RSSSteve Ballmer's letter to Yahoo CEO Jerry Yang
By the Betanews Staff | Published May 4, 2008, 12:09 AM
Late Saturday, Microsoft CEO Steve Ballmer sent a detailed letter to Yahoo CEO Jerry Yang regarding his decision to drop his company's bid to acquire Yahoo. Here is the text of that letter in its entirety:
After over three months, we have reached the conclusion of the process regarding a possible combination of Microsoft and Yahoo!.
I first want to convey my personal thanks to you, your management team, and Yahoo!'s Board of Directors for your consideration of our proposal. I appreciate the time and attention all of you have given to this matter, and I especially appreciate the time that you have invested personally. I feel that our discussions this week have been particularly useful, providing me for the first time with real clarity on what is and is not possible.
I am disappointed that Yahoo! has not moved towards accepting our offer. I first called you with our offer on January 31 because I believed that a combination of our two companies would have created real value for our respective shareholders and would have provided consumers, publishers, and advertisers with greater innovation and choice in the marketplace. Our decision to offer a 62 percent premium at that time reflected the strength of these convictions.
In our conversations this week, we conveyed our willingness to raise our offer to $33.00 per share, reflecting again our belief in this collective opportunity. This increase would have added approximately another $5 billion of value to your shareholders, compared to the current value of our initial offer. It also would have reflected a premium of over 70 percent compared to the price at which your stock closed on January 31. Yet it has proven insufficient, as your final position insisted on Microsoft paying yet another $5 billion or more, or at least another $4 per share above our $33.00 offer.
Also, after giving this week's conversations further thought, it is clear to me that it is not sensible for Microsoft to take our offer directly to your shareholders. This approach would necessarily involve a protracted proxy contest and eventually an exchange offer. Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo! undesirable as an acquisition for Microsoft.
We regard with particular concern your apparent planning to respond to a "hostile" bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo! today. In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo! undesirable to us for a number of reasons:
First, it would fundamentally undermine Yahoo!'s own strategy and long-term viability by encouraging advertisers to use Google as opposed to your Panama paid search system. This would also fragment your search advertising and display advertising strategies and the ecosystem surrounding them. This would undermine the reliance on your display advertising business to fuel future growth.
Given this, it would impair Yahoo's ability to retain the talented engineers working on advertising systems that are important to our interest in a combination of our companies.
In addition, it would raise a host of regulatory and legal problems that no acquirer, including Microsoft, would want to inherit. Among other things, this would consolidate market share with the already-dominant paid search provider in a manner that would reduce competition and choice in the marketplace.
This would also effectively enable Google to set the prices for key search terms on both their and your search platforms and, in the process, raise prices charged to advertisers on Yahoo. In addition to whatever resulting legal problems, this seems unwise from a business perspective unless in fact one simply wishes to use this as a vehicle to exit the paid search business in favor of Google.
It could foreclose any chance of a combination with any other search provider that is not already relying on Google's search services.
Accordingly, your apparent plan to pursue such an arrangement in the event of a proxy contest or exchange offer leads me to the firm decision not to pursue such a path. Instead, I hereby formally withdraw Microsoft's proposal to acquire Yahoo!. We will move forward and will continue to innovate and grow our business at Microsoft with the talented team we have in place and potentially through strategic transactions with other business partners.
I still believe even today that our offer remains the only alternative put forward that provides your stockholders full and fair value for their shares. By failing to reach an agreement with us, you and your stockholders have left significant value on the table.
But clearly a deal is not to be.
Thank you again for the time we have spent together discussing this.
Sincerely yours,
Steven A. Ballmer
At least he's polite.
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|Why don't they offer 30$ a share for Take 2 and get exclusive GTA, that would sell a LOT of Xbox 360 and at least, help them gain market share in the growing video game sector.
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|Yahoo's Management will never want this deal to go through for 1 simple reason. It's not because the Microsoft's price is not good, it's because they will loss their jobs if this goes through. Yahoo's executives have get very generous pay. Much better than industry average. And all this for driving the price of stock down.
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|Im glad this "deal" didnt go through. M$ was just trying to BUY userbase funny thing is evertime they buy somthing they make it worse and lots of that user base abandons ship. M$ is a sad shell of its former self
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|Good engineers at yahoo? what a joke. Yahoo are good and very good at patching security holes esp in their mail and messenger after hackers exploit them. Their messenger is one of the most vulnerable messenger out there and as far as mail goes, it's the same. What about Windows Live Hotmail and Messenger? The are one of the most secure and widely used messenger and mail services. So who is better? Def. Microsoft. Damn, Microsoft; Yahoo's not even worth $30 billion.
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|> Good engineers at yahoo?
He's talking about "engineers working on advertising" ;)
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|Knowing about something before posting is generally a requirement in most intellectual discussions...but I guess this isn't one, so it would probably be too much to ask for something as simple as that.
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|How about Music Match Jukebox. I great program until Yahoo bought it and ruined it. Now it is Yahoo Music. Yahoo even disabled all previous versions of Music Match; forcing you to use their software. Given what the engineers at Yahoo did with the stuff they have taken over, they are a good technological match with M$.
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|Yahoo's execs aren't stupid - they would be the first to go in a Microsoft takeover. Furthermore, Yahoo is actually doing pretty well atm, despite Google's superiority in search. And then there's the wonderful feeling that comes from knowing you are beating the pants off Balmer and company.
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|Doing pretty well? You obviosly have no idea what you're talking about. Yahoo has been doing BADLY for ages now. It's in a constant restructuring process, it's laying people off by thousands. The only quarter they did OK was last one, and that was ONLY because they let google place ads on their searches.
Yahoo are some stupid mofos, because by selling out to google rather than Microsoft, they helping create a MONOPOLY. While selling out to MS would help balance out the industry somehow. Stupid, stupid, stupid.
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|I don't see how it would balance anything. MS would ruin the assets they got from Yahoo and make Google that much more successful in comparison. I'm glad it feel through because I use Flickr a lot, and I'd hate to have it ruined, as MS invariably does with their acquisitions.
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|"Yahoo is actually doing pretty well atm"
That's a joke right? Yahoo has being doing TERRIBLE...their stock skyrocketed when MS's offer hit the street. Now that it's off the table...have you seen their stock? Took a big hit before the open...down 14% now already.
So much for doing good....now that the offer is off the table, that illusion of "doing good" is going down faster then oil prices could rise.
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|I personally wouldn't judge a company's health on stock price alone, but since you mention it ...
Let's see, January 31st (immediately before Microsoft made its offer) Yahoo's stock closed at $ 19.18 (a 4 year low, I think). Fast forward to May 5th, when news of the "no-go" is more than public and a full day of trading has passed: Yahoo's stock closed at $24.37 . That leaves us with a 27% increase in stock value in 3 months, not too bad ... :)
To get some context, Yahoo's 5-year high is about $44
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|"I personally wouldn't judge a company's health on stock price alone, but since you mention it ..."
It's a big tell of a companies health...
"Let's see, January 31st (immediately before Microsoft made its offer) Yahoo's stock closed at $ 19.18 (a 4 year low, I think). Fast forward to May 5th, when news of the "no-go" is more than public and a full day of trading has passed: Yahoo's stock closed at $24.37 . That leaves us with a 27% increase in stock value in 3 months, not too bad ... :)"
You're reaching...and I know you know it. Yahoo better do something FAST before losing more value...and before shareholders start getting even more angry. Yahoo has alot of work to do, and it better get to it now, not 6 months from now.
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|Have to love when M$ talks about reduced choice and competition in the market place. Every time i hear them say that, I can not help but chuckle.
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|Ballmer sounded sad..
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|I'm sure the letter was translated from a gutteral and unintelligible 70-minute string of obscenities involving Yang, his company, his ancestors and a variety of anatomical impossibilities... and probably some flying furniture too.
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|LOL!
Excellent observation :)
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|Well what Yahoo just did was make it impossible to use Google as a partner long term because of all the Anti-Trust issues Ballmer just brought up. There is no way Yahoo will be able to make that deal with Google now. I really think Yahoo just screwed themselves by not taking this offer. I'm shorting Yahoo first thing Monday morning, if they don't tank right away they will within a week or two back to what they were before Microsofts bid and probably even less.
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|Wow, Ballmer is a baby. I wonder if he cried? Did he get mad? Damn google! WE want a piece of that very thick, tasty pie!
All this did was make google that much stronger and made microsoft look desperate and like a horses rear end.
Fun stuff, I guess Yahoo can breath easy now.
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|Wow. What dreamland do you live in, cranbers?
You know Yahoos shareholders are threatening to sue Yahoo over this, right? You know the price of yahoo's shares will drop as a result of this, right? Who's being the crybaby here?
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|So now Microsoft can go after the Yahoo engineers they want one person at a time.
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|I would be willing to bet most of the good Yahoo engineers would never be willing to work for M$.
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|Who would want to work for a man with more Y chromosomes than feet for whom belligerence is his most endearing quality?
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|'Good' google engineers dont seem to have a problem going to MS.
Quite normal for engineers to go all over the place every couple or so years.
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|It sounds like you have some serious 'beef' with Mr. Ballmer....as if you know him in person and he's hurt you deeply. What has he done to you that's so horrible?
Either that or you're like one of those people that reads/sees some very subjective, partial blogs and decides to hate a person, in which case all I can really say is "grow up".
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|Even if they take the engineers, it's very difficult to have them leak ideas without all kinds of legal mess. So it would really be better to just take the company, ideas and all. If they wanted the engineers, they could easily get them. Money, not loyalty rules the world.
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|Or maybe I'm a person with 25 years of experience with Microsoft products who has seen first hand what Ballmer (and the rest of the company) has done over and over again to compete unfairly, destroy companies, make users miserable and generally act like a corporate spoiled brat, and just wanted to make an amusing, and admittedly flippant, comment based on widely known facts.
Although, enjoy your superiority trip. I'm sure it's fun.
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|Wanna bet? I'd leave tomorrow...
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