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June 12, 2008
Yahoo on MicroHoo: Stick a Fork In It - We're Done
MicroHoo is dead. RIP Microsoft-Yahoo. Today Yahoo made the official announcement that they've concluded discussions with Microsoft. The possibility of a full acquisition or a partical acquisition are nil.
What's more, Yahoo indicated that an independent search business will be critical to its strategic future and would not be in the best interests of Yahoo! stockholders. That casts doubt on the veracity of the TechCrunch rumor.
Full Text:
Yahoo! Inc. (YHOO) today announced that discussions with Microsoft regarding a potential transaction -- whether for an acquisition of all of Yahoo! or a partial acquisition -- have concluded. The conclusion of discussions follows numerous meetings and conversations with Microsoft regarding a number of transaction alternatives, including a meeting between Yahoo! and Microsoft on June 8th in which Chairman Roy Bostock and other independent Board members from Yahoo! participated. At that meeting, Microsoft representatives stated unequivocally that Microsoft is not interested in pursuing an acquisition of all of Yahoo!, even at the price range it had previously suggested.With respect to an acquisition of Yahoo!'s search business alone that Microsoft had proposed, Yahoo!'s Board of Directors has determined, after careful evaluation, that such a transaction would not be consistent with the company's view of the converging search and display marketplaces, would leave the company without an independent search business that it views as critical to its strategic future and would not be in the best interests of Yahoo! stockholders.
Yahoo! remains focused on maximizing value for stockholders by continuing to execute on its strategy of being the "starting point" for the most consumers on the Internet and a "must buy" for advertisers. The online advertising industry is projected to grow from $40 billion in 2007 to approximately $75 billion in 2010 and the company believes it has the right assets, strategic plan, Board of Directors and management team to capitalize on this growth opportunity.
UPDATE: Microsoft has issued a response:
"In the weeks since Microsoft withdrew its offer to acquire Yahoo!, the two companies have continued to discuss an alternative transaction that Microsoft believes would have delivered in excess of $33 per share to the Yahoo! shareholders. This partnership would ensure healthy competition in the marketplace, providing greater choice and innovation for advertisers, publishers and consumers."As stated on May 3rd and reiterated on May 18th Microsoft was not interested in rebidding for all of Yahoo!. Our alternative transaction remains available for discussion."
Posted by Kevin Heisler on June 12, 2008 3:15 PM
Comments
YHOO stock is now at $23, down 10%. It was holding steady during this time because shareholders were hopeful of a deal. With Icahn in play, it shareholders were betting on Icahn to pull YHOO through. I think Icahn will have more leverage to get his way now. I don't see how dropping this deal "maximized" shareholder value. I think Yahoo clearly has a delusional sense of its abilities to compete, its place, and has forgotten that they are a public company. "Believing" they are right and have the right assets in place means nothing - as a public company culpable to the public, they must produce results.
As a search marketer - it's clear that Yahoo stands no contest in search advertising compared to Google and almost universally, my clients claim Yahoo PPC sucks. Without that component as part of their advertising revenue model, I don't see how Yahoo can continue to compete independently.
Cryptblade June 12, 2008 3:53 PM
Couldn't agree more.. Yahoo! search does not deliver in terms of performance.
I also feel that they do not understand that the Internet is a Global business and not just a first world selective audience.
Their systems need to be overhauled and the executives need to see the bigger picture and either fix the fundamental problems in their business model or get out of this business and let someone else handle the change.
John June 13, 2008 9:15 AM
