Microsoft Threatens to Replace Yahoo Board, Cut Bid

[Hugabear]

Source: Bloomberg.com

Microsoft Corp. gave Yahoo! Inc. three weeks to agree on a takeover, threatening to replace the board and reduce its $44.6 billion unsolicited offer if the directors fail to negotiate.

Making Microsoft go to Yahoo investors ``will have an undesirable impact on the value of your company from our perspective, which will be reflected in the terms of our proposal,'' Chief Executive Officer Steve Ballmer said in a letter to the board released today.

The letter may force Yahoo Chief Executive Officer Jerry Yang to find another bid within a month or accept Microsoft, the world's biggest software maker, as a suitor. Yahoo fell 3.1 percent yesterday in after-hours trading after people familiar with the situation said Microsoft was re-evaluating its offer.

Threatening to cut the bid may be a way to ``make Yahoo's board move quicker,'' Pat Becker, chief investment manager at Becker Capital Management in Portland, Oregon, said in an interview before Microsoft's statement. ``This is all a chess match at this point.'' Becker manages Microsoft shares among its $2.4 billion in assets.


Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=a79_dK3vb_u4&refer=home

[1monster]

1. Corporate pigs... Yahoo must be doing too well or have something M.S. wants.

[EvolveOrConvolve]

2. They're both getting killed by Google in the online advertising biz

Google is the next Microsoft with their monopoly of internet advertising, and I don't see the buyout of Yahoo by Microsoft as a bad thing.

[AdHocSolver]

4. If history is prologue, Microsoft's plans for Yahoo is to serve as leverage to destroy Google.

This has been Microsoft's modus operandi for years. Buy out smaller companies that have a "mediocre" product that competes with a successful pioneer and leverage their deep pockets to destroy the better, innovative company.

Microsoft has never been innovative. They have always used their deep pockets to leverage "me-too" products to destroy the leading competitors.

By the way, I first programmed PC's starting in 1983 on an IBM PC running PC-DOS 1.00, with 128 KB of RAM and two single-sided 160KB floppies. The hardware was junky and the operating system was not developed by Microsoft, but was bought by them for peanuts from another company, and it was a hacked piece of garbage.

It would have failed in the market place if it hadn't had IBM behind it. That junky piece of software made Microsoft billions of dollars. Microsoft used those billions to destroy almost every competitor they had, while selling manure for products.

[EvolveOrConvolve]

6. But in the area of online advertising, Microsoft and Yahoo are getting killed

As a webmaster that has put up with Google's monopolistic shit for a lot of years, I welcome a Microsoft buyout of Yahoo. Pooling their resources might help open up the web again to the little guy. It's nearly impossible for the small fish to make any money because Google has a tight grip on the market.

I started programming on a Vic-20 computer in 1981 with 20K of Ram and cassette tapes as a storage medium. I was only eight years old, but it was so cool to actually control the computer and make it do what I wanted. I'm now a database administrator and programmer/analyst for a government agency and it's the best job I've ever had. I loves me the computers! :)

---

"while selling manure for products"

I'll agree with you that their operating systems are complete garbage, especially that dog Vista. But, they have a large number of products that are by far the best in the market (even if overpriced). I'll also agree with you that they have used monopolistic power to destroy competition, and that they should be split up somehow. But, we got Bush for a president and that killed any hope of reining in Microsoft's actions. Hopefully a Democratic president will reopen the investigation into MS's monopoly.

[liquiduniverse]

10. I only see this buyout as a bad thing

I use Yahoo for various services, most notably e-mail. Sometimes I watch videos on Yahoo or read the news. My browser of choice is Firefox (on a Windows machine). Will Firefox still work well with Yahoo after Microsoft buys them out? Sometimes I use a Linux or Mac computer. Will Yahoo still work well with those operating systems after MS buys them out? Will they try to purposely make them not work as well with as Internet Explorer?

Yahoo is a profitable company. They're just not doing as well as Google in the search business. They do, however offer a lot of services that Google doesn't have. I don't see how combining their search with Microsoft will do much to stave off Google's dominance. Instead of three big companies in the search business, there would instead be two, with Google still having their large and growing market share lead. The only thing that will lessen Google's dominance will be to build a better search engine.

I'm not sure what products you refer to that are the best on the market that MS creates. I assume it would be apps within the Office suite, since I can't think of anything else that they creates that is of greater value than anything else out there -- certainly not their web servers. And even the Office apps are becoming somewhat dated in the new online environment. Microsoft seems like a dinosaur now, while Yahoo has managed to stay somewhat relevant. I fear that Microsoft is only going to bring Yahoo down to their level.

[AdHocSolver]

3. Yahoo is correct about the less than stellar bid from Microsoft.

The significant sentence in the original article that explains why the offer is less than desirable is:

(snip)
.......

Microsoft offered $31 a share, half in cash and half in stock, on Jan. 31. Yahoo rejected the bid Feb. 11, saying the price didn't reflect its value. In its letter today, Redmond, Washington-based Microsoft said Yahoo had been ``anything but speedy'' in evaluating the bid, which was 62 percent higher than its closing price the day before it was disclosed publicly.

.......

The problem lies in the "half in stock" part of the offer. The value of Microsoft stock is going to decline for several reasons. A tanking economy, and therefore declining stock market, plus their Vista operating sytem is so bad, people are seriously looking elsewhere for system software.

Microsoft is supposed to be coming out with replacement software for Vista, but they have always missed their deadlines. Also, the initial rollouts of Microsoft software are always so full of bugs (until the first couple of bug fix packages, euphemistically called "service packs" by Microsoft), that this time around, people are going to be hesitant to "upgrade" their software with Microsoft products.

At the same time, companies, governments, and just plain users around the world are discovering the "joys of Linux". At one time, Linux was somewhat challenging to install and configure. However, currently there are literally dozens of Linux-based operating system packages to satisfy the most picky computer user.

Most of the Linux "distros" have GUI (i.e., a windows-like) installer software that will walk you through the process. Most have a graphical desktop system (KDE and GNOME being the most popular) that can be configured for anyone's tastes. Most distributions come with an office suite compatible with Microsoft Office, the most popular being Open Office. (A version of Open Office is available for the MS operating system as well.)

Besides office suites, most distributions come with several Internet browsers (Mozilla, Opera), e-mail programs, multimedia programs, graphics programs, software development programs (compilers, debuggers, scripting languages, IDE's), network administration tools, tons of computer games, server software (eg., apache), file management software, etc.

This open source software is hands down of a higher quality than their corresponding Microsoft counterparts. Linux is more stable. Whereas a Microsoft operating system's up-time would be measured in days, Linux systems run for months without ever needing to be rebooted.

Open source software is continuously upgraded. The best software developers work on bug fixes and improvements on an ongoing basis. As soon as an upgrade appears, it can be downloaded for free from the Internet. Most distributions supply software to assist in the upgrade process.

The only "downside" to programs like Linux is that anything more than vanilla changes requires some hands on activities. However, Microsoft products often require "hands on" activity as well, usually at great cost to the user. (I often hear from friends about the money they had to spend to fix a problem with some Microsoft product.)

Besides the much higher quality of open source programs, such as Linux and Open Office, compared to Microsoft software, the biggest advantage to those users willing to invest some effort in their computer systems is that open source software saves you significant amounts of money.

Whereas Microsoft is a blood-sucking leech when it comes to marketing their software, you are encouraged to download most open source programs for free, and install them on as many computers as you want for free. No restrictive licensing agreements, no charge for every computer you use the software on, and no spyware like Microsoft uses to screw your computer if they think you might be trying to cheat them.

Free software means not only no cost, it means freedom from getting screwed (or sued) by Microsoft if they think you might be violating their highly restrictive licensing agreements.

Businesses or government agencies with many computers can save hundreds of thousands, if not millions, of dollars by using open source software rather than Microsoft products. There is also peace of mind from not being beholden to a vulture of a company.

Microsoft became the number one software company, NOT by developing better products (their products have always been poor to mediocre at best), but by such tactics as rigging their operating system to make competing software break down or by using their deep pockets to sue competitors until they "broke".

Nowadays, more and more users, businesses, nonprofits, and government agencies worldwide are discovering open source software is available, user friendly, stable, of higher quality, and saves them tons of money. The Microsoft "monopoly" is collapsing.

The Microsoft stock price is going in one direction only, and that is down. This is why they want to use it to buy companies whose value is much better than theirs. This is what the Yahoo executives understand and why they think it is a lousy deal to trade a valuable stock like Yahoo for one that is in decline.

[madrchsod]

5. i`m running linux in a file

in my window operating system...i do not understand how anyone can put up with vista..

[EvolveOrConvolve]

7. Vista is the biggest piece of shit OS ever invented

Where I work, hundreds of machines were virtually unusable because they had Vista on them. We were able to work a deal with the distributor (CDW, I think) where we were able to get an organization wide license for XP that we will be able to use for the foreseeable future.

[papau]

18. True - but XP with Service Pack 3 RC 2 is even worse - the SP3 beta's were better

[CRF450]

12. Despite what alot of people say about Vista, its doing pretty good for me.

I updated to SP1 and its running even better. Dunno why people are having trouble with it.

[BadgerLaw2010]

13. And Vista sales are actually really strong, despite all the Internet kvetching.

[CRF450]

17. What about the people who havent complained on the net about it?

So far everyone I know hasent had any trouble with it. It runs just as good on my newly built comuter than my 3 year old gaming system with XP. In fact I had numerous problems with XP, where as Vista so far, hasent given me a lick of trouble. Go to newegg.com and you'll see the reviews on it are the same if not better than XP. The Vista Ultimate with SP1 so far has 4 perfect reviews.

I remember the same pissing and moaning people are doing over Vista as was done with XP. The way I see it, XP was full of bugs when it first released, it was also a resource hog. Vista is no different, yet it seems much more stable, reliable and more secure. Let the hardware, and 3rd party sofware makers catch up and it will be just as good as XP currently is.

[bemildred]

8. Bill always liked threats to get his way. nt

[alfredo]

9. What is the legal definition of Coercion?

[burrowowl]

11. May MS be

thwarted and if applicable fined billions of dollars!

[BadgerLaw2010]

14. 62% premium and YHOO wants more? They don't deserve the 62%.

The idea that this company is worth $40+ a share after it fell below that long ago on its own is deranged and probably driven by YHOO brass with othewise worthless options.

[sam sarrha]

15. havent gone to Yahoo since they helped the Chinese murder 6 users

[samsingh]

16. it's nice to have an independent yahoo

[Ordr]

19. Yahoo had better wise up and agree to this.

Google is eating both companies alive in the search sector.

[Floyd53]

20. Yahoo shot itself in the foot long ago

Maybe if Yahoo knew who they were and what they were doing, they would have never stopped the message boards. Yahoo shot itself in the foot with that change. All because the political pendulum was swinging away from the conservative movement when Herr Bush, uber boob, charged into the White House like a Panzer Division. The public voice had to be silenced. And this was the end of the rude, noisy, sometimes violent expression of great joy and excitement.