May 06, 2008, 1:19 PM — Facing shareholder
ire and a plunging
stock price, Yahoo CEO Jerry Yang said Yahoo board members would still sell
the company to Microsoft or another suitor if the price is right.
According to Bloomberg, Yang said late Monday that Yahoo would be open to a
sale as long as the company is not "undervalued" by any potential
bidders.
"We've always felt the Yahoo platform has been undervalued or underappreciated
by the marketplace,'' he said in an interview with Bloomberg. "Our most
important goal is to make sure we have a long-term competitive position."
According to a separate report in Financial Times, Yang said it was Microsoft,
not Yahoo, that was unwilling to complete the deal; his company wanted to continue
negotiations on a price.
"We did not say it was a take-it-or-leave-it number in the sense that
we would never negotiate any more,” he said in an interview with Financial
Times. “We were totally willing to do a transaction, and they walked away."
On Saturday, Microsoft withdrew its bid to acquire Yahoo after failing to agree
to a price even after Microsoft raised its bid from about US$31 per share, or
about $44.6 billion, to $33 a share, which was about $5 billion more than the
original offer.
Yang's comments indicate he is backtracking on the position he held during
Microsoft's three-month attempt to purchase Yahoo, and they come as the Internet
company faces pressure from shareholders who think the company was foolish to
pass on the offer.
Yang was reportedly against the deal from the start, and Yahoo made various
moves during the three months to avoid an acquisition, such as mulling a partnership
with AOL and striking a deal with Google to test Google's AdSense for Search
service as one of the Web publishers that carry pay-per-click text ads from
Google.
Yahoo also attempted to buy time when Microsoft threatened to mount a proxy
battle for the company. For example, on March 5, Yahoo lifted the following
week's deadline for nominating directors to its board, an attempt to discourage
Microsoft from trying to replace the current board with members willing to approve
its Yahoo acquisition bid.
The company also unveiled a flurry of product and strategy announcements in
the months following Microsoft's bid, pointing out that each initiative proved
it could continue go it alone as an independent company.
Now that the deal is no longer on the table, Yahoo must convince investors
it can turn the company around and deliver on promises that it can grow its
revenue at a pace that pleases Wall Street and allows Yahoo to compete successfully
against Google in online advertising.
Shareholders already are getting restless. Two public pension funds from the
city of Detroit already said they plan to expand a complaint, originally filed
as two lawsuits on March 5, against Yang and other members of Yahoo's board
of directors, saying they failed to act in the best interest of shareholders
in rejecting Microsoft's bid to buy Yahoo. It's likely Yahoo will face a barrage
of similar class-action suits in the coming months.
Yahoo's shares closed down 15 percent at $24.37 on Monday, the first trading
day after Microsoft backed out of the deal; they had dropped as low as $22.97
during the day. Yahoo's stock price was up slightly when the markets opened
Monday, trading at $25.55, and was holding steady around that price early Tuesday
afternoon.
Microsoft, in the meantime, is distancing itself from the Yahoo deal and is
focusing on internal plans to grow its Internet business, according to comments
made by a company manager at the Merrill Lynch Technology Conference on Tuesday.
"Certainly Yahoo would have been an accelerator, but we've withdrawn the
offer, moved on and now we're focused on how to grow as fast as possible organically,"
said Brian Hall, general manager of the Windows Live Business Group, during
a conference presentation made available via webcast.
(Juan Carlos Perez in Miami contributed to this article.)
