Yahoo to SEC: Microsoft bid a “significant distraction”
By Yi-Wyn Yen
It appears you can blame Microsoft if Yahoo’s employees start slacking off and business partners flee.
Late Wednesday afternoon, Yahoo (YHOO) submitted a Securities and Exchange report that called Microsoft’s attempt to buy the company a “significant distraction for our management and employees.”
Yahoo says the chaos surrounding the unsolicited bid could result in its losing key advertisers, publishers, clients and talent. It also noted that as a result of the bid it’s facing seven costly lawsuits from shareholders who want the deal to go through.
Two weeks ago, Yahoo’s ten-member board of directors rejected Microsoft’s nearly $45 billion offer, saying it was too low.
That hasn’t stopped Microsoft (MSFT), with its very deep pockets, from trying to arm twist Yahoo into a deal. Last week Wall Street learned that the software giant was preparing a bitter proxy fight to try to oust Yahoo’s board. Hours later, Yahoo began erecting a defense, notifying the SEC that it would offer its full-time employees enhanced severance packages if a change in ownership resulted in layoffs.
Yahoo’s latest signal flare to the SEC was tacked on at the end of a 10K filing under the section, Risk Factors. Here’s the report:
On February 11, 2008, our Board of Directors announced that, after carefully reviewing the proposal, it unanimously concluded that the proposal is not in the best interests of Yahoo! and its stockholders. The Board further indicated that it is continually evaluating all of the Company’s strategic options. The review and consideration of the Microsoft proposal (and any alternate proposals that may be made by other parties) have been, and may continue to be, a significant distraction for our management and employees and have required, and may continue to require, the expenditure of significant time and resources by us. Microsoft’s unsolicited acquisition proposal has also created uncertainty for our employees and this uncertainty may adversely affect our ability to retain key employees and to hire new talent. Microsoft’s unsolicited acquisition proposal may also create uncertainty for current and potential publishers, advertisers and other business partners, which may cause them to terminate, or not to renew or enter into, arrangements with us. Additionally, we and members of our Board of Directors have been named in seven purported stockholder class action complaints relating to the Microsoft proposal as more fully described in Part I, Item 3 “Legal Proceedings” of this Annual Report on Form 10-K. These lawsuits or any future lawsuits may become time consuming and expensive. These consequences, alone or in combination, may harm our business.
DEC’s computer sells itself. IBM got great sales and management. The reality is DEC is history and IBM is around and going strong. I am not a fan of Windows but a lot of things I use run on top of Windows! Yahoo missed a few steps to become a big shot! I would hope Yahoo put its acts together and come out strong.
Yahoo does not have the experience and ability to turn things around, and time and economy is not on its side. Yahoo has the consumer base, brand, internet expertise for Microsoft to continue and expand its core competence. It’s a good strategic buy for Microsoft. Microsoft, Yahoo, and Google are all public companies. It could be MicroHoo, GooHoo, YahooSoft or whatever. Jerry Yang is an entrepreneur and it’s a good opportunity for him to polish his leadership and management skills if he wants to be the CEO of a major company. It’s important to fight for something worth of fighting.
Green Grinch stole the Christmas. One day the size of his heart grew 3 times bigger and he brought Christmas back to the world.
@ S. Kelly:
You’ve got it backwards. Google did earn its way to the top. It is Microsoft that is trying to buy its way to the top.
So nobody has any compassion for Yahoo in this situation? They are trying to actually go at it alone by using their own resources which takes time. This is a difficult thing for a public company to do under the best of circumstances and then you add an unsolicited takeover bid by a larger company that is not accustomed to loosing.
People seem to forget that despite some bad financial quarters at Yahoo they are still a significant leader in internet traffic and services and given the opportunity could turn itself around.
Additionally, despite Microsoft’s attractive bid for Yahoo – it does not necessarily mean that it is the right thing for either company to do the deal. Yes – it will make the shareholders some money in the short-term but what happens in the long-term? After all – the market and the customers are fickle!
If neither Microsoft nor Yahoo has figured out how to grow similar businesses then perhaps it is better for the market to deal with it. As we have seen in the past couple of weeks even Google is not immune to changes in the market. There is always an opportunity for another portal to expand it’s reach. Friendster begat Myspace begat Facebook etc…
Microsoft, Google & Yahoo need to keep their eyes on their own businesses. Think of what $45billion could do to improve Vista? A small portion of that money, invested in Microsoft’s core business might save it from ultimate demise.
In the meantime, Yahoo has a valid complaint – they are hemorrhaging talent and losing focus. And if and when they have to make a decision on the inevitable what might be left for Microsoft to buy?
Maybe this was MS’s strategy all along. Either they will sell to us or they will be destroyed by the greed of their shareholders.
is yahoo leadership actually crying like a baby to its mommy about how the other kids on the block are playing??
how PATHETIC can, what are supposed to be leaders, be??!!??
maybe you need to cry louder yang….your ‘wimpyness’ will be even more noticed by the world!!!
dang yang…i knew you were young but still crying when you feel bullied; that’s just pathetic pussyism at its worst!!!
that is JUST NOT A MAN in todays world…lol…even todays common woman is stronger than that!
Take the deal or shutup and deal with it. That is why they are a public company.
All these companies that are complaining about this bid are companies like AOL and google who are competitors and will lose market share if a dear were to take place. I think yahoo should sell out to Microsoft, Google can complain all they want, they will have to earn their right to be on top, not have it given to the,
“where is the word” costly in lawsuits? From the reporter’s pocket? Reads more like an opinion than news!
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I know several people that worked for smaller, vibrant companies that were basically gutted after being sold to Microsoft. I hope yahoo takes a complete kamikaze approach to this takeover. Whether anybody likes it or not, business is ultimately about people, not a bunch of greedy sociopaths trying to make a deal.