back to article Yahoo! bitchslapped Ballmer's $40 a share offer

Yahoo! did its best to stymie a takeover by Microsoft, even when it offered $40 a share, because chief executive Jerry Yang let his heart rule his head. According to documents released by Delaware's Chancery court this took two forms - adding poison pill clauses to contracts which would reward staff for leaving the company in …


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  1. Jamie

    Power to the People

    If more companies had done the same thing as Yang 10-15 years ago the computer industry would not be in the crapper the way it is now.

  2. Anonymous Coward
    Anonymous Coward

    $31 offered, $37 requested

    Nah, they were offering $31 a share, Yang wanted $37, the market price rose to $30 anyway, so if the retirement fund wanted to sell their shares they could have simply sold them in the market and got pretty much all of the money.

    I didn't see the $40 mentioned in the complaint, (Yang had asked for $37 and MS were not prepared to offer that so it was not on the table)...

    What strikes me is that Microsoft were offering less than the price Yahoo was trading at only last year ($33), before the downturn, so it looks like MSFT wanted them on the cheap. If the retirement fund thinks $31 was a good selling price then why didn't it sell when they were $33, it was only last Nov...

  3. john oates

    the original offer was $40

    the $40 offer, or "about $40" to be precise is at the top of page 11 of the pdf



  4. James Pickett
    Thumb Up

    Good for Yang

    Nice to see a CEO with some backbone. Shareholders are notoriously fickle - look how many mutual building societies in the UK were turned into (now failing) banks, all because the original deal included a bribe/windfall for account holders.

  5. paul

    Yang = Legend

    The anti-ms factor may boost their popularity in the online world. Visitors to their core services may increase. Then if they are clever their revenue will go up and everyone will forget this except M$.

  6. Anonymous Coward
    Anonymous Coward

    Cool, so they're worth $40 to MS

    Yang shouldn't settle for $37 if MS was prepared to pay $40 and Google continues to attack MS's core business. He should have said $50.

    Look down the list of top traffic'd sites and MS choices are very very slim. They have no choice and Yahoo doesn't need them to get to $31 a share. i reckon.

    So Yahoo don't need the sale and MS do.....they should hold their course.

  7. Henry Wertz Gold badge

    I'm with Yang...

    I'm certainly with Yang here.. It has not gone well for any company that Microsoft purchases. They're also a convicted monopolist, and by trying to buy up all Google's competitors (in search + web advertising at any rate) they are just trying to leverage this to take down Google and gain a monopoly in another market. If Microsoft wants to try to take over, fine, try to buy 50.1% of the stock.

    If these investors do not like Yahoo's decisions, don't sue -- they haven't done anything to deflate the price (in fact it's risen ABOVE Microsoft's current offer), so there's not some big loss in stock value to sue over. If ya think Yahoo's fucked up and the stocks going to tumble, sell it now while it's high!

  8. Martin Owens


    Yang gets my pat on the back award. Any person willing to stand up to share holders and stick it to the Microsoft man deserves three cheers.

    Now if only he hadn't made Yahoo go public in the first place there wouldn't be a problem.

    I don't think share holders are a good financial business plan.

  9. Anonymous Coward

    Yang's an idiot

    And everyone who's ever worked with him thinks so. He & Filo were simply standing at the right place at the right time in the early 90's, and that, not technical brains or business acumen, are why they are where they are today. The best thing for the owners of Yahoo (that's the shareholders for you idiots out there) is to get rid of Yang, Filo and the rest of the Yahoo board.

  10. John

    not up to Yang

    Backbone or not, its not up to him. Yahoo is a publicly traded company, not owned by Yang. if it was still his, he could do what he pleases for himself and who cares. But once it is in the public domain, the board has an obligation to the actual people who own the company - the shareholders - to do whats in THE SHAREHOLDERS best interest, regardless of personal bias.

    Mines the one made of gold with bags of money tied to it, floating me gently down from the skies above San Francisco.

  11. Mike

    @anon coward

    I'm not sure that the market is so fluid that if a pension fund decided to divest themselves of all of their holdings in a company, it wouldn't adversely affect the price of their sale.

    That is, if YHOO is trading at $30, I can safely assume that I could buy or sell a share at $30. But a pension fund could hold hundreds of thousands of shares. You can't safely assume that if its trading at $30 then I can buy or sell hundreds of thousands of shares at that price. You have to find a buyer (or a seller).

  12. Majid

    Sold it there and then.

    Some people just think that going public with a company is some sort of funny way to get a load of free cash. But you're selling your company there and then, to the new stock holders. After that you're just there to make their investment grow, even if that means that you have to make a deal with some company you have a (strong) dislike for. If you can't take that, cash in your stocks and set up a new shop, or don't go public in the first place.

    Thats what's capitalism is all about, you can't have the all the cash and all the power, sometimes you have to trade one for the other. If you want to have all the cash and all the power become a dictator and install communism.

  13. Anonymous Coward
    Jobs Halo

    As much as I am ambivalent about MS

    And as much as I resent MS monopolistic ways, their creating bloatware operating systems that require expensive hardware upgrades for most business and personal computer users, and their talent (not unusual for big companies) of conducting mergers that end up being less than the sum of the two parts, I have to side with Ballmer on this one. Yang has no plan to get Yahoo! to $40 a share on his own, or even sustain them at $30 if they are not considering an M&A play. Yang has no plan to compete strongly with Google. Yang has no plan to really leverage Yahoo!'s portal.

    Yahoo!'s management needs to do the right thing for their shareholders. It's a shame that they can't make a go of it on their own, and I have no great love for MS, but if I was a Yahoo! shareholder I would be joining the lawsuit too. Yang and the Yahoo! board forgot their fiduciary duty to their investors.

  14. Anonymous Coward
    Thumb Down

    If I were an investor in Yahoo!, I'd be friggin outraged!

    Hey, if I paid 10 bucks a share for several thousand shares, you're damn right I'd want Yang to get every penny out of it, that he could. But, if his responsibilities were clouded by the fact that he was a part of "creating" yahoo, he should be tarred, feathered and thrown out the door.

    I don't give a damn if the buyer was microsoft, IBM, Google or Bob's vibrator repair, Yang has the professional responsibility to act in the best interest of the share holders.

    He's negligent, in my opinion and should be heavily fined and or forced to pay some form of restitution to the bodies that were investing in Yahoo for the profit. Period.

  15. Anonymous Coward

    Yang's a genius

    And everyone who's ever worked with him thinks so. He & Filo created the right place at the right time in the early 90's, and that due to technical brains and business acumen, is why they are where they are today. The best thing for the owners of Yahoo (that's the shareholders for the uninformed) is to richly reward Yang, Filo, and the rest of the Yahoo board.

  16. Charles Manning

    @Power to the people

    Kangaroo court. Lynch mob. Guillotine. That's the kind of power the Yahoo share holders will be exercising.

    Yahoo refused $40 a year ago. The value to MS went down a lot since then and continues to do so.

    Shareholders will want to cash up before the stock turn into toilet paper.

  17. Anonymous Coward
    Thumb Up

    My heart says...

    ...shareholders be damned. You buy shares in my company, you buy shares in me, and I don't sell myself very easily. It's easy for people who've never started a business to say, "Just sell it" - I'll count their opinions when they sell their children.

  18. Nordrick Framelhammer

    Typical Macro$lut...

    in their innovation by aquisition stratergy. They are only after Yahoo because their own search engine is such a pile of crap that no-one bothers with it.

    But this time they ran up against a brick wall in that process. And so what they are now doing is getting some of their pet shareholders to buy Yahoo shares then bitch and moan about it in court, hoping that Yahoo will fold. It would be interesting to see how many of these shareholders were shareholders before, or even during, Macro$lut started their assimilation process.

    Go Yahoo. Get lost Macro$lut.

  19. Anonymous Coward
    IT Angle

    Shareholders should

    ask for at least 2 business plans

    A - Sell with nasty protective measures

    B - sell with fullest positive support for the new owner

    c - Don't sell and be nasty

    D - on't sell and be positive

    Somehow I think it bodes poorly to incur the wrath of others (one enemy = a thousand friends and all that)

  20. Solomon Grundy

    @Nordrick Framelhammer

    That's how a publicly traded business works. Just in case you weren't aware.

    The person/entity with the most shares get to make the decisions. If you buy the shares up (only possible because shareholders are willing to sell their stake) you win. Full Stop. If you weren't so busy hating MS you would be aware that this type of thing goes on everyday on Wall Street. Get your face out of the PC and look around a bit, it's actually quite nice out here.

  21. Anonymous Coward
    Anonymous Coward

    Best interest of shareholders or short term speculators? which one?

    I am always surprised when I see the phrase "best interest of shareholders" hijacked by short term speculators who don't care about the long term well being of the companies they "invest" in. Do they really invest in the company? The word "invest" shares a stem with the word "vested", it means you are entering into a vested interest. Speculators do not actually do that. They only invest in a short gain scenario, they sell out too soon to be considered to have a vested interest in the company at any point in time. They have an interest, yes, but not a vested interest.

    If I look at the large mergers of the last decade, most of them have turned out to be disasters for the long term shareholders. They only ones to benefit from such mega-mergers or takeovers were the speculators, not the long term shareholders. Daimler-Benz lost 10 billion dollars on their adventure swallowing up Chrysler. For that amount of money they could have paid off all the speculators and still fare better as the burden of the merger would not have dragged them down. In the end they decided to get rid of Chrysler again. HP and Compaq is another such story. The combined value of the new company is less than what HP was worth before the merger. HP would likely be more profitable if they hadn't swallowed Compaq. Compaq itself was only up for grabs because they had swallowed DEC before and were unable to digest it.

    So, who is to say that a MSFT-YAHOO merger would be a success in the long term. Speculators would make a killing that's for sure, but chances are that long term shareholders would lose out over the next 5-10 years. The IT industry is littered with mergers/acquisitions that destroyed the business of the acquired company and did not produce the expected and promised outcome for the acquiring company. At the same time, the consumer is worse off every time there is one competitor less. Ultimately those mergers erode the competitive landscape and that is not only bad for consumers but also for the competitors themselves.

    For these reasons I seriously call into question whether Yahoo's refusal to merge with Microsoft really was against the interest of shareholders. It certainly was not in the interest of speculators. Other than that, this can only be satisfactorily judged a number of years down the road.

  22. Rich
    Gates Horns

    Googlite alert

    Yahoo! sucks and MS is desperate. Ballmer is a wild boar out of control. If they do eventually merge its simply: 2 pieces of shit = a larger piece of shit.

    I personally want MS to drop their Live! search rubbish. They are not a good search engine and never will be. They should simply use Google technology to search their own site. Using MS search to find anything useful on their own site turns up results that mean bugger all to anyone, its really really bad and pathetic.

    Put the resources saved from their Live! service into bringing out a decent OS that has some benefit to users over its predecessor.

  23. Mark

    Re: not up to Yang

    Yes it is. He's in charge.

    The reasons for refusing could be so that THE COMPANY continues to exist and be profitable. That is ALL that the executives of a company have to do: ensure they remain profitable. Maximum profit isn't necessary. If you, as an investor, think that you could make more money investing in a more profitable company, sell your shares in Yahoo and buy this more profitable company. Don't drive the company to sell to a competitor just so that that competitor can close the company and make it have ZERO PROFIT just so you can offload your shares at a peak. That isn't profiting from the business, that's selling off assets.

    ANYONE can make massive profits by selling off assets. However, you only have so many assets to sell, and you need assets to make profit, so your profit goes down as you sell assets.

    Surely if the CEO's job is to maintain profit, he should be able to tell shareholders to stuff it if the actions they want taken will reduce profitability. If not, then his job isn't "maintain profitability", is it, 'cos it can be countermanded by another.

  24. calagan

    Waste of assets

    Long time ago, on my 1st day at Microsoft, we gathered up in a large meeting room to listen to a welcome speech by a Microsoft top manager who used to be a former high-ranked army officer.

    Overall, I felt very motivated by his speech, but what really impressed me is the following quote: "Employees are not our most valuable assets, the are our ONLY asset".

    Looking at this merger, I don't see Microsoft getting any new assets, because, IMHO - poison pill or not - most of the valuable Yahoo employees will not stick around.

  25. richard

    so he told m$ to piss what?

    he started the company and he doesn't want it to be controlled by M$, yes, his heart ruled, so bloody what? maybe more heart and soul is needed in the industry and not just cash grabbing faceless wonders, like mr gates for example.

  26. Jason


    This is the problem with business nowdays. The responsibility of the board and CEO IS to achieve maximum profitability (value) for the shareholders, not to simply remain profitable. It is an investment, and as an investor you want max return on your investment. If something can be done to increase return, then it must be done.

    I'm not saying I agree with this method, but that's also the reason I wouldn't build a publicly traded company. Private investors providing loans to a company is a different story, as long as you repay at the contracted rate, that's the only obligation you have. Your profitability or value from that point can be whatever you chose, as you have no responsibility of value. Public corporations DO have responsibility of value.

  27. Mark

    Re: Corporations

    No, it;s not that the responsibility of the board and CEO is maximum profitability but that so many people accept their horrendous actions under the misapprehension that this is the requirement.

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