Yahoo's CEO Jerry Yang is set to meet staff later today after signaling a more open stance towards a takeover by Microsoft. Yang said that he had 'mixed feelings' about events at the weekend, when talks broke down.
Investors showed their disappointment over the breakup of negotiations by sending Yahoo shares down 15% last night. Yang said it had been Microsoft that ended the discussions.
'We were negotiating a way to find common ground and then on Saturday they chose to walk away,' said the 39-year-old co-founder of the pioneering Internet company. 'They started it and they walked away.'
Yang, who owns about 4% of the company, was expected to meet with employees today in an effort to reassure them after the Microsoft talks ended.
After three months of negotiations, Microsoft CEO Steve Ballmer raised his offer for Yahoo to $33 per share from an initial $31, for a total deal value of about $47.5 billion.
Yang held out for $37 per share, saying that even the sweetened offer did not value Yahoo properly for its Web search advertising technology, its prominence in selling display ads and its lucrative overseas holdings.
But its two largest shareholders independently told The New York Times they would have sold for as little as $34.
Shares of Microsoft rose initially yesterday on investor relief that it was not paying billions more for Yahoo, though the stock ended down slightly amid concerns about how the software maker would develop its Web strategy in the face of a dominant Google.
Microsoft had courted Yahoo to capitalise on the rapidly growing market for Internet advertising, one that has long been served by Yahoo's search, e-mail and Web communities.
It is also trying to fend off the expansion of Google, which has made inroads into Microsoft's home turf with a portfolio of Web based-applications, e-mail and messaging. But now that a deal has fallen apart, Google has emerged as the key beneficiary.
Yahoo is likely to press alternative strategies in coming weeks, including a search advertising partnership with Google and a deal for Time Warner's AOL Internet unit.
Analysts now expect a flurry of shareholder lawsuits against Yahoo, and say it may even face direct pressure on its board. Already, some Yahoo shareholders have started to question how talks were handled.
