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Microsoft Offered $40 a Share For Yahoo 306

Posted by kdawson
from the maximizing-shareholder-value dept.
fistfullast33l writes "Bloomberg is reporting that a recently unsealed court case by shareholders against Yahoo reveals that Microsoft offered $40 a share for the Internet search company in January 2007 and Yahoo turned it down. We've extensively discussed Microsoft's bid for Yahoo earlier this year for $33 a share, which was rebuffed. Investor Carl Icahn has launched a proxy fight against Yahoo over the spurning of the Microsoft deal." CWmike notes Computerworld's coverage of the revelations: "The complaint places much of the blame on [Yahoo CEO Jerry] Yang, describing him as someone with a 'well-known' antipathy toward Microsoft who acted out of a personal interest to keep Yahoo independent. Something wrong with that? Oh, yeah... public company."
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Microsoft Offered $40 a Share For Yahoo

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  • by seanadams.com (463190) * on Tuesday June 03, 2008 @03:26PM (#23643219) Homepage
    Who hasn't already written off both of these companies? Anyone holding either of them for the long term simply does not grok where the internet and personal computing are going, or how desperately inept these two companies have become due to their size and age.

    Microsoft's asset is an OS that people are still locked into, but becoming violently sick of. Yahoo's asset is a rapidly diminishing brand and user base. Combine them and you just get an even faster and more epic fail. This is the next AOL/TW.

    The guys who will eat their lunch are the Googles and Apples of the world, who are both innovating and listening to their customers. Size alone won't help you compete with that, you need to get back to innovating. I think people are being way too slow to jump the sinking ship here - if I were a YHOO shareholder, I'd have dumped as soon as the offer hit the table and the stock hit $30. Why on earth would you hold out for $31?
    • Re: (Score:2, Redundant)

      by DigDuality (918867)
      with the rate of growth of Redhat in the datacenter, I'd throw them up there with Google and Apple too.
    • by zooblethorpe (686757) on Tuesday June 03, 2008 @03:36PM (#23643365)

      I think people are being way too slow to jump the sinking ship here - if I were a YHOO shareholder, I'd have dumped as soon as the offer hit the table and the stock hit $30. Why on earth would you hold out for $31?

      Well, since you asked why:

      Nigel Tufnel: Well, it's one higher, isn't it? It's not $30. You see, most blokes, you know, will be selling at $30. You're on $30 here, all the way up, all the way up, all the way up, you're on $30 in your portfolio. Where can you go from there? Where?
      Marty DiBergi: I don't know.
      Nigel Tufnel: Nowhere. Exactly. What we do is, if we need that extra push over the cliff, you know what we do?
      Marty DiBergi: Hold out for $31.
      Nigel Tufnel: 31. Exactly. One higher.

      Maybe not too far off the mark...

      Cheers,

    • by whisper_jeff (680366) on Tuesday June 03, 2008 @03:44PM (#23643485)
      Why on earth would you hold out for $31?

      Well, as but one example, Carl Ichan is reported to own about 50 million shares in Yahoo ( http://biz.yahoo.com/ap/080513/yahoo_icahn.html [yahoo.com] ) so a stock increase from $30 to $31 represents a profit of about $50 million. Now, call me wacky, but that sounds like a good reason to me...
      • Speaking of ugly people...

        He can "want" it all he likes, but it's unlikely he's going to get it at this point. A nice brutal minority shareholder lawsuit should finish the company off nicely.
      • by AndersOSU (873247) on Tuesday June 03, 2008 @03:59PM (#23643695)
        Oh yeah I feel real sorry for the guy who didn't cash out for $1,500,000,000 because he could have made $1,550,000,000
      • Why on earth would you hold out for $31? Well, as but one example, Carl Ichan is reported to own about 50 million shares in Yahoo ( http://biz.yahoo.com/ap/080513/yahoo_icahn.html [yahoo.com] ) so a stock increase from $30 to $31 represents a profit of about $50 million. Now, call me wacky, but that sounds like a good reason to me...

        Only if he's selling the shares he personally holds. Until then, it's just a number - and when you have $1,500,000,000 (yes, 1.5bn) in stock to begin with, it's a fairly insignificant number at that.

        • Re: (Score:3, Insightful)

          by skiflyer (716312)
          It's 3.3% ... depending how long it takes to make that dollar that could be very large or very small. Just because the numbers are big doesn't make them insignificant... you always have to measure in %, and by % 3.3% for a day is a good day for most stocks.
        • Re: (Score:3, Interesting)

          by Miseph (979059)
          Also consider that when somebody dumps $1.5bn of a single stock, it is no longer worth $1.5bn.

          I'd imagine the real reason he's pissed is that he's so heavily invested in Yahoo he can't possibly get out of it.

          That said, even if it halved in value had he sold his stock off, he can still cry me a river: "I only made $750,000,000 cashing out my YHOO stocks, wah!"
    • by negRo_slim (636783) <mils_oRgen@hotmail.com> on Tuesday June 03, 2008 @03:48PM (#23643551)

      Who hasn't already written off both of these companies?
      I would assume only a fool would write off two of the largest tech companies in the country (with a combined revenue of 57.33B).

      or how desperately inept these two companies have become due to their size and age.
      Yes because we all know the only real innovation isn't done in multi-million dollar research centers, it's done in dad's garage, duh!

      Microsoft's asset is an OS that people are still locked into, but becoming violently sick of.
      Yeah one would think the nightly car bombings outside of Microsoft's HQ would finally stop this 'stay the course' mentality. But for some reason people seem to enjoy using a OS on cheap hardware the runs reliably and quickly when configured properly. Oh and plays the latest games!.. We're in the twilight zone now.

      Yahoo's asset is a rapidly diminishing brand and user base
      I'm sure that's it. Not anything to do with years of R&D [yahoo.com] or their Publisher Network. [yahoo.com]

      The guys who will eat their lunch are the Googles and Apples of the world
      Yes because it's all about Google Search on OSX.

      /sigh I have no problem with your mention of Google, but Apple... Really? Like for realsies? Sorry bro, I'm into computers... Not toys.
      • by sobachatina (635055) on Tuesday June 03, 2008 @04:02PM (#23643717)
        I don't necessarily disagree with your point that MS and Yahoo should be taken seriously but this was funny:

        people seem to enjoy using a OS on cheap hardware... Oh and plays the latest games!
        then

        Sorry bro, I'm into computers... Not toys.
        Your arguments for windows are that it is cheap and plays games and then you discredit everything else as toys? I agreed with you all the way up to that final statement.
      • Re: (Score:3, Insightful)

        by pluther (647209)

        but Apple... Really? Like for realsies? Sorry bro, I'm into computers... Not toys.

        Perhaps you are - but a great many people are into toys. People aren't buying iPhone's because it's the most useful ultra-portable computer around (it isn't even close) - they're buying it because it's fun.

        Yeah, I'd be watching Apple again, too. Not their desktop computer lines, but they have a lot more going for them than that.

      • by Cochonou (576531)
        I find ironic the apparent contradiction of some of your arguments:
        -But for some reason people seem to enjoy using a OS on cheap hardware the runs reliably and quickly when configured properly. Oh and plays the latest games!..
        -Sorry bro, I'm into computers... Not toys.

        That does not make some of your other points invalid, though.
    • by HerculesMO (693085) on Tuesday June 03, 2008 @03:52PM (#23643601)
      Apple is innovating?

      They take technology that exists in lots of other places, and put it in a prettier package. OSX is nice, but it's BSD with pretty graphics.

      The iPhone is nice, but it's a cleaned up version of the Nokia E70 (see: http://www.thebestpageintheuniverse.net/c.cgi?u=iphone [thebestpag...iverse.net])

      Apple is known NOT to listen to their customers. They listen to Steve Jobs (and for their benefit, I might add).

      Honestly, Microsoft has been around the block on these types of things before, and while Google and Apple are big threats, I don't consider Microsoft a 'stupid' company by any means -- I feel they will have a period of crap (oh wait, Vista...), reorganize and come back stronger.

      And in the end it's better for us all if they do. Although if MS ever put out an OS that is better than Linux on security, and better than OSX on ease of use and prettiness -- Slashdotters would still decry it. So I guess on this site, it's lose lose for them. But their bank accounts are still rather full.
      • Damn it! The first thread I read after giving out the last of my mods and I wish I had them all back. For what it's worth, very insightful!
      • by stubear (130454)
        Thanks for the Maddox reference. I had read that one before but I still laughed my ass off this tome around.
      • Innovate != Invent (Score:5, Insightful)

        by jamrock (863246) on Tuesday June 03, 2008 @05:23PM (#23644761)

        Apple is innovating?

        Of course they are, and they continue to innovate. The iPhone interface isn't an innovation? And are you fucking kidding me about the so-called "Best Page In The Universe"? Anyone who could have such a shitty-looking website doesn't have the least goddamned clue about design, or its importance, especially when it comes to human interface. Microsoft and Dell have also introduced dramatic innovations, and I'm fully aware that that statement is heresy on Slashdot, but give credit where it is due (and I'm saying this as a Mac user). The problem is that the word doesn't mean what most people think it means (apologies to Inigo Montoya). From Dictionary.com:

        innovate : to introduce something new; make changes in anything established.

        People usually mistakenly conflate "innovate" with "invent", and to say that any of these three companies has not innovated would be wrong. Apple's innovations were to bring geeky technology to the masses in a way that made sense and were useful (GUI, CD-ROM drive, USB, Unix); Microsoft of course were the ones who spread computing far, wide, and deep; Dell's innovations were in manufacturing and sales, and they can be fairly credited with commoditizing the personal computer. In my opinion Michael Dell has done more to drive down the cost of computers, thereby bringing heretofore artificially expensive gadgets into the mainstream, than anyone else. Like him or loathe him, his place in computing history is secure.

    • by skiflyer (716312)
      And anyone who believes your arguments doesn't grok money, momentum, business users or how real individuals (as opposed to just geeks) use personal computers.

      But hey, claim an argument is obvious and it must be right!
    • Microsoft's asset is an OS that people are still locked into, but becoming violently sick of.
      That's an interesting concept, but most people don't know what an operating system is. To a majority of the purchasing public, an OS is part of the computer. Both companies (Apple, MS) are aggressively perpetuating this myth; and the consumer will very likely never realize that there's a difference.
    • by tprime (673835)
      The guys who will eat their lunch are the Googles and Apples of the world, who are both innovating and listening to their customers

      Apple caring about their customers? I am not quite sure why that reputation still lives but they have almost become the next Microsoft in terms of how many decisions they make to limit what users can do with their tools (not going to cite links, but just do a /. seach on Apple for the last couple of years)

      Google innovates, but they are no longer the darling of their 'do
    • by Shivetya (243324)
      Honestly I don't see people getting sick of Windows, there is no alternative on low end machines that people will flock to because there is no software for them. It is human nature to complain and the biggest target is Microsoft. I use Windows and OS X at home. I am strictly restricted to XP or NT at work on PCs. It doesn't get in my way, it doesn't do anything wrong. If anything the same problem I have with OS X I have with Windows; OS X handles it better; and that is bad software. Hell even my iMac
    • by $1uck (710826)
      The only hope (IMHO) for Microsoft is to split into several different companies one Offering an OS, one offering Development Tools/solutions, one for Entertainment, one for Business software. Companies that have no ties implicit or explicit as I think it is these ties between the various business units that is killing them.
    • Re: (Score:2, Interesting)

      by MobyDisk (75490)
      Why does Slashdot love Google sooo much? Frankly, I find Yahoo to be a very competitive search engine. There are a few things I think it does better than Google, especial when searching for obscure information. Yahoo's movies, weather, etc. make it really useful. I think for the average home user who wants a "portal" Yahoo is the best balance between a pure search engine and a good home page. Why does everyone hate them so much?
  • by elrous0 (869638) * on Tuesday June 03, 2008 @03:30PM (#23643275)
    Sure it cost his shareholders billions, sure he's going to lose his job and be sued into oblivion for gross mismanagement, sure he will be lucky to make it out of the shareholder's meeting without being tarred and feathered. But the important thing is that he stood up to Bill Gates, stuck out his tongue, and yelled "I DON'T LIKE YOU!"

    And isn't that what it's all about, folks?

    • Yeah. That will have been worth it, when in 2010, Yahoo! shareholders realise their $11.00 per share.
      • by Odder (1288958) on Tuesday June 03, 2008 @03:46PM (#23643519)

        Yahoo would not have survived to 2009 if all it's employees quit. That's why Yang made sure $2 billion of the purchase price would go to employee severance plans. There's probably been some disruption anyway. Wouldn't you have a resume on the street with all of the FUD and BS being flung? The severance plans gave employees a reason to stick around and be fired by M$, or just keep on working if the deal fell through.

        Painting this to be a personal thing by Yang is nuts. Yahoo and M$ were getting along famously until M$ decided to launch a hostile takeover.

        • Re: (Score:3, Informative)

          by umofomia (639418)

          Painting this to be a personal thing by Yang is nuts. Yahoo and M$ were getting along famously until M$ decided to launch a hostile takeover.

          Microsoft never launched a hostile takeover. A hostile takeover means bringing the offer to the shareholders directly, which they never did. All Microsoft did was bring their offer to Yahoo's board, which is what any other company would do if they were interested in buying them. Apparently this latest news indicates that Yang decided to not even negotiate. Thou

      • by WebCowboy (196209) on Tuesday June 03, 2008 @04:34PM (#23644115)

        Yeah. That will have been worth it, when in 2010, Yahoo! shareholders realise their $11.00 per share.
        It all depends on your perspective. Yes, it WILL be worth it for Yahoo EMPLOYEES and USERS. On the other hand, Yahoo SHAREHOLDERS are understandably unhappy. Yahoo shareholders that are angry are upset because they wanted a way to jump ship and make a boatload of money...pure greed. A buyout would hurt Yahoo employss, Yahoo users and the industry as a whole. It would make the AOL/TW and Daimler/Chrysler mergers look like a raging success.

        If it came as a surprise to anyone that Yahoo's founders and high-level managers have an antipathy towards MSFT then they must've been living in a cave, or are total morons. From Yahoo's inception there has been little love for MSFT--if they ever cooperated it was grudgingly, in their own self interest. There is a cultural gap bigger than the Grand Canyon there.

        It doesn't help that there is a giant impedance mismatch when it comes to technology and infrastructure. A Netcraft search is telling: Yahoo is almost universally FreeBSD, and what is left is Linux. Yahoo has ZERO Microsoft in their data centres. MSFT, of course, is almost universally Windows Server.

        Remember what happened to Hotmail when MSFT bought it? They ripped out all the FreeBSD over the first couple of years, subjecting users to regular periodic disruptions. "To hell with users, we eat our own dogfood dammit!". Not only that, I'd say most of the hotmail employees were abandoned too--wandered away or pushed out.

        Hotmail still exists today as a cornerstone to MSFT's "Live" initiative and is probably the biggest webmail provider out there so it wasn't all bad of course, but there is a difference here: MSFT had no webmail service of note before buying Hotmail. In the case of Yahoo, what have they got that MSFT doesn't have? They both have an IM platform and client, a search portal, webmail, advertising services, etc...except NONE of Yahoo's runs on MSFT technology! Within 2 years, the yahoo portal will be gone, the IM client will be gone, the webmail will be gone, everything will be gone. Yahoo is coveted for its customer base and advertising presence. It'll live for awhile as "MS Yahoo! Live" for awhile then it'll be gone. It's employees will be gone. It'll be a footnote in history.

        It doesn't matter all that much to me; I have no great love for either company and think they both offer mediocre service and crappy software. However, if Yahoo's directors and Yang himself care about the company and really believe it would grow, they've made the right decision to resist a buyout by MSFT. You'd have to be a fool to think there'd be anything of substance left of Yahoo after MSFT slayed them and feasted upon the corpse. Some of us would cheer to see that, but I'm betting the founder, directors and loyal employees would understandably NOT want to see that.

        Anyways, who is to say that Yahoo shareholders would be better off with the MSFT shares tossed their way in a buyout? Right now, I'd say NEITHER stock is going anywhere exiting in the next 2 years. By the way, if you just go by the charts, Yahoo did the right thing; in the past year, YHOO has lost just over 9 percent, but MSFT has lost over 10 percent. If you extend where things have been out to 2010, if you think YHOO is heading towards $11, then MSFT will probably be $10.50.

        • Re: (Score:3, Insightful)

          by afabbro (33948)

          Yahoo shareholders that are angry are upset because they wanted a way to jump ship and make a boatload of money...pure greed.

          You realize that these are the people who put up the money for the company...without whom, there would be no company. They're entitled to be greedy. It's their company.

          • by WebCowboy (196209) on Tuesday June 03, 2008 @07:18PM (#23645943)

            You realize that these are the people who put up the money for the company...without whom, there would be no company. They're entitled to be greedy. It's their company.
            You realise that the directors are informed people with a vested interest in the further continuance and growth of a company. They are there not only to "maximise shareholder value" but to act as "sober second thought" against potential "mob rule" by shareholders that are either ignorant or greedy. Without THEM there would probably be no Yahoo today either. Without them Yahoo would probably have sold themselves to MSFT years ago and thousands would have been without jobs and we'd all have one less choice on the market.

            Without Jerry Yang, or thousands of Yahoo employees there'd be no Yahoo either. Do you not think they're also "entitled to be greedy" too? I think so. Also keep in mind that Icahn is leading this crusade. Icahn didn't "put up the money for the company" to help start and nurture and grow the company. Icahn set his "corporate raider bastard" target on Yahoo LONG after it came to prominence, and bought up millions of shares with the full intention of flipping them to MSFT.

            Not only is Icahn NOT responsible for Yahoo's existence, it is full intention to END Yahoo's existence. That is his modus operandi: March into a public company using loads of capital and credit, start scheming to out all the directors and replace them with his cronies, start throwing the lawsuits around until he gets his way, then evicerate the company and sell off its guts to the highest bidder.

            I don't have all that much love for Yahoo, but I'd have to say that my distaste for pushy, selfish corporate raiders exceeds whatever beef I've ever had with Yahoo, and even Microsoft.

            • Re: (Score:3, Informative)

              by mark2003 (632879)
              There is a name for this - it is called the agent-principle problem. The principles of the company are the shareholders, or if it is in financial distress, the debt holders. They own the company. The managers of the company are the agents and they are supposed to act in the best interests of the principles. This means that they should be returning maximum value to the share holders, either through paying out cash or investing it to create value (growth is not the same thing as value, with a negative ROIC it
    • No (Score:5, Insightful)

      by everphilski (877346) on Tuesday June 03, 2008 @03:35PM (#23643341) Journal
      It's about taking your January share price of $19 and doubling it into $40 over the course of a few short months, not to mention your shareholders, and perhaps most importantly vested employees. Sure, Jerry has a lot of cash with or without Microsoft but employees with shares could literally double their investments overnight with this deal. I'm sure theres a good bit of internal angst.

      People used to speak of Microsoft Millionaires, this could have made a few Yahoo Millionaires. Chances are Ichann will get a shot to do what Jerry should have done.
      • Re:No (Score:4, Insightful)

        by morgan_greywolf (835522) * on Tuesday June 03, 2008 @03:53PM (#23643623) Homepage Journal

        People used to speak of Microsoft Millionaires, this could have made a few Yahoo Millionaires. Chances are Ichann will get a shot to do what Jerry should have done.
        Maybe Yang thinks he can do better without someone buying him out. Yang, and other members of the Board, are not obligated 'maximize shareholder value at all costs'.

        In the long run, their goal is to make the company profitable. The more profitable, the more shareholder value is improved. Usually this coincides with maximizing shareholder value, but not always.

        In the end, if the voting shareholders feel Yang isn't doing a good enough job by making choices they don't agree with (like sticking his tongue out at Bill Gates and Microsoft), then they can all vote him off the island, so to speak.

        No, I doubt Icahn will get anywhere. It isn't Icahn's personal call whether or not Yang made the right call, it is the votes of all those holding voting stock.
        • Re:No (Score:5, Insightful)

          by everphilski (877346) on Tuesday June 03, 2008 @04:08PM (#23643803) Journal
          Follow the news, it's not that hard.

          It's not just Ichann. It's several managers of several mutual/hedge funds, several of which tend to be quiet and not meddle in the affairs of boards and the like. They just want a steady ROI. But this was just too much. You might just find a significant enough coalition of major shareholders to oust the board.

          And read my other post. Yahoo's stock price climaxed at $41 post-bubble, and has been sliding steadily downhill ever since. He can talk all day, but Yang hasn't shown he can turn the ship around until he's forced to. And at that, since Microsoft's offer is withdrawn, the price is still creeping downward. All talk, no game.
        • Re: (Score:2, Informative)

          by alexhard (778254)
          Actually profits don't play into it at all. The simply reason for that is that profit doesn't take into account the opportunity cost and time value of capital. He really does have to maximise shareholder value.
    • by Bryansix (761547)
      Yes, yes it is!
    • by ivan256 (17499) on Tuesday June 03, 2008 @03:38PM (#23643381)
      .... He made a long-term decision instead of thinking about short-term profits. He's being sued for looking beyond the next few quarters.

      If you think Yahoo can't turn it around, then yeah. He fucked up big-time. But if you think (as I'm sure he does) that Yahoo can be an innovative company that can step in to fill the gap as Microsoft declines, then he did the right thing. Hardly matters either way though. (Some profit now > Lots of profit over time) in the eyes of wall street.
      • Re: (Score:3, Insightful)

        Did he even take the offer to the shareholders? That question is going to feature prominently in this case, I think you will see...

        Basically, yes he may have been doing 'a good thing' by blowing Microsoft off, but did he go about it in the right way? Was the offer rejected unilaterally or were the owners of the company, the shareholders, allowed any say in the matter? From what I can see, no they were not.
      • by everphilski (877346) on Tuesday June 03, 2008 @03:45PM (#23643509) Journal
        Look at their 10 year trend here [google.com].

        They peaked at $100 a share before the bubble popped. Fair enough. Steadily rose to $41 back in 2005. Nice. But now look at the trend - steady decline ever since. Clip off 2008 to remove Microsoft's influence and the trend is even more severe. Yahoo's stock price is dying. Jerry can flap his wings and talk till he passes out about raising the value of Yahoo, but he wasn't doing it for the three years up till now, why is it magically going to occcur now? Microsoft was their best shot at creating shareholder value.
    • Re: (Score:2, Interesting)

      by miffo.swe (547642)
      I dont think anybody is stupid enough to think that Yahoo would last that long after a Microsoft takeover. As soon as the assets (its users) was migrated to Windows Live or whatever brand is up for the day it would have been dismantled and chopped up to pieces. The only thing Microsoft wanted was a quick way to get some users to its online services since they cannot get anyone to come by themselves.

      Its far better from Yahoos point to get together with Google in the long run. A good partnership could generat
    • I'm sure everyone here realizes that Yahoo is a BSD shop. How many of those people are actually going to stay, knowing that the platform they work on now will eventually be replaced with some release of windows server? How many of those people find themselves ethically obligated not to work for a convicted monopolist? I would expect a huge turnover of their Unix people, especially those who have done primarily Unix their entire career. I'm certain Carl's proxy fight itself is causing a similar problem in it
  • Cry me a river. (Score:3, Insightful)

    by SpeedBump0619 (324581) on Tuesday June 03, 2008 @03:31PM (#23643305)
    If he had a 'well known' antipathy for Microsoft then it was known when he was hired as CEO. Presumably the board of directors considered it a good thing or they would have hired someone else. Investment is risk. If you can't accept that risk don't invest.
  • Public companies (Score:5, Interesting)

    by Romancer (19668) <(moc.roodshtaed) (ta) (recnamor)> on Tuesday June 03, 2008 @03:33PM (#23643311) Journal
    Fair warning: Rant

    Public companies are now being run by the shareholders that take out payday loans, refinance their houses so much they owe money when they sell, cannot build traditional savings since all their income is treated as disposable. Basically the get rich generation with no long term goals other than their next big "fix".

    Why does it surprise anybody that the driving force behind these companies is to sell out no matter what the cost to the business, the employees, or even the customers?
    • Re:Public companies (Score:5, Interesting)

      by Actually, I do RTFA (1058596) on Tuesday June 03, 2008 @03:37PM (#23643371)

      Why does it surprise anybody that the driving force behind these companies is to sell out no matter what the cost to the business, the employees, or even the customers?

      And to head off the stream of ignorance about to insist that public companies are legally required to maximize shareholder value, the US Supreme Court has rejected that interpertation. The purpose of a Board of Directors is to protect a company, which it is allowed to view as a collection of relationships between customers, employees, etc. The case that decided this precident was based around rejecting a higher offer to take one that better served the companies culture.

      Your company culture may be "profit maximizing," but don't pretend you can dictate to other companies.

      • Re: (Score:3, Informative)

        by Anonymous Coward
        Actually, what you're referring to is the "business judgment rule," which says that the Board's business judgment will not be challenged in court absent a showing of bad faith or being on both sides of a transaction. The Board is *required* to focus on maximizing wealth for the company's owners, i.e., the shareholders. However, under the "business judgment rule," the Board may be able to justify its decision to refuse a higher tender offer in that it better understands the long-term business implications
        • Re:Public companies (Score:5, Interesting)

          by Actually, I do RTFA (1058596) on Tuesday June 03, 2008 @04:45PM (#23644287)

          Actually, what you're referring to is the "business judgment rule,"... The Board is *required* to focus on maximizing wealth for the company's owners, i.e., the shareholders.

          No, I'm not. And no, the board is not. Unocal v. Mesa Petroleum established that, for Deleware companies (like Yahoo!), when faced with an unsolicited bid, the board could take into account not only shareholder value, but also the interests of: creditors, customers, employees, and possibly a larger community.

          When the Board throws a "For Sale" sign up, however, it is obligated to take the highest bid.

          • by Svartalf (2997) on Tuesday June 03, 2008 @05:54PM (#23645093) Homepage
            Indeed, this is the case- and that's what most people, even the sharesellers, don't seem to get.

            There's a set of specific obligations that a BoD and the Company Execs have to everything- sometimes it's to the shareholders, sometimes it's to the company. Some of the obligations end up overlapping, sometimes they're at odds and you have to actually consider the company, it's employees, etc. FIRST.
      • by Billly Gates (198444) on Tuesday June 03, 2008 @04:28PM (#23644039) Journal
        Teh surpreme court ruling does not matter.

        The shareholders legally run the company and as such can do whatever they hell they like including firing CEO's who do not sell out for get rich quick schemes.

        You can try to protect the company and what you feel is the best but the shareholders can legally fire you for doing so if they disagree with yoru directions. Actually they fire the board and create a new one who replaces you but still.

        I wish these financial institutions would return to long term growth.
    • by everphilski (877346) on Tuesday June 03, 2008 @03:39PM (#23643417) Journal
      The small shareholders, sure. But not the big ones, which comprise the majority of the people who are going to screw over Yang. You think Ichann, or any of the bank managers, mutual fund managers, hedge fund managers, etc. that have holdings in Yahoo are being run by people running to take out payday loans? Doubtful.
      • Re: (Score:3, Insightful)

        by russotto (537200)

        You think Ichann, or any of the bank managers, mutual fund managers, hedge fund managers, etc. that have holdings in Yahoo are being run by people running to take out payday loans?
        No, but they may be run by people who issued sub-prime variable mortgages to people they knew or should have known wouldn't be able to pay if interest rates increased a bit and real-estate prices didn't continue to increase.
    • ?

      Yahoo's largest shareholders are corporations of various of various sorts (investment banks, retirement funds, etc) and billionaires. People reliant on payday loans have very little voting stock in Yahoo. For the most part, if there is a proxy fight, it will be because sophisticated corporations and billionaires decided to make it so--any comments from the "peasants" won't make it past the help desk.
    • Re:Public companies (Score:5, Informative)

      by Dachannien (617929) on Tuesday June 03, 2008 @03:48PM (#23643547)
      Actually, 82% of Yahoo's float is held by institutions and mutual funds [yahoo.com].
    • That is an oxy-moron my friend. You lampoon the shareholders of Yahoo as those who, as you said, "...take out payday loans, refinance their houses so much they owe money when they sell, cannot build traditional savings since all their income is treated as disposable. Basically the get rich generation with no long term goals other than their next big "fix"."

      As shareholders of the company, that means they are making an investment(with disposable income mind you), which is what you said they were not capabl
    • by metlin (258108) on Tuesday June 03, 2008 @03:55PM (#23643645) Journal
      Welcome to Slashdot to see people who do not have a basic grasp of finance or business to rant about it.

      For one, the majority of shares in most public companies today are held by institutional investors. The next big share holders tend to be PE folks (like Icahn, KKR etc), followed by insurance companies, hedge funds etc.

      Secondly, you cannot have your cake and eat it too. If you went public, you did it for the money - and you can't cry foul when you do something stupid and when people hold you accountable. If you wanted your freedom, you should have stayed private. Sad, but true.

      Now, one of the biggest advantages of going public is that you raise capital - and when investors put in their money, they expect returns. Now, some people like Icahn are just vultures who are looking for an excuse to make a quick buck, but most other investors are not happy, either, with the way Yahoo handled the situation.

      Like or dislike does not enter business. If it makes business and strategic sense, you do it. If it does not, you don't. If you are interested in discussing morals, ethics and "feelings", you should have kept the company private and done whatever the hell you wanted. I haven't seen anything that indicates that a merger between Yahoo and Microsoft will be a bad thing. It may throw in a little more competition; however I can see why Google is worried - they run the risk of being called a monopoly if Yahoo gets bought out. At the end of the day, once you have shareholders, you have a responsibility to them. You may not like it, but you should have thought of it before you went after the greenbacks.
      • by bit01 (644603) on Tuesday June 03, 2008 @06:26PM (#23645411)

        If you are interested in discussing morals, ethics and "feelings", you should have kept the company private

        Unmitigated nonsense, and typical of bottom feeders who want to rationalize their unethical behavior.

        Making a company public does not mystically give the company directors or shareholders a free pass to act unethically.

        Ethical and other rules apply to people regardless of whether they are participating in a company or not. Companies are just individuals cooperating to achieve common goals and if those individuals are acting ethically then the company is acting ethically also.

        ---

        Marketing talk is not just cheap, it has negative value. Free speech can be compromised just as much by too much noise as too little signal.

    • by drsquare (530038)

      Public companies are now being run by the people who own them and are invested in them


      Fixed your post.
  • Microsoft who acted out of a personal interest to keep Yahoo independent. Something wrong with that? Oh, yeah... public company.

    There's nothing wrong with acting in personal interests if there's a reasonable argument that it coincides with shareholder interests. And in this case, there certainly is.

    Look at Google's value. Which companies are in any position at all to grab any significant share of what they're doing in the market? It's a short list. Yahoo's on it.

    If you were holding onto a significant chunk of one of those companies, would you want to (a) sell it now for a quick but small profit or (b) figure out what changes you need to make in the company to have it better compete with Google and acquire value on that level?

    Some shareholders might choose a. But b is certainly reasonable.

    Frankly, so is the Microsoft antipathy. People like to talk as if the haters are just irrational folks who got up on the anti-MS side of the bed. Nevermind that there's a significant real technical and business history that would make any sane and competent person wary of them.

    The web as a platform is open and expanding. Windows as a platform is stagnating and closed. Which do you want to be invested in for the next 10 years?

    • by rhsanborn (773855)
      You're exactly right, and that is why shareholders probably wouldn't win a lawsuit for negligent management. But, the direction of the company is dictated by the shareholders. We're about to find out whether the shareholders agree with the rejection of Microsoft's offer or not. There are significant benefits to going public, capital being one of them, but that those benefits aren't free.
  • by swordgeek (112599) on Tuesday June 03, 2008 @03:53PM (#23643611) Journal
    I hope everyone realises that Carl Icahn isn't a long-term shareholder upset with how the company is being run. He thought he could run it better when Jerry Yang rebuffed MS, and AS A RESULT, bought a significant number of shares. In other words, he bought into the company for the sole purpose of getting Yang tossed out.

    In the world of billionaires, not always the most friendly of folks, Icahn is about as pleasant as a rabid shark with PMS. If he gets his way, he'll install a new board, sell Yahoo to MS at $40, help gut the company, and then leave with a few more dollars in his pockets. Yahoo staff will be out of work, the search engine market will become a battle of two titans, and basically everyone will lose except for Carl and his board.
    • Some billionaires would take over other companies and sell off the pieces just to make a buck. Some would give a token amount of their money away to charity. Me, I would shoot a guy in public with 50 witnesses. Because clearly the laws of this country do not apply to people of such wealth.
    • Re: (Score:3, Interesting)

      by Deagol (323173)
      Wait a sec... Yahoo is a search engine? I thought it was an entertainment hub or sorts. I mean, sure, it *was* a search engine, back in the days when Lycos was it's primary competitor, complete with a lean, clean front page almost as nice as Google's. Now that I think about it, MSN isn't a search engine, either -- just another entertainment hub.

      Of course, Google has started down the path of crapware bloat w/ its acquisition of YouTube. At least its front page is still an honest-to-goodness search engi

  • unfortunately they are the most damaging factor for the vision and progress of any company.
    • by lintux (125434)
      What especially sickens me is that this "mister Icahn" dude wasn't even a Yahoo! shareholder at the time this whole soap started. As far as I know he bought a shitload of shares less than a month ago and apparently this means he can start messing with things that happened before he got involved.

      Maybe this really is how this whole "public company" thing works, but IMHO it's retarded.
    • Re: (Score:3, Informative)

      by OakLEE (91103)

      unfortunately they are the most damaging factor for the vision and progress of any company.

      Really?

      Shareholders give companies money to expand, grow, and operate. More over they do it during times when the company cannot raise money through bank or debt issuances. In fact the restrictions a company takes on when taking out a loan are often much more onerous then the messiest of shareholder revolts.

      Have you ever tried to start up a business? Do it, and try to get a loan before you've even set up shop. You

  • Yeah, it's a public company, but if he really feels it's in the best interest of Yahoo's long term survival to stay independent from Microsoft (which it is) then YES it is ok he turned them down. He has NOT neglected his fiduciary duty to the company merely because this won't give Yahoo a big boost NOW. By looking out for the long term viability of the company he has an even STRONGER argument in his defense, because next quarter's numbers are irrelevant if the company folds, or is turned into a ghost of the
  • I have been reading about this and for teh record icann is not a long term shareholder at all.

    He only bought teh company after teh failed deal in order to raid it. Read his record here? He will be more than happy to fire 100% of the employees and all assets for pennies on the dollar and then cash out.

    The man is a mennace and I am shocked what he did to Time Warner is legal? To me this is gross negligence but I am no lawyer.

    Yasng beleived in a couple years he would own more markets in advertising and softwar
  • It's interesting considering the first offer was kept secret, that the stock peaked and then rapidly tanked right before Microsofts second offer, it like someone quietly bought the shares and then sold rapidly to provoke a fall in price at which point MS stepped in and made an offer for 60% per share .. :)
  • Messy mergers (Score:5, Insightful)

    by Enderandrew (866215) <enderandrew AT gmail DOT com> on Tuesday June 03, 2008 @06:14PM (#23645281) Homepage Journal
    People seem to forget what a disaster HP/Compaq was, and what a money sink-hole AOL/TW was.

    Yahoo has been known to do most of their web development on open platforms and languages. Microsoft's web services often come in third place. By purchasing Yahoo, you either allow Yahoo to remain Yahoo and abandon existing Microsoft services (never going to happen), or you force Yahoo's users into Microsoft services they didn't want (wasting what you just spent billions on), or you basically keep the two companies as seperate companies.

    These two companies were not meant to be merged.

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