is that all those free services they give away don't make them any money. They've never found a second big moneymaking product.

    • Re: (Score:3, Interesting)

      by phantomfive (622387)

      They're a large, mature company, not a growth company.

      Not sure why you think this. The internet is a revolutionary zone, where something completely new could come out at any moment. Furthermore, non-revolutionary revenue, such as advertising and online sales, are growing at a rapid rate. It is reasonable to assume that Yahoo will continue to make money off both of these areas. Even if advertising/Yahoo marketplace revenue doesn't increase significantly, Yahoo could still increase their value significantly with a reorganization and streamlining of their op

    • by MoosePirate (114589) on Tuesday April 08, 2008 @01:10AM (#22996898) Homepage
      PE isn't the be all end all of valuing companies. In Yahoo's case, it has particular problems because Yahoo has substantial unconsolidated holdings in other companies such as Yahoo Japan and Alibaba. The value of these companies shows up in the P part of the ratio, but the earnings aren't counted in the E part. The value of these holdings alone would put the value of the company close to the $10 billion number you propose.

      If we believe Yahoo's forecasts, their stock price has a fair value closer to $40/share, but even coming up short of this doesn't make them very overpriced. They are in a rapidly growing industry and have had double digit revenue growth for many years, so I think they still qualify as a growth company.
  • by s0litaire (1205168) * on Monday April 07, 2008 @10:44PM (#22996134)
    It sounds to me like Yahoo is trying to force Microsoft to start a "Hostile Takeover" bid. Yahoo probably does not want to be part of the Microsoft hegemony and has probably got it's lawyers on the case. I bet within a few hours of Microsoft announcing it's started hostile takeover bid Yahoo will have lawyers in the American and EU courts blocking the Bid due to Competition/Monopoly rules. And we all know how he court's just love Microsoft's antics.... :D MS will get loads of bad press (share prices drop) Yahoo get good press (there shares prices level out above the original value when this started). then Google comes along and snap up the two of them....... :D:D
    • Re: (Score:3, Insightful)

      by Grave (8234)
      Neither company has a monopoly on anything that would be impacted by this merger. There will be no antitrust or court issues here.

      I'm simply amazed at how many people think this won't happen. This merger is going to happen, regardless of what the current Yahoo board may say. If they don't approve it, they will be replaced by the angry shareholders, who are being robbed of the best offer they'll ever see for their shares.
      • by DECS (891519)
        Microsoft still has a monopoly position over desktop PC software. Google has already complained that MS is tying its failed search products into Windows in order to replace the currently competitive market into another annex of Windows.

        So while neither MS nor Yahoo have a huge chunk of the web search/advertising business, a merger would not only inflame the competitive threat Google is already complaining about, but also destroy a number of competitive products, including Zimbra and other FOSS projects Yaho
  • Larger than Google (Score:2, Insightful)

    by BountyX (1227176)
    In theory, if yahoo was taken over by microsoft, microsoft would control more of the search engine world than google. Remember overture? that was bought out by yahoo and it was a strong competitor against google adsense. I def. do not think yahoo is worth that asking price....microsoft is agressivly trying to consolidate the web advertising market and level the field with google. Somehow...I dont see that happening.
  • They know Microsoft is offering all the money they've got, so by asking more they say "no" without pissing off the shareholders and at the same time play to their shareholders' primary instinct - greed. This makes it less likely for Microsoft to win in a hostile takeover scenario.
  • I'm being serious here. Other than a few poor dolts who don't know of better alternatives for email, or those hypnotized by "Yahoo Games", why does anyone care about Yahoo?

    Sure, it was a big deal back in the late 90s. But hundreds of other search engines ate into them, and eventually they got passed over. So now they are a "content" provider. Sorry. Just doesn't fly.

    MS buying Yahoo is stupid; as in: stupid. What are they paying for . . . really? A brand name that is on its way out? Heck, while they'
  • Oh Yahoo, playing hard to get! Your management says "no no!" but your shareholders say "Yes, yes!"
  • "Why on Earth would MSFT offer so much when they could/should develop the search technology, content, and customer base themselves? I don't think they can."

    They can't, look at MSFT's history, they have bought, stolen, strong armed into beign sold, run out of business then stolen the majority of all the products/offerings they have. Then those products were bastardized in the usual MSFT fasion (Visio, Foxpro anyone). Anything they have built themselves is a giant piece of $h!t. Microsoft Bob, Windows Me, Win

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