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 A shareholder suit and a heated exchange between Yahoo! Inc. chairman Roy Bostock and activist investor Carl Icahn are the latest repercussions since Microsoft Corp. pulled its $47.5 billion bid for the search giant in Many and Icahn bought up shares, denounced the stalled talks and waged a proxy contest. A recap:
Icahn on June 6 urged Yahoo! to set a $49.5 billion price
for a new Microsoft offer, days after blasting the company's severance
plan. Meanwhile, Sue Decker, Yahoo!'s president, said June 4 talks with Microsoft were ongoing, while Steve Ballmer, Microsoft's CEO, reiterated to little surprise June 3 his company's pursuit of Yahoo! was all about online ad revenue. Microsoft pulled its $47.5 billion takeover bid for Yahoo! May 3, and the two returned to the negotiating table two weeks later. The most buzzed about deal possibilities now, The Deal's Baz Hiralal noted, are search
advertising deals between Yahoo! and either Microsoft or Google Inc. Gearing up for a proxy fight, Icahn signaled his willingness May 15 to invest up to $2.5 billion in Yahoo! and announced his slate of nominees. Yahoo! shot back the next day, but days later Icahn had won the support of fellow activists, namely T. Boone Pickens and Daniel Loeb. On May 3, Microsoft said it would end its quest to acquire Yahoo!, after its revised offer was rejected. Yahoo! shares were down 22% in Monday's premarket, and discussion boards were aflame with reactions to the deal that wasn't. Meanwhile, Yahoo shareholders began speaking out, expressing their anger at Yahoo! leadership for being too defiant against the Microsoft offer. Icahn said May 15 he was called upon by other shareholders to lead the proxy contest. On The Deal's Tech Confidential, Andrea Orr considered the multiple challenges Microsoft faces, now that it has apparently eliminated one of the few partners that would have given it a decent chance to compete against Google Inc. THE DEAL THAT WASN'T (AT LEAST NOT YET) In a letter May 2 to Yang, Ballmer wrote: "Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo! has not moved toward accepting our offer. "After careful consideration, we believe the economics demanded by Yahoo! do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal." In the latest round of negotiations over the weekend, Yahoo! was able to exert some leverage with Microsoft after running a trial plan to outsource its search advertising results to Google Inc. last month. Yahoo! suggested earlier in the week it could make the arrangement with Mountain View, Calif.-based Google more permanent and both companies attempted to refute arguments that such a combination would not fly with regulators. Yahoo! had reported first-quarter earnings April 22 that beat estimates. The Deal's David Shabelman noted that "to get a deal done on friendly terms and in a timely fashion, Microsoft might still need to sweeten its bid." The fight for Yahoo! looked like it was escalating April 10, with Microsoft trying to enlist News Corp. in its bid for the company, while the reluctant target, in turn, hoped to retain its independence through a tie-up with AOL, according to press reports. The Deal's Laura Board noted: The Redmond, Wash. software giant, which is under pressure to sweeten a [$31 per share] cash-and-stock offer for Yahoo! made in February, is in talks with Rupert Murdoch's media behemoth about launching a new bid, according to The Wall Street Journal and The New York Times. The development marks the realignment of News Corp., the owner of MySpace, which had flirted with a white-knight combination with Yahoo! Meanwhile, Yahoo! and Time Warner Inc.'s AOL are nearing a deal to combine their Internet operations, according to outlets including The Journal and Bloomberg. News of the plan, under which Time Warner would reportedly fold AOL into Yahoo! and make a cash investment in return for about a fifth of the enlarged company, comes a day after Sunnyvale, Calif.-based Yahoo! bolstered its defenses against Microsoft by announcing it will test an advertising alliance with Google Inc.That news came a day after it looked like an increase of $1 per share could clinch Yahoo! for Microsoft and Yahoo! continued its here-and-there dealmaking of late with a deal for Web analytics company Tensa Kft., better known as IndexTools. (All the while, Yahoo! has relied on a Skadden, Arps, Slate, Meagher & Flom LLP team in its dealmaking, as it tries to keep its would-be buyer at bay.) GETTING UGLY A spat erupted over the weekend of April 5, with Microsoft issuing an ultimatum to Yahoo! to agree to a deal in three weeks or the would-be buyer would go hostile. Yahoo!, in turn, said it was open to a deal, but at a better price. In late March, Yahoo! outlined a rosy plan for the future, which raised some eyebrows, just weeks after digging in its heels, saying it would extend the deadline for nominating directors to its board from March 14 to 10 days after the public announcement of its annual meeting date. In 2007, it was on June 12. Shabelman noted: Yahoo! said the move gives stockholders who wanted to nominate board candidates more time to do so and allows its board to continue exploring strategic alternatives without the distraction of a proxy fight while simultaneously hampering Microsoft's ability to build any momentum for a board takeover.February was busy, as well:
Microsoft's offer came a year after preliminary talks between the two subsided, and Yahoo! embarked on a turnaround -- one that in the months and weeks leading up to the offer, proved insufficient to appease investors and critics. As Dealscape's George White noted Feb. 1, Microsoft's bid may actually help Google Inc., the very force the two are vying against. If Yahoo! were to angle for a higher price (which, it seems, has been the case), Microsoft and Yahoo! would spend time duking it out over an agreement, rather than focusing on the competition. And if they do agree to merge, he noted, integration will certainly not be an easy task. Microsoft's last major score was a $240 million investment in Facebook Inc., which valued the wildly popular social networking site at $15 billion. Google challenged the Microsoft-Yahoo! proposition Feb. 3 charging Microsoft was trying to monopolize the Internet, just as it had PC operating systems. The search giant's CEO Eric Schmidt also reached out to Yahoo! CEO Jerry Yang, calling him to offer help in fending off Microsoft, according to a Wall Street Journal report Feb. 4. With other takes on the news, Shabelman noted that other bidders were not expected to top Microsoft's $31 per share offer, and Andrea Orr pointed out that acquiring Yahoo! would give Microsoft one-fourth of the online display ad market. JANUARY BUZZ The target's shares saw a precipitous slide over the last year, losing nearly 32% of their value as Google has steadily eroded Yahoo!'s market share. Yahoo!'s shares were up nearly 47.3% to $28.24 Friday morning, Feb. 1. Microsoft shares were down more than 5% to $30.95. Overall, the news boosted the stock market. Dow Jones Industrial average futures jumped 100 points within minutes of the announcement. See more from Dealscape. Earlier in the week it had become clear all patience was lost on the part of Yahoo! investors, as critics said it had failed to articulate a viable turnaround plan and the likelihood of a takeover became even greater, Shabelman pointed out.
A week earlier, watchers suggested possible M&A moves that could boost the company's business, drive growth and broaden its portfolio. Shabelman noted David Garrity, an analyst with Dinosaur Securities LLC
And finally, Shabelman noted:
ROLLER COASTER RIDE Two thousand seven was a year of highs and lows for Yahoo! Its market share and stock price steadily declined, but its M&A machine roared and its bet on Chinese e-commerce delivered the largest IPO since Google. A management shuffle at the top put co-founder Yang back to the driver's seat to turn around the company. In November, Yahoo! reveled in the success of Alibaba's IPO. The Chinese e-commerce company's IPO, which raised $1.5 billion, was the biggest since Google's $1.7 billion debut in 2004. Yahoo! in 2005 swapped its Chinese operations and $1 billion for 39% in the parent company Alibaba Group. Shares nearly tripled in their first day of trading in Hong Kong. In September, Yahoo!'s M&A machine was humming away, but Dealscape wondered if a spate of smaller deals would be enough to appease investors. The company announced a $350 million deal for e-mail software company Zimbra Inc. Sept. 17, days after a $5 million deal for news aggregation site Buzztracker, which came shortly after a $300 million deal for behavioral advertising technology firm BlueLithium Inc. In June, Yahoo! grabbed college sports site Rivals.com for $100 million. The acquisition spree came at a critical time for Yahoo!, with co-founder Yang back at its helm since the June departure of Terry Semel and under fire to boost its financial outlook. Trouble was, investors were growing restive, and some argued larger deals could foretell growth, as The Deal's David Shabelman wrote:
Rewind to June. After drawing shareholder fire for his generous compensation package and the company's financial performance, Semel stepped down June 18, and Yang stepped in to replace him. The board also named Decker, the former head of Yahoo!'s advertiser and publisher group, as president. What would come next for Yahoo! was a question analysts kicked around the next day and remains relevant.
SHAREHOLDER ACTIVISM GOES WEB 2.0 The June news came nearly one week after the company's annual board meeting saw significant shareholder resistance, as much as 30% in one case, to the board's candidates, though they were all elected. Ahead of the meeting, the company drew criticism from Web 2.0-inclined activist shareholder Eric Jackson.
WAVES OF CHANGE The management shift was the latest for the transitioning company and followed the departure of chief technology officer Zod Nazem, who had a crucial role in developing Panama, a month earlier. At the time, the move raised questions about Panama falling short of expectations, Shabelman wrote. Nearly two weeks after The Wall Street Journal reported Yahoo! was considering a merger with Microsoft, the company landed a new CFO, Blake Jorgensen, a Thomas Weisel Partners LLC co-founder who seemed poised to drive some M&A activity, Shabelman suggested in May. M&A fuel or not, his experience would only be an asset to the company, which has not ceded to the competition and, should it go to Microsoft, may be instrumental in the software giant's quest to keep Google at bay as long as possible. The May Microsoft news came after talks between the two fell apart. Yahoo! had been rejiggering itself, through product launches and grabbing small and midsize Internet companies for its arsenal and assault against its archrivals. One of its larger deals to date, Yahoo! said April 30, 2007 it would pay $680 million for the 80% stake it did not already own in Right Media Inc. in hopes of bolstering ad sales. The deal came two weeks after Google said it would acquire DoubleClick Inc. for $3.1 billion. Four months earlier, Yahoo! kicked off 2007 with the launch of its upgraded Web-based applications, including its search service, oneSearch, and the acquisition of MyBlogLog.com, a social network built around blogs, which a Yahoo! exec confirmed -- via blog -- late Jan. 8. The news came about a month after the company launched a corporate shakeup of sorts after an internal memo likened its operating structure to peanut butter on bread -- spread too thin, and further, too bureaucratic, according to The New York Times.
Leading up to the announcement, the company made a series of moves to make up for some areas in which it has been dragging, one being advertising. In November 2006, Yahoo! announced striking a partnership with at least seven U.S. newspaper companies to lend its advertising and search technology to their collective crop of Web sites that are home to 150+ dailies. The news came weeks after Yahoo! sparked buzz as it readied its next-generation search platform, which analysts told The Deal would never surpass Google's. It also came on the heels of Google's plan to dabble in offline newspaper ads, offering advertisers already using its online services, participation in a three-month pilot program for print advertising. In August 2006, Google also said it would lend its search advertising technology to eBay Inc. for the e-tailer's non-U.S. advertising needs. Even still, Yahoo! hasn't shied from a challenge. PAYING DEARLY To fuel the two-armed expansion -- international and offering-wise -- Yahoo! made a series of acquisitions and taken stake in what it sees as key markets, paying top dollar and lining the pockets of its venture capitalist friends and neighbors. Earlier in November 2006, Yahoo! acquired polling Web site Bix.com for undisclosed terms. According to BizJournals.com, Bix previously raised $6.77 million in a Series A round of funding from investors that included Palo Alto, Calif.-based Sutter Hill Ventures and Trinity Ventures of nearby Menlo Park, Calif., The Deal's Cheryl Meyer pointed out at the time of the sale to Yahoo!.
WE CAN DO THAT, TOO Ramping up its product offerings to compete with Eastman Kodak Co.'s EasyShare and Hewlett-Packard Co.-owned Snapfish, Yahoo! grabbed popular photo-sharing service Flickr in 2005 -- for undisclosed terms, but reportedly $25 million -- and announced launching Yahoo! Photos on June 8, 2006, offering users such features as the ability to send photos over instant message and drag-and-drop for easy organization. Just days before, Yahoo! announced launching Yahoo! Video to go up against megapopular YouTube, with some of the same elaborate features as Yahoo! Photos like tagging for easy browsing. Other products, too, target the competition. Launches in 2006 include:
--Carolyn Murphy
CategoriesComments
From: timothy harding,
when the search engines are truely free when i get info highway fastlane from my pc when competition grinds to a new precedent then the stock market will, in fact, reflect who wants to know?
Posted on:
February 4, 2008 8:21 AM
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I think Yahoo! made a bold but necessary step in trying to hold their own in the Internet advertising business. They shelled out a lot of funds but they can gain a lot more if their investment takes off.