The Yahoo + Google - Microsoft spin room

With the Microsoft/Yahoo/Google triangle taking a new shape as Microsoft exited and Yahoo and Google connected, the analysts covering tech industry sports are weighing in with their opinions.

Some Wall Street analysts believe Microsoft will take another run at Yahoo if the company can't get back on track or Carl Icahn wins his proxy fight to control the Yahoo board. That may be wishful thinking. Kara Swisher reports that Microsoft is done with its courtship of Yahoo and nothing will bring them back to the negotiating table.

Mike Arrington of TechCrunch called the Yahoo-Google deal a massive destruction of shareholder value, employee morale, and the Interent balance of power:

Yahoo's hatred of Microsoft runs so deep that they were actually, in the end, willing to destroy the future of their company just to keep it independent for a short while longer. They've ignored the wishes of their shareholders, employees and many now former key employees in killing that deal. And apart from Google, CEO Jerry Yang, President Sue Decker and possibly Tim O'Reilly, I don't believe there is anyone in the world that is happy with what has happened.

In a further lambasting post, Arrington called Yahoo desperate and possibly neurotic:

Quite simply, it looks to me like Yahoo is effectively paying Google off to step in and (1) keep Jerry Yang, Sue Decker and the current board of directors in power, and (2) avoid a desperation deal with Microsoft for as long as possible, or longer. It's not even clear to me that Google wants this deal, based on the terms. It almost looks like they're just doing Yahoo a favor, and trying to keep them out of Microsoft's hands.

At the other end of the spectrum, venture capitalist Fred Wilson thinks that Yahoo did the right thing by choosing Google over Microsoft as a partner.

Yahoo! finally woke up and did what they should have done years ago, cede search monetization to Google who simply does it better and will always do this era of search better than anyone else.

Now Yahoo! will do what it needs to do. Clean house, get lean, get out of businesses it shouldn't be in. Focus on what it's good at. And start making money and growing again.

They may need new leadership to do that. But selling this asset to Microsoft just because they had the wrong leadership and probably still have the wrong leadership is a mistake.

From my reading of the events over the last five months, Yang regrets that Microsoft walked away from the acquisition talks. "We all felt and understood a combination done right has a tremendous amount of power and leverage," Yang said during an interview with Walt Mossberg at the D6 conference.

Yahoo CEO Jerry Yang and President Sue Decker have a challenging set of quarters coming up.

(Credit: Dan Farber/CNET News.com)

As a founder, Yang preferred that Yahoo stay independent and that he have the chance to turn the company around as CEO. Microsoft historically was not the kind of partner that Yang considered for a marriage. And his board of directors, led by non-executive Chairman Roy Bostock, seemed to go along with that line of thought.

But the entire affair turned out to be mostly about the money, as Decker admitted. "We never got through the price door," she stated during the same D6 interview. Yahoo's board believed that the company was worth more than $35 per share based on future promise, and Microsoft wasn't on the same page. In effect, Microsoft called Yahoo's bluff.

It also wasn't helpful that Yahoo was negotiating the search deal with Google at the same time Microsoft was pursuing its hostile bid. After months of rejection, Microsoft basically became less enchanted with the potential marriage, and despite the pummeling from the shareholders, Carl Icahn's camp, and the press, Yang and his advisors held out for more money.

Unable to come to terms with Microsoft on a generous deal just for the search business, Yahoo took the less complicated, non-exclusive Google deal that allowed the company to remain in the search game.

As I wrote in my post "The battle for Yahoo's soul," Jerry Yang and Sue Decker have a short runway--about six months--to prove that they can "redefine" the essence of Yahoo in a way that yields more revenue, profit, and positive buzz. With the continuing board room distractions, employee defections, and morale issues that go along with being under siege by various parties, the duo have their work cut out for them.

[shmooth2]

i think it's interesting that the last guy (white) was able to effectively kill Yahoo, and it was no big deal. so Yang takes over and all hell breaks loose - not because of anything that Yang did, but because the previous guy in charge - a white guy - effectively killed the company.

funny how that works.

[pdx503]

How is that funny? What does his being white have to do with anything?

[super_soup1]

Way to play the race card in this. I think its funny how nothing racial is ever mentioned but some sour jerk has to go ahead and bring it up. It is as meaningless as saying, a man from Arkansas destroyed the U.S. economy, but they blame the Texan that took office after him. Come on.

Aside from that, I would really like to see Yahoo's "alliance" with Google succeed. It seems like Yahoo is trying to be too much of a Wal*Mart. What I mean is they're trying to sell you everything, but not specializing in anything. If they can get good at one thing and expand from there, they may have a chance again.

[qquidd]

Why not bring the race card up? Asian sets up a great company Yahoo, a "White" guy comes along destroys it essentially. Or lets take Sun, when that Asian is on board Sun makes hay. But the "White" guys can't bear to have him, show him the door and lo behold, Sun is eating ****. White guys are nothing but trouble with their fancy "civilization".

[RackhamX]

Well, it's safe to assume that it isn't in ones best interest to look in the comments section for any intelligent conversation.

Unbelievable.

[YankeePoodle]

Time and again many internet companies have plunged into oblivion because of lack of strategy. Yahoo by giving away search is making a confession that it is no more a tech company but a content company. As we all know Content creation is old school and not much future to it any more. Your content is lunch for a google crawler. Yahoo's move was short-term and short-sighted. If there is any search competition to google it was Yahoo and they have effectively surrendered that postion now

[khkhjkh]

I second to YankeePoodle comments. This is more of a strategy issue than other things.

It was long time ago when search crown was snatched by Google from Yahoo. And now what happened was just matter of time.

[uhpl508]

This is the inevitable outcome of a business that wanted to be involved in everything but could never put the resources together to really finish anything very well. Yahoo has been 2nd best at everything they've done in the last five years including search, search ads (which really they got from Overture in the first place), music, email, and all sorts of content and tools. I hope the money they get from this Google deal, if it goes through, gives them enough time to pick something to excel at, though honestly, I can't think what that would be.

[Sugiarto Setiabudi]

Yang the man who is care about corporate governance system and Carl Ichan the man who is only care about asset values.

At the point of view of corporate governance system ,Yang is the best ,fit,and proper figure to run Yahoo.

Public should deter abusing market at early stage by illegal hostile take over .

Congratulation for Yang and Yahoo board for INTEGRITY,DIGNITY and their HUMAN BEING.for their hard effort to make Yahoo independence.

Yang and Yahoo board has been done great work to honor and to rewards Yahoo's employees who had worked hard for the company for years.

Yahoo has only alot of capital knowledge or intangible asset not tangible asset..

Keep yahoo severance plan in place !!!!!

No way for sick monkeys "business judgement rules"

[t8]

OK, so all white people are evil and destroy companies.

Now what?

[thepoetrydude]

stupid stuff happens. as for the idiots playing the race card, grow up. If skin color (amount of melanin ) makes a difference to you, then your just screwed up. as long as people like you bring up the race color difference-whether it is to discriminate or promote due to skin color-then we will have racism in this world. I belong to the human race, that should be all that matters. One race. One people. Then again, the majority of the media uses skin color every day, because as long as they can keep racism, prejudice, and discrimination around they can make money off it.

As for Yahoo, they should wake up. They missed the boat, Microsoft would have been good for them. Google would be too, but Google will probably destroy a lot of bridges yahoo made too. Its a win-lose either way.

[djc2k2k]

Yang and Yahoo board are basically telling their engineers this:

"Hey, you guys SUCK!"

They should all be fired for failing to make a right business decision - not once but twice. I don't give a **** about their race, the only thing that matters is the bottom line. To even bring up the race issue is just so idiotic in the first place.

[Sugiarto Setiabudi]

For public knowledge, At Johnson & Johnson Directors' fiduciary duty go first to children,mother,doctor and nurse.and the last to shareholders.

Yang and yahoo board have made great effort to achieve good corporate governance system. by shift yahoo directors fiduciary duty from sharehoder to stakeholder (owners and employees)

[Sugiarto Setiabudi]

For public knowledge, At Johnson & Johnson Directors' fiduciary duty go first to children,mother,doctor and nurse.and the last to shareholders.

Yang and yahoo board have made great effort to achieve good corporate governance system. by shift yahoo directors fiduciary duty from sharehoder to stakeholder (owners and employees)

[Sugiarto Setiabudi]

For public knowledge, At Johnson & Johnson Directors' fiduciary duty go first to children,mother,doctor and nurse.and the last to shareholders.

Yang and yahoo board have made great effort to achieve good corporate governance system. by shift yahoo directors fiduciary duty from sharehoder to stakeholder (owners and employees)

[direwolf08]

This quote cracked me up:
"Now Yahoo! will do what it needs to do. Clean house, get lean, get out of businesses it shouldn't be in. Focus on what it's good at. And start making money and growing again."

What the hell IS Yahoo good at? Someone mentioned Yahoo tries to do everything and ends up doing nothing well. That is exactly correct.

Yang started Yahoo, it does not mean he knows how to run it. Nothing to do with race, it has to do with the fact that he has no business being CEO of a major public company. Sure, Semel blew it, but Yang&Co has had plenty of time to fix the problem. They should have come in and cleaned house. But they didn't. They just kept focusing on nothing. Moreover, the fact that they are climbing into bed with Google just to avoid MS just goes to show how much Yang's ego is wrapped up in the decision. That is not integrity. Well, Yang should look on the bright side, he will soon be able to go back to school and finish his Ph.D.

[PacificGatePost]

YAHOO?S SHAREHOLDERS LOSE ON MORE THAN ONE FRONT

Great to see that cool heads have finally prevailed at Microsoft. Nevertheless, it was a seriously missed opportunity by Yahoo shareholders.

http://pacificgatepost.blogspot.com/2008/05/yahoos-board-and-its-shareholders.html

They should have been more vocal. Now it's too late. Their board did not serve them well.

[K.P.C.]

I don't see why the "experts" seem to think the Yahoo founders were stupid not to jump at the take over bid by MS.
I've been a Yahoo user . . . Well . . . forever (at least 15 years)
My very 1st email account is still active with Yahoo and I still check it daily even though have my own ".com" with personal email . . .

I tried MSN and Hotmail - I didn't like it . . .
I prefer Yahoo search results to Googles . . .
MSN search results are a joke . . .

MicroSoft has a history - they buy a company - take the parts they want and try to change it so it fits into the MS way of doing things and then they trash the rest . . .
Basically they would destroy Yahoo . . .

I personally have no desire to see Yahoo become MSN2 . . .
I'd have to go to Google

[bjbrock]

Yahoo custumers are walking!

http://blog.wired.com/business/2008/06/marketers-see-l.html

[shizhouw]

It'll be more interesting if Yahoo deside to connect to Google, but less competition. Well, if Microsoft want Yahoo as its MEDIA support, what does Google want? Media??? Or the database?! Or even the unlimited email service...