Posted by: Rob Hof on July 14, 2008
After months of getting reamed out by shareholders and assorted pundits for supposedly blowing the Microsoft deal, Yahoo finally has managed to get some sympathy. It may simply be that activist financier Carl Icahn and Microsoft CEO Steve Ballmer have been shooting themselves in the foot lately—most recently with a new search deal offer that Yahoo again rejected—but somehow, sentiment is turning toward Yahoo for the first time in months. (Update: Now Andrew Ross Sorkin at the New York Times gives a big thumbs-up to Yahoo CEO Jerry Yang and a big Bronx cheer to Microsoft.)
Who knows how long it will last, given Yahoo’s own seeming recalcitrance in the face of repeated overtures by Microsoft that some shareholders now wish Yahoo had accepted? (Update: And today, shareholders are punishing the stock, which is down 5% on Yahoo’s rejection of the Microcahn deal.) But for now, the support for Yahoo’s position—weak as it may be—makes me wonder if the company might actually have a chance to withstand Icahn’s proxy fight. Consider:
* A Reuters followup story Sunday night, headlined “Did Yahoo finally do something right?”, notes that shareholders want a buyout, not the search deal Microsoft has now twice proposed. One large shareholder, Robert Hagstrom of Legg Mason Capital Management, called the latest offer “unappealing” and said he hasn’t made a decision on Icahn’s board because they have “no information about how he would run the company is Microsoft does not buy Yahoo.”
* Henry Blodget of Silicon Alley Insider, who counts himself a Yahoo shareholder, says Yahoo was smart not to take this deal, which he views as not a serious offer. “We’re fine sending the board and management packing,” he writes. “But not until we have a clear alternative to replace them with and a new operating plan. Yahoo’s current plan is sound. The company just needs to do a better job of executing it. The company can’t afford a six-month purgatory period where a whole new management team comes in, is brought up to speed, and figures out what to do next.”
* Some supporters of Microsoft are starting to wonder about the company’s seeming uncertainty about what it wants with Yahoo. “Microsoft Crosses a Line,” Mike Arrington of TechCrunch wrote recently, noting that he had supported Microsoft’s efforts to buy Yahoo but now thinks the software giant isn’t serious about creating a foil to Google in search: “Microsoft, led by CEO Steve Ballmer, have taken Yahoo’s rebuffs entirely too personally. It’s no longer just about business, it’s about destroying and humiliating the people who embarrassed Microsoft. And sadly, that has nothing to do with creating a balance of power in search.”
These are only anecdotal examples. What really matters is how shareholders vote in the next two weeks or so. And Yahoo no doubt will come in for more criticism. Indeed, Kara Swisher’s account of the events of the last few days, which includes Microsoft’s account of the proceedings, indicates Microsoft wasn’t necessarily the bully that Yahoo’s account implies. Yahoo also will no doubt get some heat on Tuesday when a Senate committee will examine its Google search deal. But for now, at least, Yahoo has one last chance to turn the tide in its favor.