How Much Will Jerry Yang's Ego Cost Yahoo Shareholders?

Remember when I said that if I were Microsoft (MSFT) I'd lower the bid for Yahoo (YHOO)?

Get ready to watch Yahoo's stock get pounded on Monday morning.

From Balmer: "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 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."

That's rich.

According to News.com, Microsoft's pulled its Yahoo bid. My bet, Microsoft lets Yahoo twist in the wind a bit, lets the shareholder lawsuits get all tangled. Then pays a lot less than they were going to in the first place.

How many billions will Jerry Yang's ego end up costing Yahoo shareholders?

More from TechCrunch here and Kara Swisher here.

Comments

[raceluver]

I am not sure why you need to personalize this matter so much. Yahoo's decision not to accept MS offer is a collective board decision and not Yang's sole and discretionary decision. You assume Yahoo's board and major shareholders are kids being ordered around by Yang. please, stop this nonsense and write something meaningful, logical, and useful! Please, ask yourself what value has your article provided to your readers????

[The Stone]

In my opinion, Microsoft was the nice guy in this deal that will still happen. Do they want Yahoo, you bet! Do they realize that a hostile takeover would make them look like the bad guy? You bet again!
However, what they offered was more than fair. Yahoo was stupid not take the offer. Now Microsoft will still get the company but will pay billions less. Watch Yahoo's stock on Monday morning. All of the smart shareholders will sell within the first 30 minutes of trading sending the stock tumbling like an olympic gymnast. Jerry, get ready to take it up the ying... Yang.

[Homer]

"Jerry, get ready to take it up the ying... Yang. "

Good play on words.

[Jase]

Who cares what happens between MS and Yahoo--I care little about either of them; I'm concerned only with the potential trades. Yahoo shares are going both ways on Monday. An interesting trade might be a straddle at $23 (the midpoint between $29 and $17). And the volatility (caused by the uncertainly of whether MS will swoop back in) is an excellent time to pick up other bargains. Sun Micro will certainly recoup some of Friday's senseless losses and rocket back to at least $15; it's also time to short Visa, that party has gotten out of control.

[RO]

I agree with the first poster. No need to personalize this as a Jerry Yang thing.. it was the Board saying they wouldn't accept less than $37/ share. And their bankers valued the company at $40/ share. Note that Jerry and co- owner David File own 1/3rd of Yahoo's shares, so he takes the brunt of whatever happens, like any good owner(s) should.

[RO]

I agree with the first poster. No need to personalize this as a Jerry Yang thing.. it was the Board saying they wouldn't accept less than $37/ share. And their bankers valued the company at $40/ share. Note that Jerry and co- owner David File own 1/3rd of Yahoo's shares, so he takes the brunt of whatever happens, like any good owner(s) should.

[freakyguy666]

WTF? How naive are you people? Do you really think that the board is not influenced by the CEO?!? C'mon. This greedy SOB and co-founder File control nearly 30% of the shares. They could vote any of the board members in or out each year. Anyone who thinks the board is completely independent of Yin-Yang's influence is clearly not familiar with how Wall Street works....not surprising. That said, if the stock hits 20 it's a screaming buy. I really don't see it getting that low except either during premarket or a quick spike on panic selling. Watch and learn...

[raceluver]

The writer of this article thinks he has discovered something by eluding to the fact that Yahoo stock will get hit come Monday.!! I can assure him that Yahoo Board is/was aware of the impact on the stock following their refusal of MS offer. So it should not come as a surprise...!!!

[raceluver]

One final comment on this article before i move on. I would have loved to have seen what the article writer would have written this morning had the deal gone through at 33? Talking about ego, I noticed how the writer started his article by stating, to quote:"Remember when I said that if I were Microsoft (MSFT) I'd lower the bid for Yahoo (YHOO)?". Notice the emphasis on "remember what "I" said.! I am not sure who has the ego: Yang or the writer of this value-less article.!

[Insightful]

I totally agree with freakyguy666.....Jerry was by far the largest cheerleader proclaiming that the proposed offer "Significantly Undervalued" the company - at the time of the offer MSFT was willing to pay >60% premium which is higher than GOOG's current multiple and they are a far superior company by almost every measure.

For me, this is the best of all options. I am long MSFT and have May 24 YHOO puts. I was counting on the combination of the following: 1) The stupidity of YHOO shareholders thinking that the company, whose earnings are crap, are actually worth a GOOG multiple 2) SB standing his ground as he is known for not taking crap 3) JY's ego and lack of touch with reality. YHOO (even with Jerry Yang) has had a poor history of being able to live up to it's multiple and monetize it's traffic.

I hope the YHOO shareholders sue the YHOO board or at least write Jerry (the primary outspoken opponent for the merger - with a huge influence of the board with his significant % of shares) and the YHOO board an email thanking them for their disregard for their shareholders and complete wealth destruction. They made a dumb bet and will pay on Monday.

[User 158855]

Is what greed does to the average man? Jerry you lost your sail!!

[mlambert890]

Not greed... Ego and ideology. The author here was correct. Its hard for those outside of the tech industry (you know, normal people) to comprehend just how passionate and irrational the hatred for MSFT is.

If there is one thing more distasteful than rappacious greed, it is certainly irrational ideological zealotry. Thats what happened here. Yang got his way, stuck SB in the eye, and is now the shining hero of the LAMP holy warriors. He still has HIS billions and, well, whatever happens to Yahoo down the road doesnt really have any personal impact on him now does it? He can always rationalize it for himself by blaming the rank and file.

And for the guy who feels it is silly to "personalize"... this? MAN do you need a clue! I mean do you have ANY experience with the workings of corporate politics at all?

[User 171084]

I am DELIGHTED that this deal collapsed..Goodbye Yahoo..

[blah-blah]

I agree, the commentors at the beginning who think Yang's ego didn't do all the talking have no clue. Time for Yang to burn.

[sf94127]

I bought a few yhoo calls on Friday and they will be worthless. I am primarily long MSFT and GOOG but I figured even Yang would accept an offer that was probably a few bucks higher. As much as I wanted MSFT to walk away I figured commnon sense would prevail on this one. Are there no adultss over there at the YHOO campus?

[sf94127]

YHOO stock will dive no doubt but it proably won't go down as far as people think cuz there will be enough hopefuls out there that believe a deal will be done. I think msft is done here. Maybe if Yang exits talks could resume. Yang is no different than Jobs with regard to stockholders on valuation except Jobs is able to bring his company back to a smokin price. Yang must have a pretty weak board.

[WAKEUP]

I hope Yahoo stock dives as far as some think it will. If it does, I'm buying. Then, if MS buys Yahoo, and succeeds with its new acquisition, I'll profit. If MS does not buy Yahoo (ever), and Yahoo management pulls its irons out of the fire, I'll profit. If neither of these things happen, and Yahoo fades, I won't have much invested, and I'll get the benefit of the tax write-off, on that. Don't we just love the way this is playing out? YAHOO !!!

[rainman]

Please count Yhoo users' ego too, which is priceless.

[bearfund]

Wall Street, and in fact most Americans who aren't a part of it, simply do not understand the tech culture. Most people in the tech industry feel the same love for Microsoft that the average man feels for the IRS. There was little point in Microsoft buying Yahoo anyway, just as there would be little point in them buying most tech companies. All the assets in these companies are in the heads and loyalties of the senior technical people, most of whom will not work for Microsoft at any price. So if they buy, they destroy all the value.

The way to get rich in tech is to work in it, not to buy shares. Most tech companies don't care about or even think about their shareholders. It's very much a fraternity, and while making money is important, it's not at the top of the list. Semis are a bit different, more traditional businesses, but Microsoft is a breed apart - driven by ego like every other tech company but also obsessed with money and, even more than money, domination and control. The company's psychological disorders colour the entire industry and have for years. The only way this deal was going through was if Yang was forced out. I think most people in the valley understood that, and it always surprises me when the street doesn't see it.

[grave dancer]

This whole fiasco is a perfect example of negotiations between assholes. On the one hand Yang with his ego and stupidity, and on the other Balmer, the George Bush of corporate America (my way or else) now there is an asshole. Obviously Yahoo shares will be trashed at the expense of the shareholders, but if Microsoft really needed Yahoo (probably not today or tomorrow, but for the future) then they are big losers too. If Balmer thinks he'll get bargain when the shares tumble (kind of like GW thinking the Iraqis would enjoy being invaded), then he better think again. Yahoo's going to get bought alright, and probably at a lower price, but it will be by someone with brains and not Microsoft.

[reader]

Since I am something of a betting man, I am going to lay 9 to 5 that the new sale price for Yahoo will finally come in at the $26 to $28 level. Mr. Yangs' ego aside.

[IHO]

Only time will tell who is right, MSFT or YHOO. If Yahoo's performance does not improve, perhaps MSFT could come back for the kill with $25 per share within a year.

[zenalgorithm]

I for one am glad that YAHOO! wasn't taken over by MSFT...the quality of YAHOO! would have diminished like MSN and Hotmail have. I'm just a YAHOO! user, not a holder of MSFT or YHOO.

I may buy some YHOO if it hits the mid-teens...

[Sartre]

Jerry Yang's ego will cost Yahoo investors $14 bilion. 5.6 billion for the additional $4 dollars (1.4 billion per dollar) offered on Saturday and 8.4 billion when the stock on monday tanks about $6 dollars per share. A whopping $14 billion for an ego-maniacal idiot.

[herohero]

"WTF? How naive are you people? Do you really think that the board is not influenced by the CEO?!? C'mon. This greedy SOB and co-founder File control nearly 30% of the shares."

My thoughts exactly - Yang is apparently unaware that Yahoo is not Google. He ought to be on his hands and knees begging Young Frankenstein Balmer to take him back. What a moron.

[Hypersonic]

Laughing! -
Microsoft thinks to itself after sobering up the next morning... "What the hell was i thinking - i so nearly ... *shudders*!.. Eyeing up & down a lipstick smeared greasy 'spread to wide' Yahoo, with its saggy tits & muffin top belly...
Then Microsoft spies firm & Fit 'Google' across the street, fluttering it's eyelids as roughneck ISPs give it the 'wolf whistle'......
Microsoft thinks to itself.... mmmmmmm I'd shag that for $33 dollars a go!

Yep ... Yangs green eyed monster rose up & he couldn't control it -
So instead of $33 per share of BILLIONS for him & his shareholders, he now as 100% of F*ck all on offer. - Prat!

I hear that though that Microsoft might be coming back for 'sloppy seconds' ...
"Don't you want all of me?" Says Yahoo trying to be sexy...
"Nah.. " Replies Microsoft . "Just your mouth, Im out of rubbers" - *Wicked Grin*...