Why Yahoo will never accept a Microsoft deal
Poor timing, too low price points? No, it appears that Yahoo might be avoiding a Microsoft buyout solely for sentimental reasons. Now that Jerry Yang is the CEO, it appears he’s wanting to hold onto the company he worked so hard to start back in his own college years at Stanford.
Yang owns about 4% of the company that is currently worth $1.5 Billion, his stakes are huge and he’s still drawing the infamous $1 salary that is common with many tech giants. His wealth has been derived in its entirety from the growth and capital gains he’s received as a huge shareholder in Yahoo. As CEO and a founder, it seems that his own unwillingness to sell might lay in a dislike for Microsoft and sentimental views of Microsoft rather than what shareholders want.
At this point its hard to understand why Yahoo wouldn’t sell for the $29/share price tag. The company has been falling off the search engine cliff for the last several years, its rapidly losing marketshare while Google continually dominates any business that Yahoo claims. Now that it’s a three way race, Google in first, Yahoo riding second and Microsoft’s MSN a distant third, consolidation is the best thing that could happen to Yahoo.
I’m beginning to believe that all this resentment towards a Microsoft deal is almost more anti-establishment than it is a strategic business move. After Microsoft made many failed bid attempts, Yahoo aligned more of their search engine with Google. Almost screaming “Na-na-na boo boo” to the corporation that is determined to buy it out, even it they have to resort to throwing out the Yahoo board.
While Yahoo’s stock does sell at a discount, its share price has moved along with Google’s but only due to the $29 bid by Microsoft. Absent that bid price, Yahoo may still be selling in the low $20s per share. If Yahoo doesn’t take this bid soon, its missing out on a perfect opportunity to sell out while the money is there.