Yahoo suggests Microsoft should make new offer

Now that Yahoo’s ad deal with Google Inc. is off, Yahoo Inc. CEO Jerry Yang said his company is open to a new offer from Microsoft Corp. “To this day, I believe the best thing for Microsoft to do is to buy Yahoo,” the Associated Press quoted Yang as saying late on Wednesday at the Web 2.0 summit in San Francisco.

Mountain View, Calif.-based Google (NASDAQ: GOOG) said in its company blog Wednesday that it is ending its proposed advertising search deal with Sunnyvale, Calif.-based Yahoo (NASDAQ: YHOO) in the face of opposition from the U.S. government.

David Drummond, Mountain View-based Google’s chief legal officer and senior vice president for corporate development, wrote that after four months of review, “it’s clear that government regulators and some advertisers continue to have concerns about the agreement. Pressing ahead risked not only a protracted legal battle, but also damage to relationships with valued partners. That wouldn’t have been in the long-term interests of Google or our users, so we have decided to end the agreement.”

The companies said in June they were looking at a partnership that would let Yahoo display search ads sold by Google in exchange for a portion of the revenue. Critics of the deal said it would give Google too much control over online advertising.

- from Bizjournals

The 25 Most Influential People on the Web

Each year, we turn to readers and BusinessWeek staff for the Best of the Web list, asking them to contribute names for a list of the Intern et’s movers and shakers. Take a look at the slide show to see which people have the most impact on the Web these days. – read at BusinessWeek

Steve Ballmer
Mitchell Baker
Jeff Bezos
Sergey Brin, Larry Page, and Eric Schmidt
Jeff Clavier
Paul Graham
Arianna Huffington
Joi Ito
Steve Jobs
Jonathan Kaplan
Loic Le Meur
Jack Ma
Matt Mullenweg
Rupert Murdoch
Craig Newmark
Gabe Rivera
Kevin Rose
Sheryl Sandberg
Jon Stewart
Peter Thiel
Maria Thomas
Anssi Vanjoki
Jimmy Wales
Evan Williams
Jerry Yang

Ad trade group opposes Google/Yahoo collaboration

The Association of National Advertisers (ANA) said Monday its board has registered with the U.S. Department of Justice its opposition to a planned search advertising partnership between Google Inc. and Yahoo Inc.

New York-based ANA said it sent a letter to Assistant Attorney General Thomas O. Barnett, citing concerns “that the partnership will likely diminish competition, increase concentration of market power, limit choices currently available and potentially raise prices to advertisers for high quality, affordable search advertising.”

ANA said it “conducted a comprehensive, independent analysis designed to represent the perspectives of the broad advertiser/marketer community. It included input from the board’s members and face-to-face discussions with Google and Yahoo.”

The letter claims that a Google-Yahoo partnership will influence 90 percent of search advertising inventory.

- from Bizjournals

Yahoo Shares Trading Below Pre-Microsoft Offer Price

It may be because Microsoft appears to have shifted its attention from Jerry Yang to Jerry Seinfeld. Or it may be that investors are feeling pessimistic as Yahoo’s search business continues to weaken. But Yahoo shares on Thursday closed at their lowest point since Microsoft made public its $44.6 billion, or $33 a share, for the Internet portal on February 1. (After months of negotiations, Microsoft withdrew its offer to buy Yahoo.)

Yahoo shares ended Thursday at $19.11, down 6 cents. It was the second day in a row that the company’s stock ended below its $19.18 close on January 31, just before the Microsoft bid.

Yahoo’s share performance underscores the magnitude of the challenges faced by Mr. Yang and his team. On Thursday, Web measuring firm comScore reported that Yahoo’s share of the search market in the United States declined to 20.5 percent in July from 20.9 percent in June. In that period, Google’s market share rose by the same amount to 61.9 percent.

There are some signs that the company is finally able to turn its attention back to business and away from the turmoil of the merger negotiations. In recent weeks, the news about Yahoo has largely been about new products, rather than about corporate upheaval.

- from NYTImes

A Truce for Yahoo, but the War May Not Be Over

From NYTimes:

Carl C. Icahn backed down over the weekend and worked out an agreement with Yahoo to join Yahoo’s board, along with two more people on his slate, which had been set to go to shareholders for a vote on Friday. Yahoo’s statement is here.

The tipping point may have been the decision by Bill Miller, the influential portfolio manager at Legg Mason, to vote his 4.4 percent stake in Yahoo in favor of the company’s slate of candidates. I’d assume that over the weekend, Mr. Icahn realized that a majority of shareholders held similar views.

This can’t exactly be seen as a vote of confidence in Yahoo’s current management. Rather it is an expression of a lack of confidence in Mr. Icahn’s ability to solve Yahoo’s problems.

A troublemaking shareholder like Carl Icahn can make a difference when there is a relatively easy decision a company could make that for some reason its management is resistant to. For the first part of the year, the narrative fit that template: Microsoft wanted to buy the company and Jerry Yang, Yahoo’s chief executive, didn’t want to sell it. If that was still true, Mr. Icahn’s board slate would probably sail to victory.

But in the convoluted story this has become, Microsoft says it no longer wants to buy Yahoo and Mr. Yang is desperate to sell it. If Mr. Icahn found himself in control of Yahoo, what could he do? He suggested he may just sell Yahoo’s search business to Microsoft, leaving shareholders owning a portal with some serious problems and a board taking cues from an investor who hardly uses a computer.

Microsoft (MSFT) makes another offer for Yahoo! (with Icahn)

From Here:

Late Friday, Microsoft (NASDAQ:MSFT) and Carl Icahn made an offer to the Yahoo! (NASDAQ:YHOO) board. Microsoft would buy Yahoo!’s search business and Icahn would take the rest of the company. Yahoo! was given one day to respond.

The Yahoo! board rejected the offer.

According to Reuters, “This odd and opportunistic alliance of Microsoft and Carl Icahn has anything but the interests of Yahoo’s stockholders in mind,” Yahoo Chairman Roy Bostock said in the statement.

Michael Arrington says Microsoft has Crossed A Line

From Techcrunch:

Until today I’ve largely been a big supporter of Microsoft’s efforts to acquire Yahoo. A couple of days before Microsoft placed its initial $44.6 billion bid for the company, I told Fox Business Channel that a Microsoft merger had to happen to save Yahoo (and I certainly wasn’t the first to say this, I just had magnificent timing).

Throughout the ups and downs and stupendous drama of the negotiations, I held firm that a deal was in the best interests of both companies. Not because I’m a huge Microsoft fan, but because the health of the Internet requires a competitive search market. Google controls too much market share and too much related search revenue. A counterbalancing force is needed to keep the system healthy. And Microsoft or Yahoo standing alone cannot counter Google.

But when Microsoft pulled its bid just as Yahoo was about to accept and replaced it with a search buyout deal that I described as equivalent to them trying to get the milk for free instead of buying the cow, I began to wonder if things were getting out of hand. Since then, Yahoo has quite literally prostrated themselves before Microsoft to get a merger done, even perhaps at a price much lower than Microsoft’s original bid. And Microsoft has largely toyed with them.

Yesterday’s shenanigans, however, clearly crossed a line. Microsoft and activist Yahoo shareholder Carl Icahn jointly announced that they’ve been talking, and that Microsoft may be willing to entertain a full buyout offer once again. But only on the condition that Yahoo’s board of directors is replaced: “We confirm, however, that after the shareholder election Microsoft would be interested in discussing with a new board a major transaction with Yahoo!, such as either a transaction to purchase the “Search” function with large financial guarantees or, in the alternative, purchasing the whole company.”

Microsoft to Yahoo shareholders: replace Yahoo board and we’ll talk buyout

REDMOND, Wash. — July 7, 2008 — Microsoft Corp. today issued the following statement:

In the past week we have had the opportunity to discuss with Carl Icahn the prospects for a possible agreement between Microsoft and Yahoo!.

Despite working since January 31 of this year, as well as in the early part of last year, we have never been able to reach an agreement in a timely way on acceptable terms with the current management and Board of Directors at Yahoo!. We have concluded that we cannot reach an agreement with them. We confirm, however, that after the shareholder election Microsoft would be interested in discussing with a new board a major transaction with Yahoo!, such as either a transaction to purchase the “Search” function with large financial guarantees or, in the alternative, purchasing the whole company.

As Mr. Icahn notes in his statement today, it would be premature to discuss at this time important details such as the price or other terms of a possible transaction. We respect the right of Yahoo!’s shareholders to determine the destiny of their company, and we do not intend to engage in ongoing commentary on these issues in advance of Yahoo!’s shareholder meeting.

As we explained on June 12 when Yahoo! announced an agreement with Google, we believe that our proposed search acquisition and partnership would have delivered superior value to Yahoo!’s shareholders and the marketplace as a whole. We have not changed our position, even as we continue to move forward with our own online search and advertising offerings. We therefore welcome interest by Mr. Icahn in pursuing this and other discussions.

While of course there can be no assurance of a future transaction, we will be prepared to enter into discussions immediately after Yahoo!’s shareholder meeting if a new board is elected.

Yahoo Strikes Deal With Google as Microsoft Talks End

Yahoo! Inc. agreed to let Google Inc. sell some of the advertisements it runs alongside Internet search results, seeking to shore up sales after ending talks with Microsoft Corp. about a combination.

The deal may add $800 million a year to sales, Sunnyvale, California-based Yahoo said today in a statement. The companies will delay implementing the program for up to three and a half months to give the U.S. Justice Department time for review.

Yahoo shares sank 10 percent today after the company said talks with Microsoft failed. The partnership with Google may boost the amount of money Yahoo gets when people click on ads, part of Chief Executive Officer Jerry Yang’s effort to deflect criticism from investor Carl Icahn, who blamed Yang for scuttling a $47.5 billion bid from Microsoft.

“Abdicating search to Google puts Yahoo in an untenable strategic position in order to obtain short-term gains,” Soleil Securities Group Inc.’s Laura Martin said in an interview. The Los Angeles-based analyst advises investors to hold Yahoo shares.

The agreement, which covers sites in the U.S. and Canada, may add as much as $450 million in operating cash flow in the first 12 months, Yahoo said. The partnership isn’t exclusive, meaning that other companies in addition to Yahoo and Google will be able to sell ads to appear on Yahoo’s pages. Yahoo’s revenue last year was $6.97 billion.

- from Bloomberg

Icahn wants to skullf*ck Yahoo’s Jerry Yang

The billionaire investor Carl C. Icahn stepped up the pressure on Yahoo Tuesday, vowing to remove Jerry Yang, its chief executive, if he succeeds in replacing the company’s board with his own slate of directors.

Mr. Icahn said newly unsealed court documents show that Mr. Yang and Yahoo’s board did not seriously consider a $44.6 billion acquisition offer from Microsoft and implemented a costly employee-retention plan that is a barrier to any acquisition.

“I don’t think anybody ever understood the magnitude of what Yahoo did to do avoid making a deal,” Mr. Icahn said in an interview.

Mr. Icahn had already started a proxy fight to replace Yahoo’s board, which includes Mr. Yang, but had not previously said that he also planned to strip Mr. Yang of his chief executive role.

“In my opinion, you might have to get rid of Jerry and part of the board to bring back Microsoft,” Mr. Icahn said.

- From NYtimes