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.
- By John K. Waters
- November 07, 2008
When Yahoo CEO Jerry Yang sat down for an onstage conversation with journalist
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
"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
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
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,"