Microsoft's Silence on Yahoo Has to End Soon
Posted by: Rob Hof on April 29, 2008
When there’s no news, journalists (including bloggers) write about the lack of news. Sorry to say, today I can’t resist the urge either. I just can’t help thinking that Microsoft CEO Steve Ballmer has to do something soon on his bid for Yahoo.
After all, the supposed deadline for Microsoft to initiate a proxy fight to replace the Yahoo board passed more than three days ago. That’s 75 hours ago. 4,500 minutes. 270,000 seconds. 270 trillion nanoseconds! How long can the famously volatile Ballmer go before his head explodes?
Maybe Ballmer’s trying to give Yahoo CEO Jerry Yang a little time to enjoy his newborn daughter. Right. And if you believe that, I’ve got a social network to sell you. More likely, as Kara Swisher reports, talks are going on quietly and informally among the bankers, shareholders, and deal people each side is spending millions on.
Why Microsoft hasn’t ponied up a couple more bucks a share over its original $31-a-share offer—or, if it has done so already on the sly, why Yahoo hasn’t taken it up—remains a mystery to me and most everyone else. It’s hard to believe simple pride is involved on either side. There’s too much money at stake and too many other people involved, from employees to shareholders, for these seasoned businesspeople to be this petty. Right? Right?? (Update: Maybe they’re finally getting there. Maybe.)
Besides, each side needs this deal to happen at this point, and it’s in each side’s interest to make it happen sooner than later. It’s always possible Microsoft might ditch the deal, at least for now. Withdrawing a bid to force the prey’s hand isn’t an uncommon tactic, of course, and maybe it would work like it did for Oracle with its acquisition of BEA. But I still doubt Ballmer would have gone this far only to walk away, all his bluster and the press’ speculation notwithstanding. Besides, Microsoft already has a new slate of Yahoo directors set, according to TechCrunch, so if it’s going the really hostile route, why not just go for it? The Journal reports that Microsoft may take a “middle ground” approach by launching a proxy fight but not yet a direct offer to shareholders, but a proxy fight doesn’t sound too middleish to me.
I’m less sure that Yahoo needs Microsoft in the absence of a Microsoft gun to its head. But it doesn’t seem to have any real alternatives, or they certainly would have surfaced by now. Yahoo shareholders (including many arbitrageurs who now must be regarding their Yahoo shares like week-old fish) no doubt are running out of patience for waiting for a white knight. Certainly a lot of departing Yahoo talent already has. Meanwhile, Google keeps gaining on both, without even the economy seeming to slow it down.
If these sotto voce talks come to nothing, however—and the way things have gone so far, that would be the smart bet—look for the fireworks to begin. Real soon.