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Jerry to Steve: Yahoo Deserves More than $31 per Share

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Jerry to Steve: Yahoo Deserves More than $31 per Share

The Yahoo Board has issued an official response to Microsoft’s letter addressed to the Yahoo Board last Saturday. Once again, Yahoo reiterated that it will not accept any buyout offer from Microsoft if it will not be more than the proposed $31 per share offer.

At the same time, we have continued to make clear that we are not opposed to a transaction with Microsoft if it is in the best interests of our stockholders. Our position is simply that any transaction must be at a value that fully reflects the value of Yahoo!, including any strategic benefits to Microsoft, and on terms that provide certainty to our stockholders.

The letter also mentioned about Yahoo’s recent launches of new products that were aimed at leveraging Yahoo’s worth as a major internet player that is definitely worth more than Microsoft has valued them. Specifically, the letter mentioned about the recently announced Advertising Management Program which is aimed at simplifying the process of buying and selling online ads.

The letter assailed Microsoft’s assertion that Yahoo is on the brink of collapse due to its current business conditions.

In contrast to your assertions about the effect of general economic conditions on our business, Yahoo!’s business forecasts are consistent with what we outlined in our last earnings call. As you know, we recently reaffirmed our Q1 and full year guidance, which is a testament to our ability to perform in line with our expectations despite the current economic environment. In addition, our three-year financial and strategic plan which we have made public demonstrates significant potential upside not previously communicated to the financial markets. This plan has received positive feedback from our stockholders, further strengthening the view that Yahoo! is worth well more as a standalone company than the value offered in your proposal, and would be even more valuable to Microsoft. Your own statements have made clear the strategic importance of Yahoo!’s substantial assets and capabilities to Microsoft.

Two other issues that the letter tackled are the anti-trust question, which Yahoo has put into question pending Microsoft’s submission of necessary information for Yahoo to fully understand the regulatory issues thrown against them, and Microsoft’s threat of resorting to proxy bid. Yahoo said that such threat is contradicting Microsoft’s initial claim of wanting to have a friendly transaction with Yahoo.

In conclusion, the Yahoo Board reiterated its steadfast stand, not against Microsoft’s offer per se, but against the price that Microsoft is offering.

In conclusion, please allow us to restate our position, so there can be no confusion. We are open to all alternatives that maximize stockholder value. To be clear, this includes a transaction with Microsoft if it represents a price that fully recognizes the value of Yahoo! on a standalone basis and to Microsoft, is superior to our other alternatives, and provides certainty of value and certainty of closing. Lastly, we are steadfast in our commitment to choosing a path that maximizes stockholder value and we will not allow you or anyone else to acquire the company for anything less than its full value.

So, are we waiting for another letter from Microsoft soon?

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Arnold Zafra

Arnold Zafra writes daily on the announcements by Google, Ask.com, Yahoo & MSN along with how these announcements effect web ... [Read full bio]

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