Microsoft changed the nature of discussions for a buy-out of Yahoo in an April 5, 2008, letter that threatened to attempt a hostile takeover at a lower price by the Redmond, Washington, corporate giant.
In late January, Microsoft offered about $44 billion in cash and stock for Yahoo, a Sunnyvale, California, company. Sources close to Microsoft view that amount of money as slightly more than petty cash. Apparently, so do the directors of Yahoo. And, as the overall stock market in the US has dropped, substantially, in the past few weeks, the offer is now probably only worth about $42 billion, which may be moving into the chump change area for take-over offers.
Today, the newly re-appointed CEO of Yahoo, Jerry Yang, sent a nasty-gram to the chief at Microsoft--roughly interpreted as "put up, or shut up."
Appearing to become testy because of the Yahoo delays, it seems that executives at Microsoft are prepared to jack up the yin in Redmond to counteract the "shop around" tactics of Yang, who is co-founder of the little search engine that used to could, but now maybe can't.
Some business analysts have commented that Yahoo has offered itself, whole and in parts, to Google, Time-Warner AOL, and News Corp. None of these corporate players seem interested in salvaging Yahoo from the clutches of Microsoft.
Terry Semel, resigned Yahoo CEO, who left last Thursday, had been an executive at Time-Warner previously, which seems very odd to some observers.
From another perspective, gamers see this simple move by Microsoft as on the order of "Prepare to be assimilated. Resistance is futile. We are Borg" or "We are Ferengi," if you will. Now where's 7 of 9 when you need her?
At Ballmer-aral Castle, in Redmond, the game-playing seems to wear thin. Some observers wonder and speculate about why the monster, Microsoft, doesn't simply move into the open market and buy up low-cost, market discounted, shares of Yahoo as a piecemeal maneuver that would actually be substantially cheaper than the overall stock and cash offer.
One commenter, Ziff Nada, noted columnist and guru of punditry, wrote "This may be a Beta test by MSFT. It makes the Redmond megacorp look as if they are nice guys who offered patient, long-suffering YHOO shareholders a premium on the stock they hold. (YHOO traded over $40 per share in late 2005 and January 2006.) The people with these Yahoo shares, of course, get some cash and also become Microsoft stockholders after the deal is complete, and they will be very, very satisfied investors in the family of the software giant." A more astute source pointed out that Yahoo has some form of poison pill clause that prevents a hostile take-over through buying common shares at the market.
Nada also noted that the Velvet Glove offer may skirt around any potential curiosity by US Justice Department lawyers pondering more "monopoly" legal grief for Microsoft. Even so, sources told Nada that the Mailed Fist can slip out of the glove in an instant, if needed.
Meanwhile, over at Google, the legal department dusted off the old "monopoly" accusations toward this potential deal. Some wags pointed out that Google has about 66 percent of the search hits on the internet, whereas Microsoft and Yahoo combined have about 27 percent. Nada noted in his column that this finger-pointing requires an extremely new definition of the term "monopoly" when used by a firm that holds a two-thirds share to describe a less than one-third share of the market held by 2 companies.
For whatever reason, the Yahoo board has told Microsoft to "piss off, buggers." This is not sitting well with some YHOO shareholders as they watch their stock drop in value and MSFT shares climb today. Share prices are of little meaning, except to the Yahoo investors, because the $270+billion Microsoft holds a massive capitalization advantage over $37+billion Yahoo. One of Nada's secret sources pointed out that the Yahoo CEO has about 78 million shares, so the push to raise Microsoft's offer from $31 per share to $40 would substantially enrich him and co-founder David Filo, who reportedly holds 52 million shares. However other sources suggested that the two are more concerned about looking out for their Yahoo investors rather than personally enriching themselves.
Notable comments also generate speculation about a name for the conjoined Microsoft + Yahoo entity. MicroHoo. SoftYah. SoftHoo. HooSoft. MicroYah. Such nonsense, however, actually becomes important in choosing the NASDAQ designation for the new stock. MSHO. SFTY. MSFY. MSYA. Pronouncing these acronyms bears testing: Mizz Hoe, Softee, Mizz Eff You, Miss Ya.
At the end of his column, Ziff Nada pointed out that the chief bean-counter for Microsoft, Chris Liddell, indicated the cash-flush corporation may need to borrow money, for the first time, in order to finance the deal. Nada then asked, "We wonder if Bill Gates will have to co-sign the note?"