Archive for March 6th, 2008


News Alert

House Majority Leader Tom DeLay Indicted

Yahoo Plays for Time In Bid to Resist Microsoft

Washington Post Staff Writer
Thursday, March 6, 2008; Page D01

Yahoo said yesterday that it postponed the deadline for nominating directors, seeking time to try to fend off a $44.6 billion takeover bid from Microsoft.

Since Microsoft announced its unsolicited proposal last month, Yahoo rejected the offer and sought deals with other companies, including Time Warner, News Corp. and Google, sources close to the negotiations have said.Hovering over those talks has been the possibility that Microsoft could swiftly scuttle them by forcing Yahoo to impanel new directors who would accept the Microsoft offer.

The nomination of directors — an event that could mark the beginning of a prolonged fight for control of the company — would have been due by March 14 under the previous rules. The postponement means the nominations could be delayed into the summer.

“Our objective here is to enable our board to continue to explore all of its strategic alternatives for maximizing value for stockholders without the distraction of a proxy contest,” Yahoo chief executive Jerry Yang wrote to employees yesterday.

He noted, however, that just because Microsoft could delay the start of a proxy fight under the new rules doesn’t mean it will.

“Microsoft, of course, could still choose to name directors,” Yang said in his letter. It could also raise its proposed bid, as some analysts have suggested.

Microsoft and Google are competing for prominence and advertising in the rapidly growing world of online commerce. Each has accused the other of becoming too powerful.

Google raised antitrust questions about the proposed union of Microsoft and Yahoo, noting that such a deal would give the combined companies an “overwhelming” share of the market in instant messaging and Web e-mail accounts.

“Could the acquisition of Yahoo allow Microsoft — despite its legacy of serious legal and regulatory offenses — to extend unfair practices from browsers and operation systems to the Internet?” Google said in a statement released shortly after the proposed acquisition was announced.

Microsoft has opposed Google’s expansion plans, specifically its proposed $3.1 billion acquisition of online advertising firm DoubleClick. Microsoft agreed with privacy advocates that the combination would put too much information about consumers under one company’s control.

Microsoft has argued that the deal should be stopped before Google could amass “the largest database of user information the world has ever known.”

Despite such objections, the deal was approved by the Federal Trade Commission. The European Commission has yet to rule.

“This is still an ongoing investigation, but we do not believe the transaction raises any competition concerns,” said Ben Novick, a Google spokesman in London. “We hope the European Commission will come to the same conclusions as the Federal Trade Commission and clear the deal without any conditions.”

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© 2008 The Washington Post Company

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Yahoo Allows Time to Nominate Board Members

Juan Carlos Perez, IDG News Service

Yahoo has lifted next week’s deadline for nominating directors to its board, an attempt to discourage Microsoft from launching a proxy fight to replace the current board with members willing to approve its Yahoo acquisition bid.The decision to move the deadline, announced Wednesday, is the latest maneuver by Yahoo to attempt to buy itself more time to seek alternatives to Microsoft‘s unsolicited acquisition bid.

If Microsoft does plan to nominate its own slate of board candidates, it would have had to do it no later than March 14, the original deadline. Now, Microsoft has more time to ponder such a move.

Also on Wednesday, The New York Times and The Wall Street Journal reported that Yahoo has stepped up negotiations with Time Warner for a possible tie-up with AOL.

Quoting anonymous sources, The Journal reported that the most likely scenario would be for AOL to be folded into Yahoo. The Times, also quoting anonymous sources, said a joint venture or merger of equals are possibilities.

To extend the nomination deadline, Yahoo amended its bylaws to state that now directors can be nominated up to 10 days after Yahoo announces the date for its 2008 annual stockholder meeting.

“As the company has not yet announced the date of this year’s annual meeting, the amendment will give stockholders who want to nominate one or more directors, including Microsoft Corporation, more time to do so. The amendment does not preclude any party from nominating one or more directors at any time prior to the new deadline,” Yahoo said in a statement Wednesday.

In an e-mail sent to Yahoo employees on Wednesday, CEO and co-founder Jerry Yang and board chairman Roy Bostock explained that the decision seeks to discourage Microsoft from launching a proxy fight as early as next week.

“In light of the current circumstances, this change removes an imminent deadline. Microsoft, of course, could still choose to name directors, but our objective here is to enable our board to continue to explore all of its strategic alternatives for maximizing value for stockholders without the distraction of a proxy contest,” reads the e-mail, which was also filed with the U.S. Securities and Exchange Commission.

Yang and Bostock also acknowledge that Yahoo’s board and top managers are exploring alternatives “to create stockholder value” and that they are making progress “clarifying the many options available to us.”

Apparently, Yang began looking for and considering alternatives to a Microsoft acquisition soon after Microsoft announced its US$44.6 billion bid on Feb. 1, a bid whose value now stands at around $41 billion due to a drop in Microsoft’s stock price.

In addition to the AOL talks, there have been reports — all attributed to anonymous sources in various media outlets — that Yang has talked to Google, Disney and News Corp. to explore deals that would allow him to reject Microsoft’s offer.

The problem for Yang is that an alternative deal would have to at least match the shareholder value of Microsoft’s offer. Otherwise, Yahoo would make itself liable to shareholder lawsuits that alleged the board had failed to perform its fiduciary duty.

On Feb. 1, Microsoft offered to pay $31 per share for half of Yahoo’s outstanding shares in cash — about $22.3 billion — and 0.9509 of a Microsoft share for the other half. Microsoft’s half-cash/half-stock offer to Yahoo was valued at about $44.6 billion at the time it was made; Yahoo’s share price was $19.18 at the time, while Microsoft’s was $32.60.

At the time, the offer represented a 62 percent premium based on the price of Yahoo’s stock, but that premium has been erased as Yahoo’s stock has risen and Microsoft’s fallen. In mid-morning trading on Wednesday, Yahoo’s stock price was $28.58 and Microsoft’s $28.28.

After Yahoo rejected Microsoft’s offer on Feb. 11, saying it undervalues the company, Microsoft indicated it would be willing to pursue any options to acquire Yahoo, leaving the door open to a hostile takeover through a proxy fight.

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News Alert

House Majority Leader Tom DeLay Indicted

Ozzie: Microsoft Needs Yahoo for Web, Advertising Plan

Microsoft Chief Software Architect Ray Ozzie today attempted to lay a case for why buying Yahoo is integral to Microsoft’s plans.

PC World
Thursday, March 6, 2008; 12:19 AM

MicrosoftChief Software Architect Ray Ozzie today attempted to clarify Microsoft‘s Web-based advertising and services strategy and lay a case for why buying Yahoo is integral to that plan.

In his keynote at the MIX 08 conference in Las Vegas, Ozzie said Microsoft realizes that having a vibrant and relevant portfolio of Web-based services and content, as well as innovative options for commerce and building communications, is essential to develop a “highly engaged, well-targetable audience” for advertising. When it comes to the Web, advertising is the primary way Microsoft will monetize its investments there, he said.Microsoft is doing all it can “to use the resources we have to ensure there is a vibrant advertising ecosystem,” Ozzie said. “If you wonder why we’re so interested in Yahoo and its creative people and properties, I hope this makes it a little bit clearer.”Microsoft has been steadily building a wider portfolio of services and content over the past few years to drive its advertising strategy to compete with Google, meeting with little success.

In an attempt to give the strategy a major shot in the arm, Microsoft last month offered to purchase Yahoo, the struggling number-two player in online advertising, for $44.6 billion. Yahoo’s board rejected the bid, but Microsoft seems determined to buy the company, even if it has to be a hostile takeover. Still, even if the deal happens, it’s unclear whether it will do much to help either company compete with Google.

Ozzie acknowledged that Microsoft has been working on its Web-based advertising plan for several years, both through acquisitions of companies such as aQuantive and its investment in Live services, but that 2008 will be the year the strategy “finally comes to light.”

Ozzie, who seemed more self-assured about his increasingly visible role as Microsoft’s technology visionary during his keynote on Wednesday, also revealed the most detail to date about how the Web is transforming all of Microsoft’s products. The company in the past few weeks has made a series of announcements that expands its software-plus-services strategy to make more of its traditionally packaged software available as services for both consumers and business customers.

Expanded Business Offerings

Earlier this week, the company expanded its hosted offerings for businesses by allowing them to use its e-mail software Exchange Server as a hosted service, as well as Office SharePoint Server 2007, a content management and collaboration tool, and Office Live Meeting, for audio and video conferencing over the Web.

Microsoft will continue this year to reveal more facets of its strategy to “drive the reconceptualization of our software to embrace this world of services,” Ozzie said. Microsoft sees the Web as a hub that must be a “mesh” connecting all of its products, and is approaching this with four goals in mind: to use the Web throughout its products to connect devices, entertainment, business and development.

“All of our software will be significantly refactored to reach a level of symmetry” between software used on premise, software as a service and services in the cloud, Ozzie said.

For example, on the business side, Microsoft plans to use a new service called Office Live Workspace to be the “central hub of our productivity strategy” for individuals, he said. Office Live Workspace lets users access and share Office documents online. On the business side, Microsoft’s Office SharePoint Server will fit the same role, Ozzie added.

Microsoft also will give developers more ability to develop services in the cloud. During his keynote, Ozzie unveiled a beta of SQL Server Data Services, a set of database services that “bring[s] the benefits of SQL Server for developers into the cloud,” he said.

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