Monkeying around won’t do it
Yahoo Chairman Roy Bostock’s reply to Carl Icahn’s terse letter of intent to initiate a proxy fight was over-long and unconvincing. Its most notable assault on language referred to Microsoft (MS) as “a formerly interested buyer who has publicly stated that they have moved on.”
“Your letter reflects a significant misunderstanding of the facts about the MS proposal and the diligence with which our board evaluated and responded to that proposal,” Bostock complained. “Yahoo’s 10-member board, comprised of nine independent directors along with Yahoo CEO Jerry Yang, remains the best and most qualified group to maximize value for all Yahoo stockholders.”
MS never put its $33 offer in writing, or stated what the cash/stock mix of the proposal would be, Bostock wrote. The board remained open to any transaction “that would maximize value for stockholders and provide them certainty of value,” The price was still $37, he concluded.
Pressure on Yahoo
New data from comScore shows traffic to Google owned destination sites passed Yahoo sites for the first time in April. Google sites had 141.1 million visitors, up 18 percent YOY, Yahoo had 140.6 million, up 7 percent YOY, and MS was third with 121.2 million. Yahoo still leads in page views, with 33.6 billion to Google’s 28.7 billion, but the trend is strongly in Google’s favour.
In a move that will bolster ad revenues, Yahoo today announced a partnership with the WPP Group, the advertising holding company. The deal will give WPP’s clients a broader range of websites at which to aim their ads, while web publishers that use Yahoo’s ad auction service to sell space on their sites will get direct access to WPP’s client base.
Unfortunately the deal also gave greater prominence to the disappointment expressed by Sir Martin Sorrell, CEO of WPP, that Yahoo and Microsoft had not reached an agreement. “Anybody who is a customer in the marketplace likes to see balance in it,” he said. “Search in America is imbalanced. That’s what Yahoo and Microsoft offered, a bit more balance.”
Finally, Yahoo announced the limited beta release of its Search Monkey feature today, permitting external sites to build bespoke applications using Yahoo search data. Yahoo is offering thousands of dollars in prizes to developers who come up with the best applications.
Alas, anything the board proposes – and has proposed since the MS offer last February – is likely to be viewed as a gambit designed to strengthen the board’s hand against MS and, now, against Icahn.
Pressure on Microsoft
If current trends continue, Google’s search business will become larger and more profitable than Microsoft Windows in 2009. Google is still well behind Windows + Office, but it is gaining fast.
Credit: Silicon Alley Insider
While Google’s gains are definitely bad news for Yahoo, it may not be the case that the relentless growth of Google’s search revenues necessarily means MS is losing. Windows has a colossal installed base with countless applications built around it, and remains enormously profitable.
However, CEO egos have been known to affect business judgements (!), and Google Apps challenges MS core business. MS boss Ballmer intends to return the favour and, as he asked two weeks ago, is there a better way to get advertising scale more quickly than the Yahoo acquisition?
The fact that two of the men on Icahn’s slate of proposed directors are believed to have been on MS’s list for the board of the combined companies is no doubt just a coincidence.
