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Yahoo!
Email Confirmation
A Deal Not to Be
by Kevin Kelleher
May 3 2008
May 3 2008
Microsoft raised its offer for Yahoo, to no avail. So it walks away.
Industry:
Technology
Summary:
The Company is a global Intenet brand and trafficked destinations worldwide. It is focused on powering its communities of …
Primary executive:
Jerry Yang,
Industry:
Technology
Summary:
The Company develops, manufactures, licenses, and supports a range of software products for many computing devices.
Primary executive:
Steven A. Ballmer,
Jerry Yang
Industry:
Technology
Biography:
The Board of Directors of the Company appointed Jerry Yang, age 38, to serve as Chief Executive Officer of the Company. Mr. …
Microsoft's high-stakes and high-profile courting of 
Yahoo is over. The spring romance soured before it even began.
Saturday afternoon,Microsoft released a letter that its chief executive, Steve Ballmer, wrote to Yahoo's C.E.O., Jerry Yang, making clear its intent to take its final and enriched $47 billion bid and go home.
There will be no more haggling.
There will be no hostile takeover either.
It's as if the whole takeover affair never happened.
Except that, for many, it did. Yahoo shareholders who, betting a deal would happen, had bid up the company's stock from $25.81 last Tuesday to $29.70 in after-hours trading on Friday are out of luck.
Yahoo's stock will certainly tumble Monday, perhaps even back to the $19.18 price before Microsoft's February 1 offer.
The deal also set into motion other discussions between companies that may still happen. Yahoo has been in talks with Google over deploying its search ads across its network. A trial run could take place as early as next week and, if extended, would almost certainly raise antitrust concerns.
As well, Microsoft and Yahoo may try to step up alliance or investment talks with players such as Time Warner's AOL or News Corp.'s MySpace, both of which made cameos in the stories covering every detail of the Microsoft-Yahoo deal.
Microsoft may also try to buy other internet and search properties like Ask.com or ValueClick. Yahoo or Google could try to swoop in first to nab such names, raising the possibility of bidding wars over smaller companies.
Ballmer's letter was as bittersweet in tone as the February 1 letter, signaling Microsoft's intent to acquire Yahoo, was arrogant.
"I am disappointed that Yahoo has not moved toward accepting our offer," he wrote. "Clearly a deal is not to be."
Ballmer also noted that "our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo undesirable as an acquisition for Microsoft."
In particular, Ballmer urged Yahoo not to get in bed with their common foe, Google. Along with antitrust issues, he said, it would effectively cast aside the Panama paid-search system that Yahoo worked so hard on and "effectively enable Google to set the prices for key search terms on both their and your search platforms and, in the process, raise prices charged to advertisers on Yahoo."
While it's not clear that Google has ever been interested in raising ad prices, the Yahoo-Google alliance would stifle an element of competition in keyword prices at a crucial time for the search market.
But Yahoo has more pressing short-term concerns, namely appeasing shareholders, who were banking on a 70 percent premium through Microsoft's final $33-a-share bid. The surest way to make them happy is to boost revenues and profit as fast as possible.
(Yahoo had no official response to Microsoft as of late Saturday, and a call to the company received no response.)
Come Monday, all eyes will be on Yahoo, now that it finally got what it wanted all along. The question it now faces: Is what it wants really what it needs?
Yahoo is over. The spring romance soured before it even began.Saturday afternoon,
Microsoft released a letter that its chief executive, Steve Ballmer, wrote to Yahoo's C.E.O., Jerry Yang, making clear its intent to take its final and enriched $47 billion bid and go home.There will be no more haggling.
There will be no hostile takeover either.
It's as if the whole takeover affair never happened.
Except that, for many, it did. Yahoo shareholders who, betting a deal would happen, had bid up the company's stock from $25.81 last Tuesday to $29.70 in after-hours trading on Friday are out of luck.
Also on Portfolio.com:Full Coverage of Microsoft's Failed Bid for Yahoo |
The deal also set into motion other discussions between companies that may still happen. Yahoo has been in talks with Google over deploying its search ads across its network. A trial run could take place as early as next week and, if extended, would almost certainly raise antitrust concerns.
As well, Microsoft and Yahoo may try to step up alliance or investment talks with players such as Time Warner's AOL or News Corp.'s MySpace, both of which made cameos in the stories covering every detail of the Microsoft-Yahoo deal.
Microsoft may also try to buy other internet and search properties like Ask.com or ValueClick. Yahoo or Google could try to swoop in first to nab such names, raising the possibility of bidding wars over smaller companies.
Ballmer's letter was as bittersweet in tone as the February 1 letter, signaling Microsoft's intent to acquire Yahoo, was arrogant.
"I am disappointed that Yahoo has not moved toward accepting our offer," he wrote. "Clearly a deal is not to be."
Ballmer also noted that "our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo undesirable as an acquisition for Microsoft."
In particular, Ballmer urged Yahoo not to get in bed with their common foe, Google. Along with antitrust issues, he said, it would effectively cast aside the Panama paid-search system that Yahoo worked so hard on and "effectively enable Google to set the prices for key search terms on both their and your search platforms and, in the process, raise prices charged to advertisers on Yahoo."
While it's not clear that Google has ever been interested in raising ad prices, the Yahoo-Google alliance would stifle an element of competition in keyword prices at a crucial time for the search market.
But Yahoo has more pressing short-term concerns, namely appeasing shareholders, who were banking on a 70 percent premium through Microsoft's final $33-a-share bid. The surest way to make them happy is to boost revenues and profit as fast as possible.
(Yahoo had no official response to Microsoft as of late Saturday, and a call to the company received no response.)
Come Monday, all eyes will be on Yahoo, now that it finally got what it wanted all along. The question it now faces: Is what it wants really what it needs?
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