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Yahoo Spent $79 Million To Fend Off Microsoft 82

Posted by CmdrTaco
Apologetics Blog writes "Getting bought by one of the biggest companies in the world turns out to be a rather costly thing. Last year when Microsoft was in talks with Yahoo regarding a possible buy-out, in a report recently filed with the Securities and Exchange Commission, Yahoo announced that it cost them $79 million to fight off Microsoft. Most of that money was spent on advisors who examined Microsoft's proposals, and the way it would impact on Yahoo's search agreement with Google. The deal fizzled out when federal antitrust regulators said it would challenge any deal made between the two companies."
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Yahoo Spent $79 Million To Fend Off Microsoft

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  • advisors (Score:4, Insightful)

    by sveard (1076275) on Monday March 02, 2009 @11:14AM (#27040157) Homepage

    Shows that consultants win, as they so often (always?) do

    • Consulting (Score:2, Funny)

      by Anonymous Coward

      If you're not part of the solution, there's plenty of money to be made prolonging the problem.

      http://despair.com/consulting.html

      :D

    • So... Yahoo basically paid out $179,000,000 to have someone do their homework assignment for them? Maybe if they applied themselves a little harder, they wouldn't be in this situation.
      • Yahoo Spent $79 Million To Fend Off Microsoft

        Yahoo basically paid out $179,000,000...

        Either inflation is really bad this year, or you are using Excel.

  • by Shakrai (717556) on Monday March 02, 2009 @11:14AM (#27040161) Journal

    Does Yahoo! have a viable business plan besides merging with someone else at some point? If I was one of their shareholders I might have gotten pretty annoyed that they dismissed the MSFT offer out of hand the way they did. What's the future of Yahoo! without a merger? They have a platform in the works that can pose a serious challenge to Google and secure marketshare against them or Microsoft? Didn't think so.....

    • by biscuitlover (1306893) on Monday March 02, 2009 @11:45AM (#27040559)

      Actually, compared to Microsoft's flailing in search, Yahoo are a pretty solid number two.

      Hang on, let me rephrase that.

      Microsoft has been greedily eyeing up Yahoo's number two slot.

      Oh, forget it.

    • by Lumpy (12016)

      Glad you're not one of their biggest investors with your money,money,money blinders.

      You can be #2 and be wildly profitable and stable. In fact many time #2 is the most stable company to invest in.

      Beamish is the #2 beer in Ireland. Guiness being #1 does not make all Beamish executives poor and destitute. They are actually very rich and doing very well. The company is thriving.

      And honestly Beamish tastes far better than that Bitter Guniess garbage.

      • Re: (Score:3, Insightful)

        by Shakrai (717556)

        You can be #2 and be wildly profitable and stable. In fact many time #2 is the most stable company to invest in.

        Thanks for telling me what you can be. Now tell me if you honestly think Yahoo has any future outside of slowly bleeding to death after Microsoft overtakes them and Google becomes even more entrenched.

        • by hairyfeet (841228)

          I'm sorry but HAHAHAHAHAHA! Did you say MSFT overtakes them? Have you TRIED MSFT Search? Hell it was shit 10 years ago and it is shit+ extra stink now. The searches are total crap and most of what you find is simply crap trying to sell you junk that has NOTHING to do with what you are looking for.

          Yahoo may not be making any headway on the mighty Google,although personally I use Yahoo Search as I find it has better features, it is simply leagues above anything MSFT has or has tried in the last 10 years. W

          • by Shakrai (717556) on Monday March 02, 2009 @12:36PM (#27041189) Journal

            I'm sorry but HAHAHAHAHAHA! Did you say MSFT overtakes them? Have you TRIED MSFT Search? Hell it was shit 10 years ago and it is shit+ extra stink now. The searches are total crap and most of what you find is simply crap trying to sell you junk that has NOTHING to do with what you are looking for.

            I'm talking about the odds of success which strange as it may seem have little to do with the quality of Microsoft search. I hate Microsoft as much as the next guy but if you look at it objectively I think it was a bad deal for Yahoo's shareholders when management rejected Microsoft's offer. Microsoft offered $33/share, which was more than they've been valued since 2006 (and only for a brief time in 2006 at that).

            Do you honesty see Yahoo crawling back up to $33/share on their own with either their current product portfolio or anything they have on the drawing board? I hear a lot of people bashing Microsoft but I don't hear too many people defending Yahoo. I still say I would have been pretty pissed if I was a Yahoo shareholder.

            • but if those odds of success were AT ALL any good, microsoft would have a better search by now than the shit they had for aeons. they dont. they didnt improve. i dont see the trend changing.

              you dont need to have a 'product' on drawing board to make money. most of the internet businesses sell SERVICES, ADS and etc and make profit. all yahoo needs to do is to become profitable and earn money. not be 'innovative' and create products etc.

            • by DannyO152 (544940)

              I don't know. At the time, I was fairly sure that the shareholders were behind management. You also have to figure that an investor with tech stocks probably already held as much Microsoft as they wanted. (I forget, was the offer strictly cash or cash and stock).

              Meanwhile, frankly, I thought Microsoft got lucky that the deal fell through. They would have gone into debt for the privilege of overpaying for Yahoo, and all because of Ballmer's obsession with search. I was noticing today that Microsoft's stock h

              • by Shakrai (717556)

                I was noticing today that Microsoft's stock has had a consistent slope downward since the deal, 13 months ago. How does Ballmer keep his job?

                Well, to be fair to our chair throwing friend, every stock not related to pasta or firearms has had a consistent slope downward in the last 13 months......

              • by hairyfeet (841228)

                Actually calls for his firing [extremetech.com] have already started. When you see that The Win7 hype [engadget.com] is just that, and when it comes to enterprise, which is where the big bucks are and where MSFT has always made boatloads of cash, that Win7 doesn't cut it [infoworld.com] anymore than Vista, I can't say that I blame them.

                We have seen that under his watch he has gone from one idea to another like the whole company has ADHD, with Zune(trying to be Apple), trying to shell out WAY too much money for Yahoo(trying to be Google) and finally his ve

        • Yes actually I do, though I'd call it crapware. Almost every PC I've ever serviced for a friend (read: re-install windows) has had the yahoo toolbar installed into firefox or IE. Normally I do a nice clean install sans the Yahoo Bar (You've got a google bar, so what's the point?). I've been surprised at the number of (sane and intelligent) people who for some maddening reason, actually want it back?!?

          I'd call it crapware, but it's actually one of the most commonly installed bits of crapware you'll find.
      • by cheftw (996831)

        Mod parent insane. Beamish is awful and a joke. People buy it because it is cheap, or because they feel sorry for it, or because they are incredibly old. I fully support them and think they are wonderful people and businessmen but their stout is just not good.

    • by rbanffy (584143) on Monday March 02, 2009 @12:38PM (#27041207) Homepage Journal

      Actually, I sincerely doubt the MS offer was done in good faith.

      Had the MS bid gone forward, MS would have access to a whole lot of Y! internal data, research, plans and so on. If they later retired their offer as they considered the companies were never really a good match, MS would have walked away with a lot of inside knowledge about its biggest competitor in the search market and Yahoo would have gotten nothing but a lot of FUD and a probably mortal wound.

      This would be a lot less expensive than buying Yahoo! would be in the first place and Yahoo would be every bit as gone as #2 as if they were bought.

      This kind of maneuver is so typical of Microsoft I cannot imagine any other explanation.

      • by Darkk (1296127)

        Problem with merges is that people assume they will have access to everything. Not entirely true. It depends on the merger agreement. They could stipulate that Microsoft can't access their "trade secrets" for a period of time, say for a year or so. This prevents a company milking them dry and toss em out like an empty beer can.

        Yahoo! could have had the upper hand in the merger but CEO didn't play his cards right so he screwed up....twice. So now the new CEO is cleaning up the previous CEO's mess with l

        • by rbanffy (584143)

          I have to disagree. Had MS been denied access to more sensitive information, any proposal would collapse at once. The damage (disturbing business, casting a shadow on Y!'s future viability, destabilizing the workforce and creating an uprising of shareholders) would have largely been already done.

          There is no way Yang could have spun this in a favorable way and there is no way he could have prevented the damage.

          And, BTW, I don't get the way the press portrayed Icahn as "activist-investor". The term "corporate

    • by vertinox (846076)

      If I was one of their shareholders I might have gotten pretty annoyed that they dismissed the MSFT offer out of hand the way they did. What's the future of Yahoo! without a merger?

      I don't know about their current future, but I know the future of Yahoo merged with Microsoft would be short lived.

      As in... If you didn't sell your shares shortly after the merger, then you would not be receiving much for your investment if you were long term seeing MS only useful option would be to dismantle the company.

      Secondly,

      • IS MS buys Yahoo, Yahoo dies off, and shareholders are paid off at $x ($33 was the offer) a share, which they can then turn around and invest in MS if they choose.

        The reasons MS wanted Yahoo were:

        Yahoo Mail
        Yahoo Answers

        Combining Yahoo Mail users with Hotmail users would give them the biggest piece of the e-mail pie.

        Yahoo Answers is the one thing MS doesn't have an analog to, and it's one area where Yahoo beats the pants off of Google. (Yes, it's retarded and filled with morans, but that's the point - it's

        • by jbengt (874751)

          IS[sic] MS buys Yahoo, Yahoo dies off, and shareholders are paid off at $x ($33 was the offer) a share, which they can then turn around and invest in MS if they choose.

          Not quite
          The offer was more MS stock than cash, and if the merger had gone through, MS stock woud've tanked.
          Really, Yahoo did Microsoft a favor by turning it down.

      • Secondly, if I were an MSFT shareholder, I'd be wondering why Microsoft is purchasing a company that duplicates their own services with MS Live.

        They acquire a completely different search ecosystem.
        Not only do they get to pick-and-choose the best Y! technologies for integration into MSN, having two different portals allows for experimentation. Wondering if a new feature will be a dud or a hit? Implement it on Y!. If it falters, kill it. If it becomes the Next Big Thing, duplicate on MSN. But make your MSN implementation better. For example: offer 1 gig online drive space to Y! users... if it does well offer >1 gig on MSN (and you have more time

    • Re: (Score:3, Informative)

      by DerekLyons (302214)

      If I was one of their shareholders I might have gotten pretty annoyed that they dismissed the MSFT offer out of hand the way they did.

      Why? Yahoo! is number two in a lot of it's business areas, but it's a solid number two and continues to perform solidly if modestly. The deal with Microsoft brought nothing to the table for Yahoo! subscribers but a short term injection of cash and a long term marriage to a company with uncertain future prospects.

      As a Yahoo! shareholder I'm glad they fended off Micro

  • I could be wrong but wasn't Google trying to buy Yahoo as well but got stopped by the regulators because then google would be considered too big? Nice to see that the door swings both ways. If you ask me Yahoo is the one that really got hurt in all this. I guess the lesson is never get in between two giants battling it out. ;)
  • Correction (Score:5, Funny)

    by BlindSpot (512363) on Monday March 02, 2009 @11:16AM (#27040183)

    Getting bought by one of the biggest companies in the world turns out to be a rather costly thing.

    That should read "Not getting bought out..." since the deal never went through. If they had only just given in to Microsoft... then all it would have cost them is their souls.

    • Re: (Score:1, Troll)

      Hahahahahah dude, getting bought out cost money. It's not cheap to hire lawyers to review everything an make sure there are not issues. Oh and I guarantee that Google would have brought the merger justice dept because Microsoft is just extended it's reach again. 60% of the search market is nothing compared with 80% of the desktop market.
    • by elrous0 (869638) *
      I'd say they lost whatever souls they had back when they started to help China [washingtonpost.com] throw journalists in prison.
  • The $79 million dollars of advice was ordered by and for the previous CEO, Jerry Yang. The new CEO, Carol Bartz, is a different kind of business person. She doesn't need $79 million dollars of advice to talk with Microsoft.
  • advisors (Score:1, Funny)

    by Anonymous Coward

    $79 million for advisors? Seriously?
    I think I'm in the wrong line of work.
    Can anyone explain that to me?
    How can that possibly cost that much?

    • Re: (Score:3, Insightful)

      by ZeroExistenZ (721849)

      How can that possibly cost that much?

      Good salespeople.

    • Re:advisors (Score:5, Funny)

      by Shakrai (717556) on Monday March 02, 2009 @11:26AM (#27040307) Journal

      How can that possibly cost that much?

      They hired Dogbert Consulting?

      • by Goffee71 (628501)
        A simple "No thank you" and maybe a box of consolation chocolates would have done it!
    • Re:advisors (Score:5, Funny)

      by larry bagina (561269) on Monday March 02, 2009 @11:31AM (#27040375) Journal
      maybe they searched for "cheap advisors" and accidentally clicked the sponsored result.
    • Re: (Score:2, Funny)

      by Anonymous Coward

      I would be glad to explain it to you and guide you in your desire to switch occupations

      For my trouble all I ask is the small sum of (cue Dr Evil voice) $79 million dollars

    • Re: (Score:2, Insightful)

      by Anonymous Coward

      I don't know how advisors work but consultants have a simple business plan:

      • Employ clueless CS graduates for cheap.
      • Hire them to clueless company wanting software project as "consultants" for $100 per hour.
      • Profit.

      The advisors probably replace "CS graduate" with "newly qualifed lawyer" and charge 10x the amount.

      Profit.

    • by Alphager (957739)

      $79 million for advisors? Seriously? I think I'm in the wrong line of work. Can anyone explain that to me? How can that possibly cost that much?

      I could tell you, but i charge 1000$/word.

      • by AlXtreme (223728)

        I could tell you, but i charge 1000$/word.

        You owe me $80k for reading your $8000 comment, you insensitive clod!

    • by Richy_T (111409)

      You know, it's hard to put a price on such things...

      I mean, if you're a manager using other peoples' money to make sure the blame falls on someone other than you, that is.

    • I have an MBA... I could have told them how to royally screw their investors for no more than $78 million...

  • by SGDarkKnight (253157) on Monday March 02, 2009 @11:29AM (#27040345)

    here is the link to the atricle that actually talks about the $79 Million dollar tab, with all sorts of links to all the related article stuff...

    http://news.cnet.com/8301-1023_3-10184454-93.html?tag=mncol;posts [cnet.com]

  • by OneSmartFellow (716217) on Monday March 02, 2009 @11:37AM (#27040457)
    1.) Immediately investigate Jerry Yang's connection with the "advisors".
    2.) Ensure that the current CEO understands that any future "advisment" of this nature will come out of her pension.

    That's $215K per day for a whole year !

    Do you expect me to believe that the 100 top flight lawyers and accountants were working every day of the year on this ? Or did they just hire Accenture ?
  • If MS takes Yahoo! over they succeed in their long term goal of a takeover.

    If MS fails, like what happened here, there was still a short term gain for MS, as Yahoo! was 'forced' to spend $79 million on keeping MS at bay. Regardless of how people fell about Yahoo! overspending for their consultants, they still would have had to allocate some money that would have been used for other services or generating new content and ideas.

    This means Yahoo! was forced to expend a significant amount of money and that they

  • by Xest (935314) on Monday March 02, 2009 @11:41AM (#27040509)

    When our company took over a company worth £43mill it cost us £1mill in legal fees etc. etc. to get everything looked over and sorted out.

    I think for something of Yahoo's worth, $79 million isn't massively unrealistic. I'd say it's not unreasonable either, it is to most people including me, but in the world of business I'd say it's probably not.

    Still Yahoo, perhaps the most business plan challenged IT company in the last few years, turning down Micrososft, going for Google, getting told to f off by Google because of the potential for monopoly problems and then running back to Microsoft and being told to f off by Micrososft too.

    Ballmer is probably laughing his arse off, they offered over the odds to pay for the company but if they had paid that much and then seen the resulting decline of it's worth due to a number of factors from Google to the financial crisis then they'd have wasted literally billions.

  • Yahoo should have just let business happen. Being eaten by Microsoft is not always a bad thing /.'rs make it out to be.

  • by briancarnell (94247) on Monday March 02, 2009 @11:54AM (#27040683) Homepage

    Does anybody at Slashdot ever actually check *anything* before they post?

    "The deal fizzled out when federal antitrust regulators said it would challenge any deal made between the two companies.""

    The link is about the deal between *GOOGLE* and Yahoo!. Google != Microsoft.

    The deal between Yahoo! and Microsoft fizzled out because Yang did everything he could to prevent it, not because of antitrust concerns.

    • I think you need to re-read the previous sentence again:

      Yahoo announced that it cost them $79 million to fight off Microsoft. Most of that money was spent on advisors who examined Microsoft's proposals, and the way it would impact on Yahoo's search agreement with Google.

      The italicized part is the "deal" that was referred to in the following sentence and what that linked story was about. Their investigation in how it would affect the Google deal was part of the total 79 million dollars that was spent when Microsoft made them the offer.

  • Sounds more like Yahoo is cooking the books a little bit to hide some losses, instead (creatively) funneling it into this consulting gig.

    "But a loss on the balance sheet is still a loss, right"?

    Not exactly, when PR and taxes are concerned.

  • by UnknowingFool (672806) on Monday March 02, 2009 @12:15PM (#27040925)

    the increases in outsourced service provider expenses were primarily the result of incremental costs incurred in general and administrative expense of $79 million for 2008 for outside advisors related to Microsoft's proposals to acquire all or a part of the Company, other strategic alternatives, including the Google agreement, the proxy contest, and related litigation defense costs.

    The way I read it, there's a lot of fees rolled into one.

    • consulting to analyze the MS offer or find an alternative (Google)
    • lawyers fees once they decided to reject the offer
    • consulting and lawyers fees to fight Carl Icahn's involvement (proxy contest) into the MS-Yahoo deal when he tried to have the board replaced
    • administrative fees to set up the Google deal (a deal worth $250 million to $450 million per year would require some initial investment)
    • lawyers fees to setup the Google deal

    Some of you may ask why so many lawyers. Well there a 3 separate legal issues here. Fight MS, Deal with Google, and fight Carl Icahn. You might get the same lawyers to fight MS and figure out the Google deal, but they really are different areas of the law and the large scope would mean you need more more bodies. For the proxy contest, you probably want a law firm that specializes in that.

  • 136th largest (Score:3, Informative)

    by dotwhynot (938895) on Monday March 02, 2009 @12:45PM (#27041275)

    Getting bought by one of the biggest companies in the world turns

    Microsoft is the worlds 136th largest company [cnn.com]

    • by gateep (643001)

      By revenue maybe, but it looks like they're #1 in terms of profits.

      • by gateep (643001)

        Nuts, i was only looking at #101-#200 - still, they're a lot higher up when ranked by profit rather than in terms of revenue.

  • by aunt_jamima_sr (668433) on Monday March 02, 2009 @12:49PM (#27041321)
    > The deal fizzled out when federal antitrust regulators said it would challenge any deal made between the two companies. The way I understand it, the deal actually fizzled out because some Yahoo C-level egos couldn't agree on a valuation with Microsoft. Yahoo, whose stock currently trades for $12.60, wouldn't sell to MS for $33 / share because they felt they were worth $37 / share, and also because they are idiots. Slashdot actually covered this story at the time. [slashdot.org]
    • I think one thing people keep forgetting is that, the $33 is a misleading figure. Only half of the amount was in cash, and the rest in MS stock. Given the complexity of the deal involved, and the monopoly concerns (MS and Y! are big players in instant messaging and mail), the deal would have been AT LEAST a year to happen. And look at what MS price is a year after that (nearly down by 50%), so the effective price for the shareholders would have been $24-25, and not $33.

      This is of course, assuming that the d

  • by Locke2005 (849178) on Monday March 02, 2009 @01:15PM (#27041657)
    If it costs you over $70 million to figure out how being acquired by Microsoft would effect your agreements with Google, shouldn't you begin to suspect your agreements with Google are too fucking complicated? Especially when a simple Google search would tell you how Microsoft feels about Google [google.com]
  • So, on a whim, MS can
    • zap $79 million from Yahoo!'s budget
    • get multiple representatives on the board

    These appear like real-life versions of a DOS and an injection attack. Along similar lines, the FAT lawsuit against TomTom looks also like a case of doing damage for that sake of damage.

  • The $79 million was not due to the size of Microsoft, as the summary implies. It was because of the size of Yahoo. A small company would not have to spend $79 million to figure out the impact of MS buying it.

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