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Yang to Microsoft: Buy Yahoo

Yahoo's CEO at a tech conference admits to second-guessing the Microsoft offer and offers his assessment of the Google deal gone bad.

When Yahoo CEO Jerry Yang sat down for an onstage conversation with journalist and Wired magazine Co-Founder John Battelle at the O'Reilly Web 2.0 Summit last night in San Francisco, he had to have seen the question coming.

"Why didn't you take the $33 a share, Jerry?" Battelle asked him, referring to Microsoft's offer last April to buy Yang's company.

Yang's answer: "A lot of people have replayed that in their minds. I'm no exception...[Microsoft] walked away from a public offer. We were ready to negotiate, but they withdrew...We believed that we were doing the right thing every step of the way...To this day, I would say that the best thing for Microsoft to do is to buy Yahoo."

The interview followed on the heels of another scotched deal: Google has recently decided to back off from a reported search-ad revenue-sharing agreement with Yahoo. That deal promised to add hundreds of millions of dollars to Yahoo's coffers but faced resistance from trust-busters at the Justice Department.

"We were disappointed going through the process with the Department of Justice because we thought it was a good deal for the marketplace," Yang said. "Their market definitions are too narrow."

Yang insisted that the Google deal, widely seen as a keystone of the company's turnaround plan, was not that important. He described it as "incremental" to Yahoo's overall growth plans and pointed out that the decision didn't hurt the company's bottom line. In fact, after the announcement Yahoo's share price rose 4 percent to $13.92.

The crowd attending the O'Reilly Media-sponsored event had been buzzing before the interview with rumors that Yang would be a no-show. Also circulating in the crowd: news of a faked internal company e-mail stating that Yang would be resigning. The embattled chief exec assured the audience that he wasn't planning to step down.

"The debate at Yahoo has always been about trying to understand the alternatives, vis-a-vis an acquisition," Yang said, "not because we don't want to do that, but because we want to understand how to do an acquisition on the right terms."

Battelle said he'd tried to get Microsoft CEO Steve Ballmer to join the conversation, but that Ballmer had shown no interest. According to the Associated Press, Microsoft's chief exec had just the day before told attendees at a business lunch sponsored by the Committee for Economic Development of Australia that buying Yahoo was off his to-do list.

"We made an offer, we made another offer, and it was clear that Yahoo didn't want to sell the business to us and we moved on," Ballmer said according to the AP. "We are not interested in going back and re-looking at an acquisition. I don't know why they would be either, frankly. They turned us down at $33 a share."

Battelle pushed Yang on the claim that the latter's seeming resistance to a Microsoft takeover was driven by his own ego.

"People who know me know I don't have an ego about remaining independent," Yang said. "We remain open to everything but it has to make sense."

And yet, Yang's ego wasn't exactly absent from the interview. "My personal belief is if you're not in the game to win, you shouldn't be in the game, and that's the way that I try to encourage the whole company to think about it," he said.

About the Author

John K. Waters is a freelance author and journalist based in Silicon Valley. His latest book is The Everything Guide to Social Media. Follow John on Twitter, read his blog on ADTmag.com, check out his author page on Amazon, or e-mail him at john@watersworks.com.


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Sun, May 10, 2009 richard RgAGVJ dkv7Rq29nVvzm74lApqSw

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