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Wow, watch Yahoo stock crash tomorrow!
 

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Well, the markets behave unpredictably to this sort of stuff.... it could stay stable or go higher because of this move. Nortel's stock went up even though they reported that they lost money in the last quarter, etc
 

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I'm sure Yahoo is very very happy.
Really? Maybe the entrenched managers who would have been out of a job are happy but I'll bet shareholders are very upset. After hours on Fri it was trading at almost $30 a share. By the end of Monday, shareholders could lose $5 to $10 billion.

Yahoo management has failed its shareholders miserably in the last five years and this is just one more example of a company that has gone from being a star to a dog.

I expect we'll see a number of class action suits in the coming month.
 

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It will be interesting to see what happens but it seems likely that Yahoo's stock will take a big hit on Monday. The day before Microsoft made their initial offer of $31 a share Yahoo was trading at $19. It immediately jumped to $28 after the Microsoft bid. I can't see why Yahoo would remain at the $30 level now that MS has withdrawn their offer.
 

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Yahoo trades in Frankfurt and this morning shares are down 21% (about $8 billion) while Microsoft shares are up 3%.

If Microsoft doesn't make a new offer this week then I'll bet Jerry Yang will be gone as CEO by the end of the month. I sense Mr. Yang is a pretty smart guy who had the inspiration to start Yahoo but I don't think he's up to running a $30 billion company.
 

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Letter sent to Yahoo

May 3, 2008

Mr. Jerry Yang
CEO and Chief Yahoo
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089


Dear 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
 

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Ouch! That's a pretty scathing letter...

Through sheer luck and incompetence I managed to escape Yahoo's share price swings in the black by selling the day Microsoft's original offer came. Unfortunately, a good friend of mine that bought in at the $40's was holding out for mid-30's; I imagine that he like other shareholders are just fuming. Yesterday I thought Yang was foolish and that seems to be coming true today...
 

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Opened in NY at $23.05 a share down from over $29 in after hours trading on Friday.

Analysts figure it might stay higher for a few months since many people think Microsoft will make another offer. If MS doesn't make another offer, many suspect the price could be back in the teens.

Related: MS and Google shares were both up
 

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If Microsoft doesn't make a new offer this week then I'll bet Jerry Yang will be gone as CEO by the end of the month. I sense Mr. Yang is a pretty smart guy who had the inspiration to start Yahoo but I don't think he's up to running a $30 billion company.
Well I was wrong about the end of the month but I think Mr. Yang's days are definitely numbered. I think the fact that he still owns about 4% of the company and has a few loyal major shareholders has kept him in charge so far but I doubt that can continue to last.

Todays news
Icahn to seek removal of Yahoo CEO Yang: report

The stock price has held up better than I expected ($26) but I suspect that is because most investors still think some type of MS deal is soing to be done.
 

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Woe be unto Yahoo

In our watching of stock prices and related events, what we are not discussing in this thread is that there are many, many, many, many people who do not want to be in business with Microsoft on principal. Yang's opposition may probably turn out to be just symbolic with his potential ouster to prove it (by people who had nothing to do with Yahoo's rise to success) but clearly there are messages here that need to be considered. They are questions and topics that understandably elude the stock market: ethics, gain for hard work, resistance to plunder, sheer ego of the defender, and a myriad of other reasons that do not enter into calibrations of stock prices. Sad that the bourse is the final quencher of ethics and principals, but there you go... welcome to our world. For those who believe that the market is always right, go have a big, fat, happy day.

Besides, I remember all the glory and hoopla about MSN... what happened that made Microsoft need Yahoo so badly? How can you trust Microsoft to somehow "get it right" this time where they've so obviously failed with web portals/search before?
 

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stampeder said:
They are questions and topics that understandably elude the stock market: ethics, gain for hard work, resistance to plunder,
sheer ego of the defender, and a myriad of other reasons that do not enter into calibrations of stock prices.
While reading this one of Chirchill's quotes came to mind
Democracy is the worst form of government except for all those others that have been tried.
----- Winston Churchill
The same can probably be said about the stock market as a tool to value a company...;)
 

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If Microsoft doesn't make a new offer this week then I'll bet Jerry Yang will be gone as CEO by the end of the month. I sense Mr. Yang is a pretty smart guy who had the inspiration to start Yahoo but I don't think he's up to running a $30 billion company.
Well, I was wrong about the timing but I'm amazed the board didn't turf him earlier. His arrogance and intransigence cost shareholders $30 or $40 billion.
 
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