Posts Tagged ‘Yahoo’

It’s Official: Microsoft and Icahn in Cahoots

July 8, 2008

Compared to last week’s non-stories about continuing talks between Yahoo, Microsoft, AOL and just about any other company with a pulse, yesterday’s news that Carl Icahn and Microsoft have been talking about teaming up to take over Yahoo is a REAL STORY.

This is the first time that these two parties have publicly commented and supported each other in their efforts to get Yahoo to sell all or part of itself to Microsoft. See Carl’s letter here.

And see Microsoft’s confirmation of their talks with Icahn.

The development raises the chances that Icahn could get his slate of directors voted onto Yahoo’s board. Until today’s news, that coup seemed like more of a long-shot. But now that Steve Ballmer has said that Microsoft is interested in restarting talks to acquire some or all of Yahoo–only if the company’s board is replaced at next month’s annual meeting–the odds of the coup surely went up.

Now the big investors must decide who to vote for. And there have been reports that big shareholders are seriously considering to back Icahn’s slate.

Stay tuned for next week’s episode for As The Web Turns….

Can RIMM Beat Back Apple? Is Wind Power for Real?

June 28, 2008

In this week’s Digital Dish, BusinessWeek reporters Spencer Ante, Heather Green, Steve Hamm and Catherine Holahan decode RIM’s earnings, discuss the promise of wind power and evaluate Yahoo’s reorganization.

Check out the video here.

Yahoo-Google Ink Search Deal; But Does it Fly?

June 13, 2008

As Techcrunch reported, Google and Yahoo! inked a search deal. While early reports said such a deal would be limited, the actual agreement sounds somewhat expansive–and is far from a slam dunk when it comes to approval of government regulators. See the full release below.

* The deal enables Yahoo! to run ads supplied by Google alongside Yahoo!’s search results and on some of its web properties in the United States and Canada
* It also allows Yahoo to run ads on other third parties, and Yahoo!’s own Panama marketplace.
* The agreement also applies to current partners in Yahoo’s publisher network.

This could be a landmark case for the application of anti-trust law to the Internet search market. With Google dominating the market, it’s hard to see how regulators are going to let this fly without altering the deal, or putting the kibosh on it entirely.

What do you think?

Yahoo! to Strengthen Competitive Position in Online Advertising Through Non-Exclusive Agreement With Google

Agreement Advances Yahoo!’s Open Strategy; Enhances Ability to
Compete in Converging Search and Display Marketplace

SUNNYVALE, Calif., Jun 12, 2008 (BUSINESS WIRE) — Yahoo! Inc. (Nasdaq:YHOO), a leading global Internet company, announced today that it has reached an agreement with Google Inc. that will enhance its ability to compete in the converging search and display marketplace, advancing the company’s open strategy. The agreement enables Yahoo! to run ads supplied by Google alongside Yahoo!’s search results and on some of its web properties in the United States and Canada. The agreement is non-exclusive, giving Yahoo! the ability to display paid search results from Google, other third parties, and Yahoo!’s own Panama marketplace.

Under the terms of the agreement, Yahoo! will select the search term queries for which – and the pages on which – Yahoo! may offer Google paid search results. Yahoo! will define its users’ experience and will determine the number and placement of the results provided by Google and the mix of paid results provided by Panama, Google or other providers. The agreement applies to paid search and content match and does not apply to algorithmic search. The agreement also applies to current partners in Yahoo’s publisher network.

Yahoo! CEO and co-founder Jerry Yang said, “We believe that the convergence of search and display is the next major development in the evolution of the rapidly changing online advertising industry. Our strategies are specifically designed to capitalize on this convergence — and this agreement helps us move them forward in a significant way. It also represents an important next step in our open strategy, building on the progress we have already made in advancing a more open marketplace.”

“This agreement provides a source of funds to both deliver financial value to stockholders from search monetization and to invest in our broader strategy to transform display advertising and advance our starting point objectives with users,” said Yahoo! President Sue Decker. “It enhances competition by promoting our ability to compete in the marketplace where we are especially well positioned: in the convergence of search and display.”

Agreement Provides Attractive Economics and Enhances Search Monetization

Yahoo! believes that this agreement will enable the Company to better monetize Yahoo!’s search inventory in the United States and Canada. At current monetization rates, this is an approximately $800 million annual revenue opportunity. In the first 12 months following implementation, Yahoo! expects the agreement to generate an estimated $250 million to $450 million in incremental operating cash flow.

The agreement will enhance Yahoo!’s ability to achieve its goal to grow operating cash flow significantly, while at the same time providing flexibility to continue to invest in ongoing initiatives such as algorithmic search innovation and search and display advertising platforms. It gives Yahoo! complete flexibility to continue to use its Panama paid search results.

Significant Benefits Will Flow to Users, Advertisers, Publishers and Employees

Users will also benefit from Yahoo!’s ability to invest incremental operating cash flow in ongoing improvements to its search services, building upon recent major innovations such as Search Assist and SearchMonkey. Advertisers will continue to benefit from multiple marketplace alternatives including Panama, Google and others. Publishers will benefit from a winning combination of distribution, monetization and services to help them grow their businesses. The financial benefits will enable Yahoo! to broaden the scope of its investments and initiatives, enhancing Yahoo!’s ability to offer attractive career opportunities to its employees.

Terms of the Agreement

The agreement will enable Yahoo! to run ads supplied by Google’s AdSense(TM) for Search and AdSense(TM) for Content services next to Yahoo!’s internally generated paid search and algorithmic search results. Yahoo may also run Google-supplied ads on non-search Yahoo web properties, as well as on current members of its partner network. The agreement has a term of up to ten years: a four-year initial term and two, three-year renewals at Yahoo!’s option. It applies to Yahoo!’s operations in the U.S. and Canada only. Advertisers will continue to pay Yahoo! directly for clicks served by Yahoo! from Yahoo!’s Panama and Content Match marketplaces. Advertisers will pay Google directly for each click on Google paid search results appearing on Yahoo! owned and operated network or certain affiliate sites. Google will share a percentage of such revenue with Yahoo!.

In addition, Yahoo! and Google agreed to enable interoperability between their respective instant messaging services, bringing easier and broader communication to users.

The agreement allows either party to terminate the agreement in the event of a change in control of either party. The agreement also requires Yahoo! to pay a termination fee if the agreement is terminated as a result of a change in control that occurs within 24 months. The termination fee is $250 million, subject to reduction by 50 percent of revenues earned by Google under the agreement.

Although Google and Yahoo! are not required to receive regulatory approval of the deal before implementing it, the companies have voluntarily agreed to delay implementation for up to three and a half months while the U.S. Department of Justice reviews the arrangement.

Goldman, Sachs & Co., Lehman Brothers and Moelis & Company are acting as financial advisors to Yahoo!. Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor to Yahoo!, and Munger Tolles & Olson LLP is acting as counsel to the outside directors of Yahoo!.

Micro-Hoo Talks Off Again (Or Are They?)

June 12, 2008

Today, Yahoo confirmed a Wall Street Journal report that its “discussions with Microsoft regarding a potential transaction — whether for an acquisition of all of Yahoo! or a partial acquisition — have concluded. The conclusion of discussions follows numerous meetings and conversations with Microsoft regarding a number of transaction alternatives, including a meeting between Yahoo! and Microsoft on June 8th in which Chairman Roy Bostock and other independent Board members from Yahoo! participated. At that meeting, Microsoft representatives stated unequivocally that Microsoft is not interested in pursuing an acquisition of all of Yahoo!, even at the price range it had previously suggested.”

So the deal talks were dead, right? Well, maybe not. Later this afternoon, Microsoft released a statement in which it hinted at an “alternative transaction” still in the works. Here’s the full statement.

June 12, 2008

Microsoft Corp. today issued the following statement:

“In the weeks since Microsoft withdrew its offer to acquire Yahoo!, the two companies have continued to discuss an alternative transaction that Microsoft believes would have delivered in excess of $33 per share to the Yahoo! shareholders. This partnership would ensure healthy competition in the marketplace, providing greater choice and innovation for advertisers, publishers and consumers.

“As stated on May 3rd and reiterated on May 18th Microsoft was not interested in rebidding for all of Yahoo!. Our alternative transaction remains available for discussion.”

What is going on here? Possibly a separate search deal with Yahoo. But my bet is that Microsoft is willing to wait it out for a full takeover, sort of like laying siege to Yahoo! Yahoo’s stock is already down 10% on today’s news. It would be down more if i weren’t for the rumors about an impending deal with Google.

If and when Yahoo delivers another underwhelming quarter, its stock should continue to fall–even with a Google deal. And then Microsoft can come back with another bid, probably a lower one, and take out the company.

What to Expect from the New iPhone

June 8, 2008

In this week’s Digital Dish, BW’s tech team discusses Verizon’s $28 billion Alltel bid, Carl Icahn’s manuevers to push Yahoo into Microsoft’s arms, and the demise of eBay auctions. On the sunny side: Apple’s new iPhones.

Micro-Hoo: The End of Tech’s Soap Opera? Or the Beginning of the End?

May 10, 2008

In this week’s broadcast of the Digital Dish, BusinessWeek reporters Spencer Ante, Heather Green, Arik Hesseldahl and Catherine Holahan wonder if the Microsoft/Yahoo dance is really over, and then size up Microsoft vs. Google and News Corp.’s slumping Internet revenues.

Not to trumpet our horn too loudly, but we warned you about MySpace twice over the last six months. In fact, last November we first raised red flags about MySpace and how the pressure was on Rupert Murdoch to turn his prize quarry into a profit machine.

Microsoft Walks from Yahoo Deal; Ball’s In Your Court, Jerry

May 4, 2008

Wow. I can’t believe Microsoft actually walked away from the Yahoo! deal.

But while I am truly surprised, I believe Steve Ballmer made the right call. I’ve said from the beginning that this deal was too big and too risky–I called it a potential merger from hell several times around the office and on TV–especially given the cultural differences between the two companies and the fact that Microsoft had never before pulled off an acquisition of this size.

Now that the tech industry’s biggest soap opera appears to have reached its dramatic conclusion, there are two big questions to answer:

1. Why did Ballmer and the Microsoft board pull a 180 and change their mind?
There’s got to be more to this story. Some people will wonder why Microsoft did not come back with a slightly higher offer, in the $34 to $35 range, which could have sealed the deal.

Something happened during this process that gave Microsoft the willies. Maybe it was the strong negative reaction from their employees that caught management off guard. Or maybe it was Yahoo’s determination to not break. Or maybe Ballmer underestimated the greed and toughness of some major shareholders.

To me, the behavour of the reluctant shareholders is just as surprising as Ballmer’s retreat. Reports have said that some big Yahoo investors such as Legg Mason were holding out for $34 or $35 a share. Given that Microsoft was willing to offer $33 a share, those shareholders will probably live to regret that position.

But while Ballmer ultimately did the right thing for his employees and shareholders, I believe his reputation is going to take a hit in the short term. This was Ballmer’s big first play as CEO of Microsoft and it just looks a bit odd for him to reverse course on such an enormous strategic move.

Now, Microsoft needs to figure out other ways “scale” and go after Google in the online advertising market. Maybe Microsoft will try to cut a deal with AOL or MySpace?

2. What is Yahoo’s next move?
While I admire Yahoo’s toughness and determination to fight off the giant from Redmond, Jerry Yang & Co. have a lot of explaining to do. They just turned down a very handsome offer for their company. Many shareholders are going to be pissed and sell off the stock–while others are likley to launch a raft of lawsuits against Yahoo. My hunch is Yahoo plummets to the low $20s tomorrow morning. (It was around $19 before Microsoft made its $31 offer.)

The only reason it won’t fall further is because Yahoo keeps threatening to outsource part of its search traffic to Google. That could provide a short-term financial boost to Yahoo but it’s a losing long-term strategy as their share of search traffic would continue to decline, and it might even accelerate after such an arrangement. It also may never amount to much because regulators are likely to prevent the companies from cutting a substantial deal.

It will be interesting to see if Yahoo continues its merger talks with AOL, News Corp. or other partners. My hunch is that while they might, nothing is likely to come from it. For Yahoo, the merger talks seemed like more of a manufactured diversion or knee-jerk reaction than a well-considered move of true strategic intent.

So if Yahoo can’t or doesn’t pursue a significant deal with Google, and it doesn’t merge with another company, that still leaves the $44 billion question: What is Jerry Yang & Co. going to do to give Yahoo a better shot at remaining competitive ande lift its slumping stock?

Ball’s in your court, Jerry. Sometimes it’s dangerous to get what you wish for. Good luck.

As the Web Turns: Microsoft Blinks on Yahoo Deal

May 1, 2008

So instead of launching a proxy fight after passing its self-imposed deadline, Microsoft did the smart thing and tried to show Yahoo some love, so says the latest leak-story in the Wall Street Journal.

Last night, the Journal published a report saying that “Microsoft this week indicated a willingness to raise its bid to as much as $33 per Yahoo share, attempting to avoid the hostile takeover battle Mr. Ballmer had threatened, according to people with knowledge of the situation.”

The problem? Yahoo’s major shareholders “have signaled they want in the range of $35 to $37 a share,” while “Yahoo’s management and board similarly shooting for an offer in the upper 30s, say people familiar with the matter.”

My bet: There’s no way Microsoft is going to push its bid into the high 30s. This deal gets done at $34 or $35, just as I have said all along. That allows Microsoft to save some face, and Yahoo to feel like it didn’t roll over. Yahoo’s quarter was good enough, and the prospect of a drawn-out proxy battle is so unappealing, that Steve Ballmer is likely to bump up his offer just a tad more to close the deal. Yahoo needs to get the deal done because if it doesn’t, its stock would plummet, drawing a raft of distracting shareholder lawsuits.

Tech Earnings Round-up: Yahoo, Microsoft, Yahoo!, Apple

April 26, 2008

Were Yahoo earnings good enough to get Microsoft to sweeten its offer? Could Microsoft actually walk away from the deal? Can Apple withstand the downturn? Are hard times coming to venture capital and startups? BusinessWeek’s Digital Dish has the week’s biggest stories.

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Digital Dish on the Microsoft-Yahoo Melodrama

April 12, 2008

The Microsoft-Yahoo merger melodrama makes “As the World Turns” look like a PBS documentary.

Will AOL sneak in the back door and steal Yahoo? Why did Rupert Murdoch get back onto the dance floor? And what in the world is going on with Jerry Yang? BusinessWeek reporters Spencer Ante, Heather Green, Arik Hesseldahl and Catherine Holahan discuss the latest moves in this soap opera. Check out the video by clicking here.

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