SAN FRANCISCO, July 7, 2008

Microsoft Backs Play To Dump Yahoo Board

Software Giant Would Renew Its Bid To Take Over The Search Engine If Shareholders Revolt

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

    Microsoft Corp. threw its weight behind investor Carl Icahn's effort to oust Yahoo Inc.'s board next month, saying a successful rebellion would encourage the software maker to renew its takeover bid for Yahoo or negotiate another deal.  (AP / CBS)

(AP) 
Microsoft reinforced that perception by refusing to revive its bid last month even after Yahoo's board signaled its willingness to accept the earlier offer.

With Microsoft in Icahn's corner, "the dynamic has changed," Sanford C. Bernstein & Co. analyst Jeffrey Lindsay said. "There is now a rationale for voting for Icahn's board because there now seems to be a real possibility for a deal again."

Monday's turn of events amplifies the pressure on Yahoo co-founder and CEO Jerry Yang, whose handling of the earlier negotiations with Microsoft infuriated many shareholders.

Yahoo's stock price had plunged by more than 30 percent to fall below $20 during Yang's first six months as CEO. Then, in January, Microsoft raised hopes for a quick windfall with its unsolicited takeover bid, only to be repeatedly rebuffed.

If he seizes control of the board, Icahn has promised to fire the 39-year-old Yang as CEO and replace him with a more seasoned leader.

Yang has been meeting with Yahoo's major stockholders during the past week, hoping to persuade them to give him a chance to prove the Sunnyvale-based company is worth more than the $33 per share that Microsoft previously offered.

Ballmer withdrew that bid after Yang sought $37 per share - a height the stock hasn't reached in 2½ years.

In its Monday statement, Microsoft didn't mention how much it thinks Yahoo is worth now.

Industry analysts estimated Microsoft would likely pay anywhere from $28 to $33 per share if it takes another stab at swallowing Yahoo whole.

"Microsoft is still asking Yahoo shareholders to make a big decision with incomplete information," said Standard & Poor's Internet analyst Scott Kessler. "I could still see a scenario where the Yahoo board is replaced and Microsoft comes in with a bid that is lower than people want. Then what do you do?"

Microsoft more recently has been trying to pry away Yahoo's search engine for $1 billion, plus an additional $8 billion investment for a 16 percent stake in Yahoo's remaining operations.

Yahoo instead opted for an online advertising partnership with rival Google Inc. that is supposed to boost its annual revenue by $800 million. That alliance faces an antitrust review by the U.S. Justice Department because Google and Yahoo combined control more than 80 percent of the U.S. search advertising market.

In its Monday statement, Yahoo asserted Microsoft is trying to use Icahn to engineer a purchase of Yahoo's search engine in a deal that would hurt the company in the long run, by hindering its ability to compete in the Internet's rapidly growing ad market.


© MMVIII The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.
Add a Comment See all 16 Comments
by cjs_cnet_xyz July 10, 2008 5:15 AM EDT
Microsoft cannot compete against Google with any other competitors. Let''s just dismantle the entire search/email industry so Microsoft can compete.
Reply to this comment
by barbaram99 July 10, 2008 12:47 AM EDT
I need to read more. It is nice here in Seattle.
Reply to this comment
by barbaram99 July 9, 2008 3:14 PM EDT
I have books on the XP and Vista plamforms. My Dell is 32 bit and my HP Vista 64 bit. Vince is new to pcs and really he wanted to put together a home network. I wanted a pc I would not out grow. Being 53, I do get out but mostly on computer. MS will get Yahoo as it is only a matter of time. There is a love-hate MS and google. I love google and yahoo.
Reply to this comment
by godseyesore-2009 July 8, 2008 4:39 PM EDT
MS mantra...if you can''t fight ''em, join ''em.

Hey, BarbaraM99...
You need to get out more often. OSX is 64bit.
Reply to this comment
by wl7bzh July 8, 2008 1:35 PM EDT
Dear Microsoft,

If you''re going to be dumb enough to marry Yahoo, get a pre-nup. Your bride is all fluff and no substance. You were warned about her son.
Reply to this comment
by barbaram99 July 8, 2008 1:10 PM EDT
My friends uses Window Mail and I have MSN Mail. I hate outlook express. I told my ISP it is not legally blind friendly. I use large print.
Apple will not move to 64 bit system. I know of an Apple user where I live and she don''t care for us pc users. It is a blooody personal computer- PC. She is fussy . They talk to each other.
Reply to this comment
by barbaram99 July 8, 2008 12:43 PM EDT
Dear MS is too bloody big for its own good..''member Ma Bell..I do. I think that MS can''t push its around. I love what my friend Vince said about Microsoft Sam,he done got fired.Anna beat beat Sam. Yahoo needs to step up to the plate and tell MS to take a hike. I like to have as many engines on my computer as they are different and if MS gets its paws in Yahoo will MS change it . Vista is lovely as my friend loves it. I am still in XP. I have a 64 bit Vista pc.
Reply to this comment
by July 8, 2008 12:14 PM EDT
MicroJunk. The only software that kills other software from the same company.

Posted by FloydZepp2

Ever heard of CA? They''re even worse.
Reply to this comment
by July 8, 2008 12:09 PM EDT
Working for a company that Icahn has very recently tried to destroy (and was somewhat successful) - everything he decides upon is NOT ALWAYS in the shareholders interest.
Reply to this comment
by floydzepp2 July 8, 2008 8:32 AM EDT
MicroJunk. The only software that kills other software from the same company.
Reply to this comment
by alphaa10-2009 July 8, 2008 5:16 AM EDT
Microsoft, under embarrassment and stress from its failed bid for Yahoo, reverted briefly to its old "engulf and devour" behavior of the past. The stereotyped MS culture remains deeply entrenched.

Clearly, Ozzie has a huge challenge ahead of him. Restructuring Microsoft''s general strategy is something Bill Gates and Ballmer allowed themselves the luxury of ignoring.

The lumbering, "my way or the highway" approach of the MS juggernaut is now entirely laughable, given the circumstances. Equivalent to a temper tantrum at the corporate level.

Microsoft needs to understand the larger picture, and its own changing role in the market. The "kinder, gentler Microsoft" PR campaign is still a bit premature.
Reply to this comment
by Meg003 July 8, 2008 3:04 AM EDT
On a selfish note, I just hate to see Microsoft change what I like about Yahoo email. Soon it will be part of the hideous Windows Live mess, instead of nice and simple on its own page.
Reply to this comment
by fee1free4u July 8, 2008 2:42 AM EDT
Txlakeside, your igorance astounds me. Do you not realize the Yahoo shareholders are generally furious at Jerry Yang for blowing the deal with Microsoft and NOT taking the last offer? Sheesh, all the info is out there for you to easily find. Yang''s primary job is to lookout for the shareholders, NOT pretend to be protecting the Yahoo employees.
Reply to this comment
by spadeisspade July 8, 2008 2:39 AM EDT
Man, Microsoft has stooped to some serious lows building their empire-strong arming computer companies into carrying Windows exclusively comes to mind. But a hostile take-over of a huge company like Yahoo is just kind of sickening. I thought the term "hostile take over" was reserved for John Grisham novels, movies and third world countries!
Reply to this comment
by whitemale08 July 8, 2008 2:17 AM EDT
What a joke?

Here''s Microsoft trying to dump a bunch of worthless Federal Reserve Notes on Yahoo and there''s nothing they can do about it.

Then again Yahoo and all of these internet companies are fake anyways....fake companies for fake dollars; what''s the difference?
Reply to this comment
by txlakeside July 8, 2008 2:08 AM EDT
Ballmer and Ichan are theives in the night and 2 of the biggest egos on the planet! Why do they want yahoo at firesale prices? So they can divey it up and sell the pieces. Shareholders should give them both the shaft!
Reply to this comment
See all 16 Comments

60 Minutes

The secrets of tennis legend Andre Agassi; the growing threat of cyber wars; and more.
Read More

Latest News
News in Pictures
Scroll Left Scroll Right
  • The Fall Of The Berlin Wall The Fall Of The Berlin Wall

    Looking Back at the Wall that Once Divided Germany On the 20th Anniversary of Its Collapse

  • Patricia Clarkson Patricia Clarkson

    Television and Film Actress, Yale School of Drama Graduate and Academy Award Nominee

  • Day in Pictures Day in Pictures

    A Glimpse at the Day's News as Seen Through a Camera Lens

  • Andre Agassi Andre Agassi

    Former Top-Seeded Tennis Star, Gossip Column Favorite and Philanthropist

  • Yankees Victory Parade Yankees Victory Parade

    The Yankees Celebrate Their 27th World Series Championship with a Ticker-Tape Parade Up Broadway

  • Orlando Office Shooting Orlando Office Shooting

    A Gunman Opens Fire at the Offices of an Engineering Firm Where He Once Worked

Connect with CBS News

Stay connected with the CBS News using your favorite social networks and online news applications: