Archive: April, 2008

Yahoo has made its first reply to Microsoft since receiving a hostility threatening letter from Microsoft CEO Steve Ballmer on Saturday.

In a long response letter, Yahoo CEO Jerry Yang says that the Yahoo Board of Directors is open to a deal with Microsoft but feels the price offered is too low.

“Our Board’s view of your proposal has not changed. We continue to believe that your proposal is not in the best interests of Yahoo! and our stockholders. Contrary to statements in your letter, stockholders representing a significant portion of our outstanding shares have indicated to us that your proposal substantially undervalues Yahoo!. Furthermore, as a result of the decrease in your own stock price, the value of your proposal today is significantly lower than it was when you made your initial proposal.”

Reading the entire letter it becomes clear that Jerry Yang knows Yahoo is going to be sold. Much of it deals with initiatives Yahoo has taken to increase its own value and covers the moves Yahoo continues to make seeking other supportive suitors.

Microsoft delivered an ultimatum to Yahoo over the weekend. Tired of waiting while Yahoo delays what most observers believe is inevitable, Microsoft CEO Steve Ballmer issued a 21 day deadline to Yahoo’s Board of Directors informing them that if they don’t accept an offer for their company within three weeks, they will face full-fledged hostility from his.

The deadline warning comes in the form of a 6 paragraph letter to Yahoo’s board. In it, Ballmer notes the dramatic lengths Yahoo has gone to trying to stave off an acquisition by Microsoft. It also correctly notes that none of Yahoo’s efforts have been remotely successful and that a saviour/suitor is not likely to materialize.

“While there has been some limited interaction between management of our two companies, there has been no meaningful negotiation to conclude an agreement. We understand that you have been meeting to consider and assess your alternatives, including alternative transactions with others in the industry, but we’ve seen no indication that you have authorized Yahoo management to negotiate with Microsoft. This is despite the fact that our proposal is the only alternative put forward that offers your shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers, and consumers.”