February 8, 2008

Yahoo lost its exclamation mark

Poor Yahoo.. After reading this TechCrunch post, I feel really bad for its founders and employees. I think Jerry Yang would be longing for those early days when the company was controlled by him and not external entities and shareholders. Looks like they have a tough decision to make today. "Should we sell our souls and succumb to Microsoft or partner with Google for search advertising which may also be shot down by DOJ?". Either way, it's not good for the employees because there will be massive layoffs. If they partner with Google, the remaining employees might feel good about the company and stay. Even though Yahoo is into so many things, it's fate is going to be determined by this search advertising alone. Man, the perils of going public...

If you are a Yahoo employee, leave a comment here about what you feel Yahoo should do now.


Robert T DeMarco said...

I really can't follow your logic. Going public provided all shareholders, including the employees, the opportunity to get liquid. As a private company, they would never have enjoyed the opportunity to sell their stock at anywhere near the prices they could have received.

In addition, the public offering gave Yahoo the necessary capital to grow and compete. Without the capital they would have been dead a long time ago.

If Yahoo had competed more effectively they would be Google. They didn't.

As an existing shareholder what would you prefer? A stagnant company on its way to zero or an opportunity to decide. Take your money and run or take some money and stay invested in the new entity?

The capitalistic system allowed entrepreneur's like Yang to accomplish great things. He did.

You can't have it both ways.


Ramani said...


I totally agree with your point of view as a shareholder. I agree Yahoo couldn't have grown this much without going public. I just wondered how Jerry would feel when he is rendered powerless due to this hostile takeover.

Ramani said...
This comment has been removed by the author.
Avatar said...

I remember that i was awaken with the news of the Microsoft-Yahoo deal when it first broke.

(some friends called me to ask me about it)

and it made sense from a history point of view, knowing the history and background of the companies involved helps to see things under a different light.

i will cite some questions that exemplify some landmarks in yahoo history playing them as "Did you knew?" (play along if you do):

-Did you knew that back when Yahoo was created, it was created as a direct response to failed to launch Microsoft web initiatives?, as a way to do what they felt Microsoft needed to be doing?.

-Did you knew that even if the cultures of the companies diverted because of that history break point, they always have collaborated closely on the general consensus of things even if not on a official manner?

-Did you knew that as Microsoft shadow created yahoo, yahoo own shadow on web initiatives was the very thing that created Google and that yahoo funded that creation?

-Did you knew that Yahoo while having the chance to buy Google for 10 million (rumored) back when it was created, they passed on it?

-Did you knew that Yahoo after bad handling and short reaching a perfect lawsuit againt google they got 1% of google as consolation prize, could actually had been 10%?

-Did you knew that Yahoo sold that 1% of Google for less than a fifth of the current value instead of just keeping it until the right time?

-Did you knew that at the times when yahoow was negotiating huge search deals around the world, they allowed Google to rob them the deals not once but three times? and did nothing?

Those are points in history that can be marked as what caused Yahoo to be in the state they are now.

On the part of the MSFT-Y! deal, the deal is great, they would never get anything better. they are crazy if they not take it, more than likely stockholders will riot if it don`t happens.

Any path where they decline this deal, is a path to destruction.

The premium offered by Microsoft is the calculated premium price measured to have a breaking effect on the company value if declined.
(old trick in the book). if the deal is declined the value of yahoo would fall no less than 10% below the value they had before the deal was offered, that effect would pretty much kill the company anyway allowing to MSFT still go directly to stockholders and make a hostile takeover without yahoo board been able to do nothing about it or activate anti-takeover measures.

Going with google is a even bigger gamble because it is very likely to be rejected by regulators thanks to google current 75% marketshare in search/adverting.

that must have been already take in count by MSFT before they offered the deal. making that deal would make Yahoo a sworn enemy of Microsoft, and microsft would then go Vendetta on them big time on every front they had left.

I think that at this point, only a miracle would save yahoo. they must give in and make themselves welcome as a MSFT division.

unless that magical Ebay-Yahoo merger would get to happen but given Ebay own problems and the fact that meg whitman is no longer the CEO the chances of that are close to none.

Avatar said...

Oh and Ramani, this is not a Hostile takeover, as this is a strategic hostile bid.

A hostile takeover would have been going to stockholders and buy, and if they had done that there is enough in the market to easily get the 51% stock pool needed to do so. but they didn`t went that route because yahoo has in place the way to apply a poison pill along a Time Out (two anti hostile takeover measures)

cutting out power in the yahoo board , adding market pressure and after effects into the bid. that is the way to disable such anti takeover measure even if they declined the offer as i said.

Ramani said...

That was some great explanation, Avatar. Yes, this deal is bound to happen looks like.

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Also, about this yahoo thing - if they do anything, they're screwed. THey've gotta try to find something else to renovate themselves, maybe like partner with Amazon or something.

RattleSnake said...

my sincerest condolences