Microsoft Wants To Deal With New Yahoo Board, Yahoo Doesn't Want A New Board

Carl Icahn's saber just got louder. The Associated Press reports that Microsoft has indicated that it would be interested in negotiating a deal with Yahoo once more if there were a new board of directors. The deal could include Microsoft buying just a portion of Yahoo, such as the search engine, or even buying the whole company if need be -- now likely at a steeply discounted price, after Yahoo's stock plummeted last week.

Microsoft Corp. threw its weight behind investor Carl Icahn's effort to oust Yahoo Inc.'s board next month, saying Monday that a successful rebellion would encourage the software maker to renew its takeover bid for Yahoo or negotiate another multibillion-dollar deal.

The development gives Icahn a huge carrot to dangle before Yahoo shareholders as he wages a campaign to oust Yahoo's nine directors at the company's annual meeting Aug. 1.

Henry Blodget over at Silicon Alley Insider writes that even if the Yahoo board were fired by shareholders -- a big if -- it wouldn't seal a deal for Microsoft to buy Yahoo.

Or, importantly, Microsoft might NOT buy the company. Don't forget that Microsoft has already made one search deal with large guarantees that Yahoo was wise enough to reject. No guarantee that the next one will be that much better.

Later, Yahoo's board shot back at Icahn and Microsoft in a press release, saying that if Microsoft is so eager to buy Yahoo, it ought to tender a new offer. From the release:

Yahoo!'s Board of Directors continues to stand ready to enter into negotiations with Microsoft Corporation for an acquisition of Yahoo!... Now Mr. Ballmer and Mr. Icahn have teamed up in an apparent effort to force Yahoo! into selling to Microsoft its Search business at a price to be determined in a future "negotiation" between Mr. Icahn's directors and Microsoft's management.

We feel very strongly that this would not lead to an outcome that would be in the best interests of Yahoo!'s stockholders. If Microsoft and Mr. Ballmer really want to purchase Yahoo!, we again invite them to make a proposal immediately. And if Mr. Icahn has an actual plan for Yahoo! beyond hoping that Microsoft might actually consummate a deal which they have repeatedly walked away from, we would be very interested in hearing it.

Silicon Alley Insider's Blodget sides with Yahoo.

This is our problem with the new Icahn/Microsoft proposal, too. We like the fact that Microsoft is now explictly willing to entertain the possibility of buying the company again, but we already took that as a given. Now we want specifics. Namely, how much?

And if Microsoft is going to give those specifics to a new board, we're rather they just gave them to us, so we can decide in advance whether we should fire the current crew. As we explain here, we're not going to fire the current board just to have Microsoft say, "Our final offer is...$22 in cash."

Comments

[ugmold]

Great photoshop work on the pic..

[dadw5boys]

ICAHN needs to take his sorry rear down the road.

[watchingthings]

Well, naturally, Gates will have it no other way. Fire the board that represents the stockholders and install one that is hand-picked by Gates himself. If they leave the present board in....then the stockholders will surly find out what Gates is doing to the company. This is my viewpoint. Gates probably has a different viewpoint.

[KarateKid]

So, this is the New World way of doing business, eh, techies? It sure looks like the old way of doing business to me.

[Kassandra]

Yeah, but what is with all these hostile takeovers? It's like a shark feeding frenzy.....Fire Yahoo's board so Microsoft can buy it; fire Budweiser's board so the Belgians can buy it. Screw up Bear Stearn's so chase can buy it.

I haven't seen anything like this since Reagan.

[HBeachbum]

Where is the story deploring Huffpost's distortion of these people's photos?

[handyallen1]

yahoo is dead it just want lie down it aint worth 10 a share let alone 30 yahoo has always spread the right wing gospel and is in bed with the bush administration let them die is what i say

[mero909]

I thought I heard stupid comments before, but this one takes the cake. Well done.

[Sundialsvc4]

I do not own any Microsoft stock (directly), and this is Why.

A company must, first and foremost, clearly understand what business it is in ... what are its competitive strengths and weaknesses vis-a-vis the business that it is in. And, stick to the business it is in.

Yahoo is not a "fantastically valued asset." It is not a core-business of Microsoft. Given that Microsoft's core business (the Windows operating system) has produced a massive flop at the cost of literally billions of dollars and is steadily losing market-share against nimbler competition ... I think that the Board of Directors should be focusing on THAT.

If they want to sit on Yahoo's board also, they can do that on their own time.

[MrWampler]

Agreed. I cannot understand Microsofts insistence on competing in every single industry. It really makes no sense when its core business (software) is suffering in quality and from bloat.

Was there ever really a need for: MSN (Engine & Portal), MSNBC, Zune, Xbox, or even Internet Explorer, Windows Media Player?

Not one of those "businesses" is Number One in its respective field. (Internet Explorer doesn't count because you don't win by default, 15+% of users still install another browser, they don't make money off it, and who installs IE on a Mac?)

It's like MS competes for the sake of competing.

[mero909]

Microsoft, despite popular opinion, has helped the industries it's been involved in. Competition is good for everyone. It drives prices down (in most cases), it can spur jobs as well as bring about better products.

Look at the Xbox... Some say it was unneeded, but it's deep into the console wars and doing just fine. The Zune was probably unnecessary considering how well the IPod is doing, but there's nothing wrong with it. I hear it's actually a well put together product.

Microsoft is after Yahoo's search engine functionality. Plain and simple. They really don't give a damn about all of Yahoo's other crap.

If Microsoft wants to compete in any industry they choose, I say, "more power to them". It can only be good for the consumer.

[jp5472]

The attitude against Microsoft is not just "popular opinion", it is based on fact. Microsoft has a history of killing competition whether by buying them up, absorbing or "killing" their effect, "dumping" their OS and applications on computer manufacturers and consumers so that these markets would not look elsewhere for a more (at the time) pricey or less compatible (as in compatibility of files/applications with the vast majority out there) system. Microsoft has through the years done everything possible to corner all areas of the computer market, including internet and the highly profitable search engines. They have been subpar in all areas consistently. For example: The majority of people use IE because it is conveniently on their machine, subpar to the old Netscape Navigator and subpar to today's FireFox. The majority of people use MS Office because again for a number of years it was "dumped" onto new computers -so who would shell out $400 for WordPerfect if they could get by with Office? MS has continuously looked for ways to dominate web browsing and searches and therefore intenet revenue. Their many attempts have fallen unsuccessful (thank god!). Maybe someday someone in the company will finally decide to put all their effort into making their core product (OS) the best and most streamlined system it can be instead of the bloated mess that it is (Vista). But that would take people in play other than Ballmer and Ichan.

[joebaggadonuts]

Of course if they get rid of all the reasons to be a Yahoo! employee, they can have the shell of the company. That's what will be left anyway if M$ owns it.

[mero909]

You'll definitely never see the "Yahoo" brand any more if Microsoft owns them. Microsoft will take the search engine functionality and say, "See ya!". Can't say I don't blame them.