BoomTown Decodes Microsoft's Steve Ballmer's Letter to Yahoo (So You Don't Have To)
Could we resist? No, we could not.
Thus, BoomTown’s translation of Saturday’s letter from Microsoft (MSFT) CEO Steve Ballmer to the Yahoo (YHOO) Board of Directors, which has been resisting the software giant’s efforts to buy the troubled Internet portal for $31 a share in an unsolicited takeover.
The well-written letter was surprising in its clarity, but it still masked several secret messages.
Ballmer wrote: April 5, 2008
Board of Directors
701 First Avenue
Sunnyvale, CA 94089
Dear Members of the Board:
Translation: Dear Members of the Board, whom I will be replacing very soon with my own slate, which includes the three judges from “American Idol” (Simon promises to behave and Paula promises not to), as well as the sock puppet from Pets.com, the PC Guy in those #@#*! Apple commercials and also Microsoft Bob.
Ballmer wrote: It has now been more than two months since we made our proposal to acquire Yahoo at a 62% premium to its closing price on Jan. 31, 2008, the day prior to our announcement. Our goal in making such a generous offer was to create the basis for a speedy and ultimately friendly transaction. Despite this, the pace of the last two months has been anything but speedy.
Translation: What? A middle of the night crank call from me, yelling and screaming and threatening “Terminator”-like destruction if you did not acquiesce was too much?
Didn’t you get the flowers I sent the next day?
Ballmer wrote: While there has been some limited interaction between management of our two companies, there has been no meaningful negotiation to conclude an agreement. We understand that you have been meeting to consider and assess your alternatives, including alternative transactions with others in the industry, but we’ve seen no indication that you have authorized Yahoo management to negotiate with Microsoft. This is despite the fact that our proposal is the only alternative put forward that offers your shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers, and consumers.
Translation: I tried not to be annoyed when you had dinner with News Corp.’s (NWS) deal-loving Rupert Murdoch, or when you flirted with those we-gotta-make-some-move-any-move execs at AOL (TWX) (Bebo for $850 million in cash=Microsoft’s $240 million investment in Facebook).
But dithering around with Google (GOOG), whose secret corporate motto is “Poke Microsoft With a Stick Often,” even after it has been slapping you around Silicon Valley for years?
Ballmer wrote: During these two months of inactivity, the Internet has continued to march on, while the public equity markets and overall economic conditions have weakened considerably, both in general and for other Internet-focused companies in particular. At the same time, public indicators suggest that Yahoo’s search and page view shares have declined. Finally, you have adopted new plans at the company that have made any change of control more costly.
Translation: Google keeps slapping you silly in search, then you slap us with a costly severance plan. It’s like we’re Curly in a Web-version of “The Three Stooges.”
Why I oughta….
Ballmer wrote: By any fair measure, the large premium we offered in January is even more significant today. We believe that the majority of your shareholders share this assessment, even after reviewing your public disclosures relating to your future prospects.
Translation: Legg Mason and Cap Re and Citi and the rest of them are with us and not with you. Why? They like us, they really like us. Also, we are much scarier.
Ballmer wrote: Given these developments, we believe now is the time for our respective companies to authorize teams to sit down and negotiate a definitive agreement on a combination of our companies that will deliver superior value to our respective shareholders, creating a more efficient and competitive company that will provide greater value and service to our customers. If we have not concluded an agreement within the next three weeks, we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo board. The substantial premium reflected in our initial proposal anticipated a friendly transaction with you. If we are forced to take an offer directly to your shareholders, that action will have an undesirable impact on the value of your company from our perspective, which will be reflected in the terms of our proposal.
Translation: We can do this the easy way or the hard way. The easy way includes tasty breakfast pastries and yummy hot cocoa (unlimited marshmallows, of course!) and lots and lots of hugging.
The hard way? Tepid lattes in the Silicon Valley soup kitchen lines for you, after your stock drops to the bottom of a bottomless well when we pull out!
Ballmer wrote: It is unfortunate that by choosing not to enter into substantive negotiations with us, you have failed to give due consideration to a transaction that has tremendous benefits for Yahoo’s shareholders and employees. We think it is critically important not to let this window of opportunity pass.
Translation: Like I said before, I won’t be ignored, Jerry! I have a very sharp proxy firm and I am not afraid to use it!
Also, I am not above boiling your annoying exclamation point.
Ballmer wrote: Sincerely,
Steven A. Ballmer
Chief Executive Office
Translation: If you’ll be my bodyguard,/I can be your long lost pal!/I can call you Jerry,/And Jerry, when you call me,/You can call me Steve!