Microsoft still has the hots for Yahoo and now wants to enlist partners to win the target's search business. Yes, folks the Microhoo saga continues and boy are these two c
razy kids awkward.
According to The Wall Street Journal, Microsoft is still trying to airlift the search business out of Yahoo and is enlisting Time Warner and News Corp. to make a run at Yahoo. The general idea is to break up Yahoo and pair non-search assets with MySpace or AOL. But the real meat of the story is the narrative behind Microsoft's courtship of Yahoo and how executives from these companies just couldn't get it right. Microsoft is hell-bent on buying Yahoo. Yahoo balks. Microsoft gets cold feet. Yahoo CEO Jerry Yang's face hangs when Microsoft walks. Then this awkward pair hooks up later to no avail. These two companies are flighty when it comes to deal making.
In any case there are more than a few morsels to ponder in the Journal story, which if I were to guess was mostly told from Yahoo's side of the fence. After all, Yahoo made its case to shareholders on Monday and rolled out a timeline of events designed to show that Microsoft was the flighty party. Yahoo has been on a PR offensive about the Microsoft deal--a move that comes as the Washington Post reports that the Department of Justice is sniffing around the company's search advertising deal with Google. Both parties are telling selective versions of the story.
Here's Yahoo's timeline of events, which as Henry Blodget points out omitted a few items (namely that Yahoo would have sold at $33 to $34 initially). Click to enlarge chart.
Among the key nuggets of this Journal must read:
Yahoo "needed to know that they (Microsoft) would go to the mat to get the deal done."
Ballmer blamed the investment bankers for screwing the deal up.
Ballmer brought a huge spreadsheet (Excel I presume) to question Yang about Yahoo's value.
Yahoo viewed Ballmer's vision as "crude."
Ballmer asked Yang for a price to seal the deal. Yang said that his posse at a meeting wasn't authorized to talk about price.
At a later meeting where the deal officially unraveled Yang gave Ballmer a price of $37 a share, but said $38 would be better. Ballmer calls a Microsoft exec during a break and says a deal won't be done. Later that day Ballmer calls Yang and says "we're done" and explains that there's no deal. Yang's face fell.