Archive for February, 2008

Here’s a quick update on the Microsoft’s next move.

MSFT: Microsoft readies assault on Yahoo’s board

YHOO’s response: Yahoo sweetens employees’ severance package

My response: Can you say SUMO?! Hajime [begin]!

SmugMug is the preferred service for serious photographers. In fact, it has over 100,000 paying customers who have uploaded over 100 million photos since 2002. In addition, this company is extremely profitable; revenues exceed $10 million per year.

There is no free version of the service. People pay a minimum of $40 per year to upload photos to the site. Even better, pro accounts, which are $150/year, enable photographers to sell downloads as well as prints of their work.

Don MacAskill is the “brains” behind this venture. In the video below, Don gives an in depth interview about SmugMug. Check it out.

Rupert Murdoch to the rescue! In an interesting twist to the Microsoft-Yahoo saga, Techcrunch and the Wall Street Journal both report that Yahoo is exploring an alliance with News Corp.

While details are still being worked out, discussions are taking place about integrating News Corp’s Internet assets (incl. the popular MySpace) with Yahoo. In addition, News Corp and a private equity firm purchase significant stakes in Yahoo as part of a deal to boost the shares of Yahoo above Microsoft’s $31 / share offer.

Read more about the latest developments on Yahoo! News.

Today, Yahoo’s board rejected Microsoft’s offer stating the bid is too low and undervalues the company.   Yahoo believes their company is worth close to $40 / share.  If we compare this situation to the Oracle buyout of BEA Systems, then it is likely Yahoo is holding out for a better offer from Microsoft.

Microsoft then issued a response calling the rejection “unfortunate”.   What are the next steps for Microsoft?  First, Microsoft could increase their bid.  However, this is unlikely since it would give Yahoo the negotiating edge in this transaction.  Instead, the likely response is for Microsoft to hold firm on its bid and take it straight to the shareholders who can then exert pressure on Yahoo executives and the board.

One day after I wrote about Microsoft’s unsolicited bid for Yahoo!, I found a blog post about the strategic alternatives.

Read the post in Fortune’s blog, “How Yahoo might get away”.

In related news, the House panel canceled its hearing on Microsoft’s proposed bid.  While the “official” reason given is due to scheduling conflicts, the real truth is that there’s nothing to hear unless the deal is imminent.

The government was too quick to jump on this one even before Yahoo! has responded to the bid one way or the other.   Interestingly, I can’t even find the original article on CNN.com.  Hmm… Is this a cover up?  You can judge for yourself by trying to Google any articles on this particular topic.

As you may know, Microsoft made an unsolicited bid of $45B for Yahoo! last week. The bid values the stock (YHOO) at $31 / share.

In a recent article on CNNMoney.com, we recently learned that Yahoo! is considering various strategic options in addition to Microsoft’s bid.  Jerry Yang, the CEO, wrote in an email to Yahoo employees,

“Microsoft’s proposal is one of many options that we’re evaluating in order to maximize value for our shareholders and employees over the long-term. That’s why we will respond to Microsoft after our board has completed a careful review of all of our strategic alternatives.”

If you read between the lines, it appears Yang would prefer not to sell the company to Microsoft.  However, given Microsoft’s attractive offer and the recent performance of YHOO, Yang will need to  convince shareholders his plan is better than a 62% premium over current valuation.   In my opinion, that is going to be a tough story to sell.   Yang is better off taking the money, selling out, and enjoying an early retirement.

What do you think?  Should Yahoo! sell out?