MicroHoo: Investors Standing By!
BoomTown feels like a digital postal carrier today, delivering a small message each for Microsoft (MSFT) CEO Steve Ballmer and Yahoo (YHOO) CEO Jerry Yang from some of your bigger shareholders–some of whom own you both, in fact, and with whom we like to check in with from time to time to gauge their mood:
Steve: Greetings! Well, not greetings, exactly, since many of us are still really annoyed by the mean letter you sent to Yahoo two weekends ago.
Actually, we would not have minded a mean letter directed solely at Yang and the board.
In fact, if you had just focused on Yahoo’s lack of cooperation and your frustration in wanting to start negotiating and reiterated how valuable Yahoo was to you, that would have given us cover to phone up Yahoo and complain about inaction.
Instead, you threatened a price drop, which is like delivering a Kung Fu Panda blow right to the collective windpipe of big shareholders and makes it impossible for us to do anything but complain about Microsoft.
Which is precisely what Legg Mason’s Bill Miller did like clockwork, of course.
“The problem is Microsoft blundered with the letter this weekend,” Miller said flatly in an interview in The Wall Street Journal. “Telling the shareholders you’re going to take something away from them is not a way to get their support.”
So, now to assuage us, you probably have to raise the price. A poll of those BoomTown talked to said $2 more would do it and $3 would be a clincher.
Our advice: Lob a call into Miller and also Capital Research & Management and all the other big owners of Yahoo shares and do a little sweet-talking.
Salutations! Well, not salutations, exactly, since many of us are perplexed at what exactly is the plan.
OK, we like all the activity of late, as it is keeping the pressure on Microsoft. But we are deeply dubious of the efficacy of all the various plans.
While we would grudgingly accept a union with AOL, with an investment from Time Warner (TWX) and even a stock buyback, we are nervous that it could be a disaster.
Most of all, there is the question of leadership and who would run this obviously hard-to-manage organization. We are not so sure that anyone in either team is up for it, and we just cannot imagine making that call to Steve Case and Bob Pittman to reassemble the old band.
And, while we love the idea of Google adding $1 billion in cash flow to the bottom line via an outsourcing deal to take over search-ad monetization, it’s a risky move fraught with regulatory questions, potential legal quagmire and increased aggression from Microsoft.
In fact, given how clear the Microsoft option is, especially if the price goes up or it switches to an all-cash deal, we still maintain that the most likely outcome is that we will support a richer Microsoft bid, since it presents us with the most clarity.
Or, as Fergie sings in her delicious “Big Girls Don’t Cry”: “Clarity, Peace, Serenity.”
So whatever happens, remember that big companies don’t cry either.
Have a great weekend and enjoy the video: