Consolidation happens in the business world. Companies grow, compete, and buy out the ones who can't keep pace. Electronics, soft drinks, automobiles, pick a sector, someone has knifed someone right in the ledger, watched the red ink bleed out, and cleaned up for the cost of a tissue or two. It happens.
It's happening in the Internet services arena, where Google's search dominance and Microsoft's money-printing Office and Windows franchises have more perceived value than Yahoo, the web destination with the heaviest traffic. Microsoft watched Yahoo tank down under $19 a share, and pounced.
Only a clever bit of bylaw rewriting bought Yahoo a few more months until Jerry Yang and Yahoo's board have to decide whether their fiduciary duty to shareholders means giving in gracefully to Microsoft, or engaging in a running proxy fight for control of the board.
Kara Swisher at All Things D took the pulse of Yahoo investors, and found some rising blood pressures on the parts of the powerful institutional backers who hold interests in both Yahoo and Microsoft:
And the bottom line from several of them - if Yahoo does not wise up and start seriously kibitzing with Microsoft over its takeover bid sooner than later, then some investors have signaled to the company’s top execs that they would likely back Microsoft if a proxy fight came to pass.
The Wall Street Journal says Microsoft isn't going to budge on the price it offered for Yahoo. With Yahoo suffering a smattering of smaller lawsuits over its initial rejection of Microsoft's offer, which raised Yahoo's stock out of its doldrums, they face even more litigatory unhappiness with delays.
Whispered partnerships with News Corp and AOL haven't materialized for Yahoo. An idea to have Google pick up Yahoo's search business would be like tossing clay pigeons up for antitrust regulators, who would have to do something to keep Google's search market share from hitting 85 percent with a signature on a contract.
Unfortunately for Yang, it comes back to strategies that haven't panned out to investor satisfaction with his company. Those investors want to give Steve Ballmer a chance to slug it out with Google, backed by a Yahoo buy. That future looks more likely each day.
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