April 26, 2008
Yahoo Stays Silent
as Microsoft Deadline Nears
San Francisco
Yahoo maintained a defiant silence Friday on Microsoft's $40-billion
takeover bid, as Saturday's deadline to wrap up the deal came down
to the wire.
Instead of publicly responding to the software giant's ultimatum,
Yahoo ignored the issue entirely and instead unveiled plans to
rewire its Internet services to make them more flexible for users
and more compatible with other websites.
The announcement of Yahoo's intended conversion to a social hub was
made at the Web 2.0 conference in San Francisco by Yahoo chief
technology officer Ari Balogh, who dubbed the initiative "Yahoo Open
Strategy". The announcement reinforced expectations that the
internet pioneer would remain steadfast in its rejection of
Microsoft's bid, which Yahoo argues fails to take into account the
company's imminent growth prospects.
Under the new system, Yahoo's 500 million users will be able to
seamlessly integrate content from across Yahoo's entire web empire
into their personal network. The idea is to combine Yahoo's popular
mail, instant message and personalized web pages with features from
Yahoo's photo-sharing site Flickr, its bookmarking site del.icio.us
and others.
Yahoo will also open its application platform to outside developers
to allow third parties to create apps that work across the network
and help create a social networking site that through sheer numbers
of users and applications could quickly overtake current market
leaders like MySpace and Facebook. The system is not expected to
debut before 2009.
"We are not building another social network," Balogh told more than
1,000 attendees at the Web 2.0 Expo conference in San Francisco. "We
are building social into everything we do."
Since Microsoft unveiled its original $44-billion cash and stock
offer in February, Yahoo has determinedly sought other suitors to
help it remain independent. However its attempts to forge an
alliance with News Corp floundered when Rupert Murdoch's company
allied with Microsoft.
Yahoo's plans for more limited alliances with Google and AOL have
failed to convince many stockholders that they will yield more
advantages than Microsoft's bid which offers a 60 percent premium on
Yahoo's pre-bid share price.
With Yahoo appearing resolute in resisting Microsoft's current bid,
analysts are split on whether Microsoft will walk away, sweeten the
offer, or launch a hostile bid that would try to circumvent Yahoo's
board of directors.
But with Yahoo unable to offer any compelling alternative to
investors in the short term, Microsoft is unlikely to increase its
offer, most analysts believe.
If Microsoft remains determined to do a deal it may be able to pick
up Yahoo for less by waiting a few months. With Yahoo's latest
earnings reports showing disappointing results the company's stock
is liable to drop precipitously if Microsoft withdraws.
Microsoft has also assembled an alternative board it could try to
have elected in a proxy battle, but it is far from clear whether it
has the votes to succeed.
"It's not clear if they would be successful," Steve Weinstein, an
analyst with Pacific Crest Securities told Forbes magazine. "It's a
possibility, but not a certainty."
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