Posts Tagged ‘Bill Miller’

Battle of Letters: Bill Miller Trumps Jerry Yang

February 14, 2008

Last night, SearchEngineWatch posted the full text of a letter Yahoo! chief exec Jerry Yang sent to its shareholders. The letter follows up on Yahoo!’s rejection letter to Microsoft, explaining why Yahoo!’s board believes Microsoft’s proposal significantly undervalues Yahoo and isn’t in the best interests of Yahoo stockholders. In the missive Yahoo CEO Jerry Yang emphasizes its strong brand, financial strength, strategic investments, technology, relationships with marketers and the huge opportunity in online advertising.

It’s not very convincing. “We are executing our strategy – and making headway,” claims Yang. Not.

A far more important letter was sent on Feb. 12 by the respected money manager Bill Miller. Legg Mason’s Value Trust fund, which Miller runs, is Yahoo!’s second largest shareholder. In his letter, Miller told investors that Microsoft will probably need to raise its $31-per-share offer if it wants to seal the deal. In the end, though, he said that Yahoo is in a “tough spot if it wishes to remain independent” and added that it will be “hard for Yahoo to come up with alternatives.”

What Miller’s letter shows is that most shareholders believe doing a deal with Microsoft is the best way to create more value for shareholders in the short term. It’s easy money up front, with no risk. To get the deal done, all Microsoft needs to do is sweeten that offer. Give Yang credit for restarting deal talks with News Corp. Forming some sort of combination with Fox Interactive Media may be just enough of a real threat to get Steve Ballmer to up its offer.

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