Microsoft Backs Play To Dump Yahoo Board

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

(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.

[cjs_cnet_xyz]

Microsoft cannot compete against Google with any other competitors. Let''s just dismantle the entire search/email industry so Microsoft can compete.

[barbaram99]

I need to read more. It is nice here in Seattle.

[barbaram99]

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.

[godseyesore-2009]

MS mantra...if you can''t fight ''em, join ''em.

Hey, BarbaraM99...
You need to get out more often. OSX is 64bit.

[wl7bzh]

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.

[barbaram99]

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.

[barbaram99]

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.

MicroJunk. The only software that kills other software from the same company.

Posted by FloydZepp2

Ever heard of CA? They''re even worse.

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.

[floydzepp2]

MicroJunk. The only software that kills other software from the same company.

[alphaa10-2009]

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.

[Meg003]

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.

[fee1free4u]

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.

[spadeisspade]

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!

[whitemale08]

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?

[txlakeside]

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!