SEO Blog

REDMOND, Wash., May 3 /PRNewswire-FirstCall/ — Microsoft Corp.
(Nasdaq: MSFT) today announced that it has withdrawn its proposal to
acquire Yahoo! Inc. (Nasdaq: YHOO).

The news came out of Redmond Washington early Saturday evening. Microsoft CEO Steve Ballmer announced that Microsoft was walking away from their attempt to acquire Yahoo!.

In a long letter (reproduced below) to Yahoo! CEO Jerry Yang, Ballmer outlines his decision and is clear about his disappointment with the outcome. Ballmer is less clear about his future intentions, leaving the door open for another acquisition attempt while falling back on Microsoft’s oft heard but unproven mantra, “We Can Do Search Ourselves”.

Over at Search Engine Land, Danny Sullivan has written a definitive analysis of the weekend’s events, (Leaving Las Yahoo: Microsoft’s $5 Billion Mistake?) and Yahoo!’s multiple options, including links to several other takes on Ballmer’s $50Billion Balk.

I don’t think this is exactly over yet. Tomorrow morning will give us a better idea what Yahoo! shareholders think as the markets are certain to react swiftly.

Steve Ballmer’s Letter to Jerry Yang:

May 3, 2008

Mr. Jerry Yang
CEO and Chief Yahoo
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089

Last week I wrote a rather breathless account of how exciting the weekend was going to be. Microsoft was going to initiate extreme hostilities against Yahoo! in its bid to take over the elder search portal. Microsoft CEO Steve Ballmer had imposed a 21-day deadline that expired last Saturday and the world expected immediate and brutally forceful action. Nothing happened. When Sunday morning rolled around I felt somewhat burned…

Given the lack of events last weekend, it’s hard to get all excited about the latest round of news, rumours and innuendo but I get paid to get excited about this sort of thing so here goes…

He’s gonna or he’s not. It’s come down to a the simplest of complex choices for Microsoft CEO Steve Ballmer. An emergency Microsoft Board of Directors meeting held yesterday gave Ballmer the absolute power to make a decision to move forward into hostile territory or retreat to the relative discomfort of his Redmond Washington office. The decision is expected to be announced this weekend, possibly as soon as this afternoon.

It’s noon-ish on Monday and nothing of note has happened on the Microsoft - Yahoo! front this weekend. Observers expected to witness the fireworks of brinkmanship and brimstone as the three-week ultimatum issued by Microsoft CEO Steve Ballmer expired at midnight-ish Sunday.

Though nothing happened over the weekend, most expect Microsoft to make an announcement early this week. What that announcement will bring is another question. Yahoo!’s Board has mounted a stiff and surprisingly strong resistance to the acquisition attempt, seemingly in a bid to drive Microsoft’s offer higher. Microsoft however, has warned Yahoo! it does not intend to increase its offer.

Some financial analysts are now predicting that Microsoft could just pack up and walk away, leaving Yahoo! spinning and reeling after four months of frantic dodging.

Perhaps this period of Sitzkrieg has been part of Microsoft’s overall strategy all along. Even if it doesn’t acquire Yahoo!, Microsoft has succeeded in weakening Yahoo!’s position and in forcing Yahoo! to alter its business plans well into the future. In short, Microsoft has totally knocked Yahoo! off its game. Even it it walks away, Microsoft has won position against its #2 rival.

If you’re a Yahoo! shareholder today,
you’re in for a big surprise,
if you pick up the phone today,
prepare for a long weekend sigh,
for every Microsoft C-Level freak,
is going to invite you out for a drink,
for that’s they way that Microsoft
get’s to take Yahoo!
(to the tune of The Teddy Bears’ Picnic)

Three weeks ago, Microsoft CEO Steve Ballmer laid a 21-day deadline down in front of the Yahoo! Board of Directors. Tomorrow is the expiration date of that deadline. If Yahoo! doesn’t acquiesce to Microsoft’s acquisition bid, Ballmer has threatened to initiate a proxy fight for control of the Yahoo! Board.

There are a couple scenarios that could play out in the coming 24-hours.

The first is the most obvious. Microsoft goes headhunting in order to gain support for a Micro-hoo friendly slate of candidates to present at Yahoo!’s next annual general meeting in June. This is considered the most likely outcome, assuming Yahoo! continues to put-off Microsoft’s offer.

The second scenario is far less obvious and somewhat less likely. Microsoft walks away from the deal, leaving Yahoo! to continue the business of being second banana to Google. That outcome is possible but, after the three month effort and investment put in by Microsoft, unlikley.