Yahoo to Microsoft: I've Seen Bigger Offers on a Flea
Yahoo (YHOO) has replied in kind to the acquisitive saber rattling of Microsoft’s (MSFT) weekend letter–albeit with a less menacing saber rattling of the plastic butter knife sort.
In a public letter to Microsoft CEO Steve Ballmer (addressed “Dear Steve”), Yahoo said it’s not opposed to a deal with Microsoft; it’s just opposed to a deal at the current price. “Our position is simply that any transaction must be at a value that fully reflects the value of Yahoo, including any strategic benefits to Microsoft, and on terms that provide certainty to our stockholders,” Yahoo CEO Jerry Yang and Yahoo Chairman Roy Bostock wrote, adding that the decline in Microsoft’s share price has made the company’s takeover offer even less attractive than it was when Yahoo first rejected it. “As a result of the decrease in your own stock price, the value of your proposal today is significantly lower than it was when you made your initial proposal,” Yang and Bostock argued.
That’s an apt parry to Ballmer’s suggestion that worsening economic conditions have reduced Yahoo’s market value, making the large premium Microsoft offered for the company in January even more significant today. But just how is Yahoo faring in the current economy? That’s the real question here, isn’t it? Yang and Bostock say the company’s “business forecasts are consistent with what we outlined” after releasing its fourth-quarter results. And that’s not really saying much at all, is it, as Silicon Alley Insider notes:
If Yahoo had wanted to torpedo Microsoft’s latest assault, it could have published a revenue figure for the quarter showing that its revenue came at the high end of its forecast range. If it could have done this, we think it probably would have (or at least should have).
“Instead, Yahoo said that its quarter and outlook are ‘consistent’ with previous forecasts. However, the previous forecasts cover such a wide range that this statement is almost meaningless.”