Microsoft Developing Secret Plan To Seize Control of Yahoo Without Buying It

Henry Blodget | June 25, 2008 11:34 PM

ballmerhands.jpgYahoo oracle Kara Swisher has been busy today. Here's what she's come up with:

  • Furious Yahoo (YHOO) investors--including Carl Icahn--are pushing Microsoft (MSFT) to radically boost the value of its Google-alternative search deal and buy 33% of Yahoo for $30-$32 a share (instead of the 1/6th of Yahoo at $35 a share Microsoft offered in connection with its last search deal). Microsoft is seriously considering this.
  • Owning 33% of Yahoo and having the backing of several major Yahoo investors would effectively give Microsoft control over Yahoo.
  • Pressure from angry investors has convinced Yahoo chairman Roy Bostock (formerly asleep at the switch) that the company must do something with Microsoft soon.
  • Under this plan, Jerry Yang and Sue Decker would likely be toast: Jerry because investors are apoplectic about his having blown the Microsoft deal, Sue because she has supported Jerry.
  • Backing out of the Google search deal Yahoo signed two weeks ago will cost Yahoo $250 million.
  • Two dissident Yahoo board members, who feel no one is paying attention to them, may quit out of frustration with Jerry.
  • News Corp could be brought into the deal.
  • Microsoft might also pay more than the $1 billion it previously proposed to buy Yahoo's search assets, and give it bigger revenue guarantees.

Picture 23.pngKara cautions that no "formal" talks have happened yet. Based on what our sources have told us, we continue to believe there have been some informal ones.

What This Means For You Yahoo Shareholders

If Microsoft bought one-third of Yahoo for $30-$32 a share, you would likely be able to sell one-third of your shares for that price. The value of the rest would depend on the company's performance (which would, in part, depend on the value of Microsoft's search revenue guarantees).

Likelihood That Yahoo Would Accept a Deal Like The One Above? High

Based on the level of frustration among Yahoo shareholders, we think Yahoo management would come under tremendous pressure to accept such a deal--especially if Yahoo chairman Roy Bostock supports it. $30-$32 for 1/3rd of the company is a far cry from the $34-$35 Yahoo could have had for the asking in February, but many Yahoo shareholders will likely thank heaven for small favors and rush to jump aboard.

See Also: Why Yahoo Took the Google Search Deal Instead of Microsoft's

Subscribe to SAI: RSS, email newsletter (no spam)

More:

Share:
Post to Del.icio.us


< Prev. Story
Next Story >

51 Comments

Fernando Alvarez said:
I had erroneously thought this is what they were working on before. It sounds like their finally trying to put the peices together to give it a $30 plus valuation. This is evidenced by the higher revenue guarantees, bigger stake and that she says Newscorp may enter the deal.

Shareholders were not going to take anything less and for msft to let the board and management be ousted and risk that the new board would've ended up recruiting a stellar management team and worst yet that the street would have ended up liking the pick is too risky.
steve (URL) said:
let's see... let me get this right... 85M shares traded hands yesterday at $20-22... but Microsoft wants to pay up $11 for them... right. OK, i know if they want to buy a THIRD of the shares, that would drive the price up... but... $30-32? come on...

i hear desperate longs planting stories...

although it does make sense to me that Microsoft should be feeding Goldman tons of cash and Goldman should be setting on the bid grabbing shares, as YHOO gets destroyed... they could accumulate a nice "position of strength".

I say, let YHOO squirm and buy the shares all the way down to $13-15; THEN move in -- Jerry will be gone -- and talk Turkey!

steve
Fernando Alvarez said:
Steve, msft has no choice on that matter. Why did they offer $31 on a day when it was trading at $19 back in Feb.? To get the shareholders to agree. Granted they're trying to get it free now but it just will not happen because the Owners of the company not the shorts are the ones that have a say in the matter.
Fernando Alvarez said:
BTW, on Jan. 30, 2008 when yhoo hit $19.05 more than 115 million shares traded hands.
esbl said:
ms should *not* agree to pay anything starting with a 3 for any portion of yahoo shares. yahoo has materially depreciated in value since the time of the original offer and has no leverage to extract anything north of $25-$26. a significant percentage of yahoo shareholders would jump at that number as they know the company is akin to a dead man walking.
steve (URL) said:
granted they can't buy 1/3 of the company in the open market; but they could buy a lot of share on weakness. there has to be someone reading here who knows the rules... I think they have to report once they own >5% of the shares; but there is a delay in that news reaching the public domain, as i recall. They could take a lot of shares off the hands of hedge funds.

Look at the chart... if she cracks the prior low support level there just below $20 from late Jan 08 the stock would likely sell off on volume into the mid-teens. With the private equity types out of the equation for now, could get interesting. Doubt if too many buyers would want to step in front of MSFT, knowing they lurk if it breaks the lows.

Another factor, $20.00 is a hugely important support level for any big stock... a lot of funds dump positions automatically once shares close under $20 for a day or two. Technical factors and news often align in situations like this.

The biggest thing weighing on YHOO, I think, is overhead supply. A lot of funds got into the shares speculating on the takeover and they are stuck in there. Now they brought Icahn in to try and save their positions; are spinning the WSJ; etc... but that stuff only works for so long.

I'm thinking that Ballmer wants to let them cook on the mess of their own making, at least for a while now, after the way they responded to his offer. Too soon for him to be serious about coming back to the table!
David E said:
I love all of this conspiracy talk about a once proud Internet company. I can hear Gordon Gekko receiving the phone call, "The Blue Horseshoe Loves Yahoo."

Watching this unfold is better than The Usual Suspects, The Sixth Sense, and LOST combined.

It really boggles the mind at this point watching Microsoft pathetically going after Yahoo...and then Yahoo not being able to differentiate its ass from its face without help from Google Maps.
steve (URL) said:
Now, Gordon Gekko would be on the bid, accumulating shares; selling options premium in Chicago; and he would then screw Icahn big-time in a fancy hedged options manuver; unwinding his position and strangling ICahn like a Boa constrictor would! ha

seriously though... once MSFT had it's bid in, the funds moved in on the shares, and a majority of the float moved out of the hands of the investors, and into the hands of the hedgies who are in it for the shorter term -- "hot money". Now they need out, and you can bet they are gaming like crazy to get a pop to sell into. Uncle Steve being their best-case scenario; but they'll settle for getting out with their skin. THAT's overhead resistance. They didn't plan it this way, it didn't come out like it should have; and now they are feeling some serious heat. Perfect setup for the stock to selloff hard to new lows. No "conspiracy theories" required, just business logic and hedge fund/trading floor experience!
Neek said:
Yahoo is damaged goods at this point, and while there was significant value at the time the initial offer was made public, Yahoo as since been marginalized. At the time, time was of the essence, but after they blew it, and its value materially diminished, MS can afford to wait a while longer without losing anything, and in fact has more to gain as Yahoo shares and its business prospects start to dwindle.

Though MS needs Yahoo still, it would make more sense to wait a bit more and let the value continue to slide as it's already doing, wait for Yang and Co. get the boot, then they can come back, at a far lower price.

In other words, why is there even still talk about a price range in the low to mid 30's when the company has damaged itself (and its value along with it) and the effects of said damage only spiral in the past many weeks and the company isn't intact as it was at the time of the offer?
noblow said:
MSFT, leave YHOO alone, please! YHOO and MSFT are not a good match, and you are not welcome (a fact that you could have figured out by now). Why don't you spend that money on making LIVE the best search engine, and Adcenter a really competitive product? Why go with the YHOO folks who don't want you in the first place?
usbworks said:
Unless Carl Icahn wins the proxy battle and neutralizes all the poison pills from the inside, Microsoft will not be able to build up a 33% stake in Yahoo.

There's the Google deal cancellation poison pill. There's the severance package poison pill. Last not least, isn't there the 15% maximum stock position poison pill that floods the market with new Yahoo shares?
MediaTech Analyst (URL) said:
From where I stand, all of this is just noise. The end result, I believe, will be a full acquisition of Yahoo! by Microsoft for a price in the mid-$30s. However, the overall markets will have to stabilize before the two come back to the table.
http://mediatechanalyst.blogspot.com/2008/06/several-reasons-to-buy-bankrate-now.html
MediaTech Analyst (URL) said:
From where I stand, all of this is just noise. The end result, I believe, will be a full acquisition of Yahoo! by Microsoft for a price in the mid-$30s. However, the overall markets will have to stabilize before the two come back to the table.
http://mediatechanalyst.blogspot.com/2008/06/several-reasons-to-buy-bankrate-now.html
Fernando Alvarez said:
Neek, I still don't see what's undamaged about yhoo trading at $19 on the last day of Jan. That's pretty damaged to me. The speculators and arbs. on their own cannot accomplish much without having a few key long term shareholders on board. Even if they wanted out at $25 now it would not happen.

As far as msft waiting a few quarters down to see what happens, fine, but I don't think you can shake us out at $25 anytime soon. We would rather see new management put in place and give it a go. The low stock price will help us get that new management.
SteveO said:
The best part of the whole deal is that MS doesn't really need yhoo's employees anymore. Ideally they could pick up the eyeballs and web addresses, keep the same look and feel, and then route the back end traffic to their ad servers and search software.

I can see MS waiting a bit longer and then picking up the entire shell for $25-27. That will make Camp MS in Seattle happy that they didn't overpay.

Yang & Semel might go down as the most idiotic team of the century! It's sad that Yang or Semel (or any of the Yhoo board or execs) get to make any money from this company. They're ruining capitalism for the middle class. The I-bankers must want to strangle these guys...
steve (URL) said:
SteveO, i couldn't agree with the points made your last paragraph more ("Yang and Semel might go down as.... ".

What concerns me most about the Yang/Semel behavior is, it is really stinking up the image of silicon valley tech managers at large... they are making tech managers look like complete blathering idiots.

Semmel is really Yangs' fault for allowing him to run the company, and walk away with loads of money and praise, for basically presiding over a collapse - much as Meg Whitman did at eBay. What a disgrace that this can happen! It's a big flaw in our corporate governance system, imho.
stone said:
Totally agree with many on this board. This is all noise. Microsoft will buy all of Yahoo because it's the only game in town. M's portal is awful, always has been always will be.

This is all a game to soften Yahoo's resolve.

Sue Decker needs to lose her job because she's the architect of 5 re-org's in the past 12 months, none of which seem to work very well.
Fernando Alvarez said:
From Icahn proxy.....

'the dissident shareholder said he plans to eliminate the company's change in control severance plan, hire "a talented and experienced CEO" to replace Yahoo Chief Jerry Yang'

There's his plan and I'm on board. Let the stock take a dump when we vote them out, it will make it easier for us to recruit n ew management.
Fernando Alvarez said:
However, Icahn called on Microsoft not to consider any alternative transaction short of an outright merger unless it can ensure Yahoo's stock price reaches a level of $33 a share or higher.

We won't have it, period.
Tommy Rich said:
Not trying to be picky here, but why do you have a picture of Zoe Cruz in this post?
Tommy Rich said:
Not trying to be picky here, but why do you have a picture of Zoe Cruz in this post?
I'm surprised!?!?, no word out of SAI today on Icahn's remergence.
steve (URL) said:
SteveO, a typo - what i meant to say on my
Jun. 26, 3:56 PM post:

SteveO, i couldn't agree with the points {you made}

was: i couldn't agree MORE with the points...
steve (URL) said:
what's up with the WSJ issuing a bright-red "BREAKING NEWS ALERT" today, about the leaked-for-days YHOO reogranization? I have always had a lot of respect for the Journal; but are they getting desperate for exciting news, or what??

Sue's re-org is pathetic, but the breaking news treatment is even MORE pathetic... I am noticing more and more of this kind of stuff in the journal. The other day it was a long article going on and on about how the founder/CEO of BRCM had (gasp!!) played LOUD MUSIC at trade shows. And it just accepted that was really a horrible move, and went on to gravely debate why he wasn't prosecuted sooner, and how he could be in charge of a big firm. Just the kind of stupidity you used to NEVER see in the WSJ.
joeblow said:
Here, I'll beat you to the topic:

http://biz.yahoo.com/ap/080627/gates_last_day.html?.v=4
--
Cryin' my damn ass!

I'll tell you who needs to be cryin'... and it's the poor MSFT scaredholders that have been watchin' Fire-Bombin' Ballmer wipe out enough MSFT scaredholder equity to equal the GDP of several US states combined.

I'll tell you what, Ballmer... You can take Yahoo and stick it up your cryin' damn ass.
Just saw the latest tech ticker interviews with Kara Swisher. You are right she is the 'oracle of yahoo'. Best analysis of the situation I have seen.

Except maybe with the exception of Steve's translation of yhoo's reorg. plan in the comments of that story.
Sword of the New World Gold (URL) said:
Each class has its own set of stances, which level separately from the character itself, and this makes each character class highly Sword of the New World Gold customizable.
Arua ROSE zuly (URL) said:
You are the most worrying I am. Here I feel the pressure of life, feel that they were not the attitude of attention, I feel that I can not find the comrade-in-arms who I play with in the game. I am a friend of profound significance; we once brush the Arua ROSE zuly while we are playing the game.
twelvesky Gold (URL) said:
Since I have the twelvesky gold I went to Internet cafes to be registered the owner of the account immediately
jeff said:
mp4 converter for mac allow you to trim videos, crop videos and apply special effects to videos.
yoyogongzuo (URL) said:
World of Warcraft Alliance Leveling Tips - Tips on Powerleveling your Alliance Character in World of Warcraft(LWB)

Here are some tips on how to quickly wow power leveling your World of Warcraft Alliance character to level 60 and beyond in the least amount of game time.cheap wow power leveling


1 - Since wow power leveling is the most important thing, only take First Aid as a profession. Running back and forth to profession wow power leveling trainers is time consuming. So is getting enough wow power leveling resources in your inventory to make use of the profession. Instead, use that wow powerleveling time for questing and building experience. First Aid world of warcraft powerleveling requires cloth and is a profession that has immediate benefits after battles. Make some bandages and get moving again.world of warcraft power leveling


2 - Use Auto Run when possible.you wow gold It is amazing what you can do while make wow gold you are using Auto Run. Make a sandwich. Rearrange your inventory. Carry on a chat conversation with someone. Use your travel wow powerleveling time as wisely as possible.world of warcraft power leveling

3 - Make sure your world of warcraft gold ammo supplies are topped off before you leave wow powerleveling town. If you use arrows or bullets, make sure you have plenty to survive on until the next time you world of warcraft gold go back to town. There's nothing worse than a Hunter leaving town, having a few battles, and then world of warcraft powerleveling coming back because cheap wow gold he forgot to stock up on arrows Warhammer Online Gold before he left. Topping off your supplies might take a little extra time, but it will save travel time if you have to run back to town.buy world of warcraft gold

4 - Make sure equipment is fully repaired before buy AOC Power Leveling town. Another big pain is going on a quest far from town and then finding your main weapon is in need of repair. Get it repaired before you leave AGE OF CONAN Power Leveling town.

5 - Destroy inventory Warhammer Online Power Leveling items to save trips to town. If you are far from town Warhammer Power Leveling and have a full inventory, it's not against any rule to destroy items to free up room. Try not to destroy items needed for quests.Warhammer Gold 2 Moons Dil MapleStory Mesos Maple Story Mesos MS Mesos WARHAMMER ONLINE GOLD Cheap WARHAMMER ONLINE GOLD RuneScape Gold RS Gold RuneScape Money RS Money SilkRoad Gold SilkRoad Online Gold SRO Gold EVE ISK EVE Online ISK Gaia Gold 45ye y45y4
Rosanna said:
dvd ripper for mac is really a useful software which can help you convert dvd to any format you want.And flv converter for mac is the other software that I highly recommend to you which allows you to convert flv videos to any format you want on mac.
shadow of legend Gold (URL) said:
He took me to exercise and taught me how to use shadow of legend Gold to upgrade my equipment. With the good equipment, I was becoming more and more powerful.
ghost gen (URL) said:
My friends knew. She gave me her ghost gen and said to me that it can upgrade my equipment.
tea (URL) said:
i like chinese tea,for example oolong tea and pu'er tea.
Metin2 yang (URL) said:
When I met you, I have learned to cherish and treasure our understanding, our treasure in future, cherish our fate, treasure our entire bit by bit, and know how to cherish the value. We know and we earn Metin2 yang together in the game. We often play the game together and we get along well in the game.
Cheap metin2 yang (URL) said:

I know all of a sudden a lot, like: Love is the beginning of growth. Do not understand: people love to grow, grow or love is not so simple. We are fall in love, and we earn Cheap metin2 yang together. We feel we are very happy and we want to we can live together.
welcome to wow gold,world of warcraft gold,warcraft gold,world of warcraft gold,wow leveling, the cheapWoW Power Leveling, service site,world of warcraft WoW Power Leveling,fast and secure service.we WoW Power Leveling, WoW gold isn’t found everywhere in the game; WoW Power Leveling,you have to look for it and, when you find it,WoW Gold, you have to save it.WoW Gold,WOW goldis earned through doing things like killing enemies, WoW Gold, hunting and crafting. WoW Gold, is for sale online at a number of locations. buy WoW Gold,The decision wow gold,wow gold to buy wow gold is one Cheap WoW Gold, that many video gamers wrestle with. Cheap WoW Gold,Many World of Warcraft players try to play the game on their own wow power level before making the decision to buy wow gold. Cheap WoW Gold,If you wow gold,want to buy Cheap WoW Gold,wow gold there is nothing wrong with it.WoW Gold, Buying wow gold is similar to finding cheat codes WoW Gold,World of warcraft Power Leveling,World of warcraft Power Leveling,age of conan gold,aoc gold,buy aoc gold,cheap aoc gold,aoc power leveling,age of conan power leveling,aoc power leveling,aoc gold,age of conan gold,age of conan power leveling,maplestory mesos, maple story mesos,maple story mesos,maple story mesos,maple story mesos,Maple Story mesos,MapleStory mesos,ms mesos,mesos,SilkRoad Gold,SRO Gold,SilkRoad Online Gold,eq2 plat,eq2 gold,eq2 Platinum,EverQuest 2 Platinum,EverQuest 2 gold,EverQuest 2 plat,lotro gold,lotr gold,Lord of the Rings online Gold,oil purifier,rolex replica,replica rolex,chongqing,yantai,evening dresses,evening gowns,wedding dresses,bridal gowns,wedding gowns,cocktail dresses,Bridesmaid dresses,prom dresses,formal dresses,Promotional items,Promotional products,Wedding dresses,Pet supplies,Dog clothes,Replica handbags,Replica Watches,wedding cake toppers,cake toppers,digital cameras,digital camera,warhammer online,war gold,digital cameras,digital camera,Mobile Phones,Mobile Phone,Cell Phones,Cell Phone,Mp3,world of warcraft power leveling,world of warcraft power leveling,power leveling wow,power leveling wow,power leveling wow,cheap wow power leveling,cheap wow power leveling,cheap wow power leveling,buy wow power leveling,buy wow power leveling,buy wow power leveling,power leveling,power leveling,power leveling,power level,power level,power level,
carola (URL) said:
640-802 Microsoft Developing Secret Plan To Seize Control of Yahoo Without Buying It What a gossip. Move over.
dom (URL) said:
Be quiet. You're not so great yourself. 640-802 / 642-445 / 642-456 / 350-001 / 70-236 / 156-215.1
hr said:
Jordan Kicks, Nike Kicksgirl jordan shoes Nike Dunks, Nike Dunk, Dunk Shoes
zwoeo said:
nike dunk shoes - offers from nike dunk shoes manufacturers ...custom air jordansnike dunk shoes - offers from nike dunk shoes manufacturers ...
wow (URL) said:
MMOGA mediates virtual goods for online games within 1-24 hours. Offers don´ t only consist of the latest games, items, WoW powerleveling, WoW gold but WoW accounts and much more. Furthermore we have currencies for plenty top online games like Silkroad Gold, Guild Wars Platin, Eve ISK, Lotro Gold, AOE Gold and many more.
In addition we offer prepaid game cards for many games. Multilingual competent team, we are your MMORPG´s partner.

wow account
Rolex Milgauss replica watches (URL) said:
Rolex Milgauss watches and Rolex Milgauss replica watches made with swiss movement ! so cheap and high quality ! accept paypal ,and 14 days money back without reason !

Join the discussion



Copyright © 2008 Silicon Alley Media, Inc. All rights reserved. Registration on or use of this site constitutes acceptance of our Terms of Service and Privacy Policy.