Microsoft-Yahoo: The Blogs Weigh In

There's been no shortage of opinions on the failed takeover as bloggers offer plenty of advice for CEOs Yang and Ballmer—plus a few laughs

by Bruce Meyerson

On Day 2, the finger-pointing began.

The collapse of the Microsoft-Yahoo courtship and immediate 15% retreat by Yahoo's (YHOO) shares, albeit not quite the meltdown that some expected, led many bloggers to assert that CEO Jerry Yang had blown it. There was plenty of bile directed northward, as well, to Microsoft (MSFT) headquarters where CEO Steve Ballmer stands accused of botching a dalliance he'd so recently described as crucial to the software maker's future.

Andrew Ross Sorkin of The New York Times took both sides to task on his Dealbook blog: "Yahoo may look like the big loser…but for Microsoft, this has been a remarkable lesson in how not to do a deal." Ballmer "miscalculated from the start," misreading his own shareholders and employees, both of which "hated the deal." But most of all, Sorkin wrote, "Ballmer didn't realize—though he had been warned by his advisers—that when you make a blockbuster unsolicited offer, you must be prepared to win. Not necessarily win at any cost, but win at a cost within reason. (Just ask Rupert Murdoch.) And the truth is, the few extra bucks that Yahoo wanted in order to save face was within Microsoft's ability to pay without wrecking the economics of the deal."

Yahoo Takes Some Heat

Sorkin went on to belittle Yahoo Chairman Roy Bostock's statement that many of Yahoo's shareholders agreed that Microsoft's $33-a-share bid undervalued the company. Responded Sorkin: "As if. Most of the big investors I spoke with, even long-term value investors, are furious at Yahoo."

Likewise, in a story titled "Yahoo Investors Up in Arms," Pete Carey of the San Jose Mercury News quoted a number of unhappy stockholders: "I haven't spoken to one Yahoo shareholder who is happy," said Eric Jackson of Ironfire Capital, a small, activist hedge fund. Jackson said the dozen investors he'd spoken to were "upset, frustrated and wanting to know what they can do." Larry Haverty of Gabelli Funds' GAMCO Investors said: "Jerry has not given the shareholders a vote in this. The shareholders never got a chance to say whether $33 was a good price or not, and people, including myself, are very skeptical about the forecasts he's put out."

At Silicon Alley Insider, Henry Blodget fell firmly into the Ballmer camp: "Yahoo has launched a PR offensive to try to get itself off the hook for blowing the negotiations. The message of this campaign is that Yahoo showed that it was willing to come down in price…. Yahoo is now telling this story to anyone who will listen—because the mercurial Ballmer really did get over this deal. (What Yahoo isn't saying, as it rolls out its global don't-blame-us campaign, is that OF COURSE Steve Ballmer is over this deal. For this merger to have a chance of working, both companies have to charge into it with 100% enthusiasm.)"