Gizmodo
Microsoft has retired their bid over Yahoo completely, citing "excessive demands" on Yahoo's part. They won't try to do a hostile takeover either, because "Mr Yang would "take steps that would make Yahoo undesirable as an acquisition for Microsoft," according to Steve Ballmer. The potential nightmare/dream love story is over. Do you think this is bad for the world, given Google's almost monopolistic position? Or maybe it's good because Microsoft already has enough power? Tell us your comments after reading the rest of Steve Ballmer's farewell letter after the jump.
Mr. Jerry Yang CEO and Chief Yahoo Yahoo! Inc. 701 First Avenue Sunnyvale, CA 94089Dear Jerry:
After over three months, we have reached the conclusion of the process regarding a possible combination of Microsoft and Yahoo!.
I first want to convey my personal thanks to you, your management team, and Yahoo!'s Board of Directors for your consideration of our proposal. I appreciate the time and attention all of you have given to this matter, and I especially appreciate the time that you have invested personally. I feel that our discussions this week have been particularly useful, providing me for the first time with real clarity on what is and is not possible.
I am disappointed that Yahoo! has not moved towards accepting our offer. I first called you with our offer on January 31 because I believed that a combination of our two companies would have created real value for our respective shareholders and would have provided consumers, publishers, and advertisers with greater innovation and choice in the marketplace. Our decision to offer a 62 percent premium at that time reflected the strength of these convictions.In our conversations this week, we conveyed our willingness to raise our offer to $33.00 per share, reflecting again our belief in this collective opportunity. This increase would have added approximately another $5 billion of value to your shareholders, compared to the current value of our initial offer. It also would have reflected a premium of over 70 percent compared to the price at which your stock closed on January 31. Yet it has proven insufficient, as your final position insisted on Microsoft paying yet another $5 billion or more, or at least another $4 per share above our $33.00 offer.
Also, after giving this week's conversations further thought, it is clear to me that it is not sensible for Microsoft to take our offer directly to your shareholders. This approach would necessarily involve a protracted proxy contest and eventually an exchange offer. 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.
We regard with particular concern your apparent planning to respond to a "hostile" bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo! today. In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo! undesirable to us for a number of reasons:
• First, it would fundamentally undermine Yahoo!'s own strategy and long-term viability by encouraging advertisers to use Google as opposed to your Panama paid search system. This would also fragment your search advertising and display advertising strategies and the ecosystem surrounding them. This would undermine the reliance on your display advertising business to fuel future growth.• Given this, it would impair Yahoo's ability to retain the talented engineers working on advertising systems that are important to our interest in a combination of our companies.
• In addition, it would raise a host of regulatory and legal problems that no acquirer, including Microsoft, would want to inherit. Among other things, this would consolidate market share with the already-dominant paid search provider in a manner that would reduce competition and choice in the marketplace.
• This would also 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. In addition to whatever resulting legal problems, this seems unwise from a business perspective unless in fact one simply wishes to use this as a vehicle to exit the paid search business in favor of Google.
• It could foreclose any chance of a combination with any other search provider that is not already relying on Google's search services.
Accordingly, your apparent plan to pursue such an arrangement in the event of a proxy contest or exchange offer leads me to the firm decision not to pursue such a path. Instead, I hereby formally withdraw Microsoft's proposal to acquire Yahoo!.
We will move forward and will continue to innovate and grow our business at Microsoft with the talented team we have in place and potentially through strategic transactions with other business partners.
I still believe even today that our offer remains the only alternative put forward that provides your stockholders full and fair value for their shares. By failing to reach an agreement with us, you and your stockholders have left significant value on the table.But clearly a deal is not to be.
Thank you again for the time we have spent together discussing this.
Sincerely yours,
Steven A. Ballmer
Chief Executive Officer
Microsoft Corporation
Comments
Finally!!! Now I hope I never need to hear about this bs anymore.
@Neodiablo22: You can't call it "BS anymore" because on monday all that Yahoo stock is gonna plummet.
@CGrant: Hey now, some folks would call that an "awesome ground floor buying opportunity".
The fact that those people are Realtors makes it no less true. ;)
Are they walking away, or are they sending a message to the investors of "take it or leave it"? If the stock crashes on Monday, there may be some big investors speaking to Jerry Yang.
Woo, yahoo is not going to get crappier than it already is!
If only I had shorted Yahoo!!!!!
I've used Yahoo's services since 1997, and I was seriously planning on moving everything I had with them to Google if this merger had taken place. I'm seriously not ready to watch the destruction of Yahoo by Microsoft. If I wanted hotmail I'd have hotmail...
It might have been an interesting partnership. Maybe both Microsoft's and Yahoo's products, as well as joint projects, might have improved with joint effort.
What an odd way to conduct business. Shouldn't this stuff be covered by an NDA or something? From what I can see, all Yahoo has done is to say no to an unsolicited bid. Now the effect on their shares could be massive, purely down to the detailed disclosures made.
Yahoo is not crappy. There is a reason its the #1 most visited site on the internet. I wouldnt mind if Microsoft took over Yahoo because I am a VERY HUGE microsoft junkie. I know so much about it. If microsoft synced yahoo with them then my email would work with my computer as well
Yahoo is doomed. Look for major losses tomorrow.
Be careful what you wish for.
Yahoo might be down on the short term but pressure will be on current management to pick it up quick.
Leggy leggy leggy leggy, leggy leggy leggy leggy, leggy leggy leggy leggy blonde!
Come Monday morning, Jerry's ass is grass. Let 'em die a slow death.
Really folks, Yahoo! should have taken the offer, now they have to face the consequences of Jerry's playing the shitty car salesman trying to get Microsoft to basically buy a Yugo priced the same as a BMW.
MS has a 20 year track record of pure evil. How can people compare Google's monopoly to MS??
I never hear complaints about Cisco's monopoly. Why? Because they haven't screwed everybody on Earth!!
MS is a special case of evil. Part of why they walked away at this moment was hurt Yahoo!'s stock as much as possible. Some of the anti-Yahoo! comments here are probably from MS astroturfers, given a mission to make dumping Yahoo! stock seem sensible.
Cisco monopoly?
Public Education FTL.
Unbelievable. Yahoo's board will have to "divest itself" of Yang. Glad I didn't entrust any of my money to him.
I think yahoo is better off without microsoft. Microsoft is probably better off without yahoo too.
@zorg:
Get a clue, dumbass. 20 years ago, Microsoft was saving everyone from the "evil" IBM. Now MS is the evil one, and Google is going to save us. Wait 10 years and we'll see how altruistic Google really is.
And Microsoft is demonstrating its evil ways by abandoning the Yahoo bid to depress the stock? What were they supposed to do, keep trying? Or would that have made them evil too?
Friends Microsoft has done this to push Yahoo to take the offer as soon as possible, they know that by doing this the stock will go down at least by 20% or more. Yahoo at Friday was very happy with the price of their stock what they don't realize is that the price of the stock was up because the Microsoft deal.
I bet that sooner than Friday Yahoo will accept the offer after looking that their stock is down by 35%.
@max.: yeah, yahoo's loss. even if M$ isn't the buyer, Google or someone's getting a super deal in 3-6 months.
I need M$ to buy them so I can check my mail with Outlook, so I can check it with Thunderbird.
@butterflyeterna: Seriously?
@Gadgetdon:
My money's on this.
This deal was never about the computing landscape as it exists today, in my opinion, but about establishing competivity for the world of cloud-based computing that's just now being conceived and built. MS and Yahoo both lose, on that basis, if this deal doesn't go through; as they are both not well placed to lead in a cloud-based world, but together may have had a chance.
ok, why is there all this talk about the share price crashing? of course it is going to crash, it will drop right back down to about where it was before the MS merger was proposed... so what's the big deal? sure, some of the shareholders might be pissed cuz they didn't get a huge payday, but welcome to investing... they call it that because it involves risk, if there was no risk they would call it "getting free money".
I think this whole ordeal just leaves a bad taste in a lot of peoples mouth once again for Microsoft. Amazing at how they seemed not to care one bit how their company looks thru this whole thing and what it does to their own stock price in the long run.
Microsoft can't even design a corporate takeover that doesn't crash.
Microsoft + Yahoo = Antitrust.
It would never have gotten by the FTC anyway. I think even if the shareholders wanted the merger, it wouldn't have made muster.
Microsoft cannot do email, they cannot do search and they cannot even do an operating system-- they have sucked for a long time now. Yahoo has better email, Google better search and Apple better OS. What is MS going to be in five or ten years?
Answer: SHIT
@CGrant: Sure doesn't look like it. Not from Tokyo it doesn't.
...
@jpitsch:
XP, Server 2003 and Server 2008 seem to disagree with your statement.
OSX didn't even have an easy free automated way to back up files until leopard.
"Microsoft cannot do email, they cannot do search and they cannot even do an operating system-- they have sucked for a long time now. Yahoo has better email, Google better search and Apple better OS. What is MS going to be in five or ten years?
Answer: SHIT "
Probably the same place it is now. Office is the standard, office integrates with everything including sharepoint now. Active Directory is a standard. Apple doesn't even have a good solution in this market because OSX Server doesn't even have the concept of a domain forest. No rational company is going to trust information within google docs to save money.
Answer: Microsoft still around after 10+ years if not more.
@Syndication:
Ok you got me: MS is currently better at servers. Office ain't anything special though.
Thank god. There's no way in hell Yahoo was worth $46B.
What funny and ridiculous speculation. Of course risk is the nature of investing-- but Jerry Yang is going to have to sell the board on this being a GOOD thing, and that Yahoo can make the stock jump 70% pretty quickly or they WILL be pissed at the value left on the table. I'm not sure he's the snake oil salesman Strauss Zelnick is. Yang could be in trouble.
@jpitsch: Yay, fanboy bullshit. Yes, you like Apple and Google and Yahoo. Yes, you hate Microsoft. Yes, some of Microsoft's products may soon become second or even third in their fields-- and yes, there's still a HUGE amount of profit to be made by the guys in second and third.
Give it a break!
Slam. Now Yahoo is left high and dry with inflated value ready to crash on Monday morning, with momentum. Me thinks Mr. Yang is and his board will be spending some serious cash defending themselves from shareholder lawsuits. And now when the share price hits rock bottom, maybe another offer will appear to a board of more amenable composition. Genius. 'Poison Pill? I'll give you a Poison Pill'. And people doubted Balmers inclusion on Guy Kawasaki's Time 100 list.
I can't get past the:
"Sincerely Yours"
Steven A. Ballamer
Are they having some kind of affair? That is not very business like....
Good, because I don't want Microsoft's evil over-managed grubs on Flickr. It's already gone downhill enough with the Yahoo! acquisition, we don't need someone to completely destroy the fun of the site, especially for us Apple fanboys...
@jpitsch:
However Office is used by over 90% of businesses. That's what matters.
I figured that this would eventually happen. Yahoo should have been happy with the deal they were offered, because it obviously seems Flickr and del.icio.us are the only real things they have going for them, and they bought it from other people, rather than developing it in-house like microsoft or google often does. Go figure. Yahoo is gonna regret it in the future.
wow you people hate Microsoft, Microsoft gives me no problems that i can't fix...stop being pussies and complaining about everything microsoft, grow the fuck up
this isn't over...In 9 or so months, if Yahoo stock plummets, Microsoft will buy it in a firesale. On the other hand, if Yahoo is able to leverage their userbase into profitable social networking, bake sales, or whatever else they claim to have up their sleeve, they buttress the company from repeat rapaciousness from the borg.
@oo0cyst0oo: Exactly
@oldmanstan: Tried webmail for thunderbird? hotmail, yahoo, gmail, etc. [webmail.mozdev.org]
oops, I messed up my replies. They should be swapped, the first one is to oldman.
Yahoo hasn't been relevant (much less any good) for the last 7 years or so. This is a relief. I couldn't fathom why yahoo wouldn't sell for one and I couldn't understand why MS wanted to buy.
Some interesting speculation here; Ballmer's job might be on the line if the deal doesn't go through.
See here