Yahoo Already Playing For Time

Henry Blodget | February 3, 2008 7:23 AM

Yahoo responded in more detail to the Microsoft offer late Friday with a FAQ. We've annotated it below. The bottom line? The company is trying to act as though it is in control of this process (which it isn't), and is already playing for time.

From Yahoo:

FAQ: Unsolicited Proposal From Microsoft
Q1. How is Yahoo! responding to Microsoft’s proposal?
The Yahoo! Board is undertaking a deliberate review process.

[They're saying "Oh my god what the heck do we do?" and calling our investment bankers]

They’re going to take time to thoroughly evaluate the proposal in the context of Yahoo!'s strategic plans. This will include evaluating all of the Company’s strategic alternatives - including maintaining Yahoo! as an independent company.

[They're going to pretend for a while longer that they're in control of this process. They're also going to pretend that, if they say "yes" to Microsoft, that it was their choice]

That process will take some time, but the Board will ultimately pursue the option that it believes can best maximize value for our shareholders.

[The Board will ultimately pursue the option that it believes will best maximize value for our shareholders...because that's what fiduciary duty requires them to do. And, also, if they don't, the shareholders will storm the castle.]

Q2. How long will the Board’s review process take?
A review process like this is fluid, and it can take quite a bit of time.

[The Board needs to explore every conceivable alternative: private-equity, News Corp, AOL, outsourcing search to Google, you name it--anything but being forced to become a division of Microsoft. They'd like to stonewall for years, but realize that at most they'll have a month or two.]

Q3. Will the Board seek proposals from any other companies?
The Board is going to evaluate all of Yahoo!’s strategic alternatives and pursue the option that it believes can best maximize value for our shareholders.

[You're God-damn right they will!]

Q4. What would a deal like this mean for Yahoo!’s users, advertisers, publishers, partners and people?
Yahoo!’s Board is going to evaluate all aspects of this proposal carefully and promptly in the context of the company's strategic plans and alternatives. So it wouldn't be appropriate to speculate about the potential benefits or challenges of a deal. But the review process that's underway won't have any impact on our efforts to deliver value to all of our users, advertisers, publishers and partners - as well as new and exciting opportunities to our employees.

[Ultimately, unfortunately, selling out to Microsoft would probably mean at least a couple more years of purgatory, except with the added distraction of trying to get the deal integration done. This probably won't be good news for the company's business (not to mention employees). We expect thousands of the latter to leave, and we'll probably have even more trouble recruiting top tech talent until it is clear what our fate will be.]

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