Minus Succor from Google, Yahoo Is Still Open to a Deal with Microsoft
Minus Succor from Google, Yahoo Is Still Open to a Deal with Microsoft
SAN FRANCISCO-Yahoo CEO Jerry Yang said he
regrets that Yahoo and Microsoft couldn't come to terms on a merger earlier this
year and that the best thing for Microsoft to do would be to buy Yahoo.
Yang, speaking at the Web 2.0 Summit Nov. 5, exhibited a Zen-like calm
for a leader under fire for the last several months. The statements, made to a
packed house at the Palace Hotel, seem startling given that Yang was reported
to be thoroughly opposed to joining Microsoft.
Still, in answer to Web 2.0 Summit co-host John Battelle's question about what
happened with the Microsoft takeover bid, Yang said, "To this day I would
say the best thing for Microsoft to do is to buy Yahoo. I don't think that is a
bad idea at all."
Battelle broke in, suggesting "just at $40 per share," which was what
Yang and the rest of Yahoo's board asked Microsoft to pay when Microsoft made
its $33-per-share bid Jan. 31. "Oh no, I think that at the
right price, whatever the price is, we were willing to sell the company."
Yang added the Microsoft walked away from the offer. Yang's stance clashes
spectacularly with the legacy of media coverage of the back-and-forth between
the companies after the deal collapsed. Many media outlets quoted sources close
to Yahoo as saying that Yang was fiercely determined to keep Yahoo as an
independent company.
Reports said Yang was particularly adamant about not doing such a deal with
Microsoft, which is a traditional software company trying to become a provider
of popular Web services. That, of course, is what Yahoo became famous for.
Google swooped in to the rescue. Google and Yahoo June 12 struck a search ad
deal proposal designed to both enable Google search keywords to run alongside
Yahoo results and keep Microsoft at bay.
When the U.S. Department of Justice pushed back on the deal because it believed
the deal wouldn't maintain a level of fair competition in online advertising,
and seemingly balked at Google and Yahoo's concessions, Google bailed.
Yang Considers Future in Wake of Failed Google Deal
When Battelle asked Yang about what happened with Google, Yang confirmed
that Google walked away from the companies' proposed search ad deal, but told
Battelle he'd have to ask Google why.
"Google clearly decided that they did not want to stay with [the deal],"
Yang said.
Yang also said the DOJ did not understand "our industry" and that the
agency's definition of the search advertising market was too narrow. "Things
like this have unintended consequences on the ... industry," he said.
Now Yahoo is back at square one. Yang said the company is not in negotiations
with Microsoft but declined to comment on any dealings with AOL.
The company's stock price is $13.93, nearly $20 less than what Microsoft was
willing to pay.
Despite this, Yang declined having regrets over the last 15 years. He
characterized what Yahoo has been through in 2008, including the failed
acquisition bid, the mass employee exodus and the plummeting stock price, as
"extraordinary."
This is a characterization that should interest Yahoo investors, who lost millions of dollars on the company. GigaOM's Om Malik provides a guilt trip post here.
The embattled chief also rebuffed Battelle's suggestion that Yang's ego kept
the Microsoft bid from succeeding, noting that he is not adamant about Yahoo
remaining independent. Again, this is contrary to media reports that Yang
wanted to turn Yahoo around internally instead of aligning with Microsoft.
Whether this has always been the case or not, we may never know. What is clear
is that Yang's cooperative stance is easy to take now that both Microsoft and Google
have left Yahoo without a suitor.
The question now becomes: Can Yahoo turn itself around with Yahoo Open Strategy, the company's plan to rewire Yahoo and
effectively open up its cores search and other Web services to the distributed
intelligence of outside programmers?
