Microsoft reserves Yahoo rights

By Kimberly Guest for Microsoft

Johannesburg, 13 Feb 2008

Yahoo's rejection of Microsoft's $44.6 billion bid does not mean the software giant will back down.

Microsoft has reiterated that it reserves the right to pursue all necessary steps to ensure that Yahoo's shareholders "are provided with the opportunity to realise the value inherent in our proposal".

The statement follows an announcement from Yahoo that its board had carefully reviewed Microsoft's unsolicited proposal (now valued at $41.7 billion) and unanimously decided to turn it down.

"The board believes that Microsoft's proposal substantially undervalues Yahoo, including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as our substantial unconsolidated investments," it said.

In a filing with the US Securities and Exchange Commission, Microsoft told shareholders that Yahoo's response did not change its belief in the strategic and financial merits of the proposal.

"It is unfortunate that Yahoo has not embraced our full and fair proposal to combine our companies. Based on conversations with stakeholders of both companies, we are confident that moving forward promptly to consummate a transaction is in the best interests of all parties," it said.

The software giant restated its belief that the offering presented shareholders with "superior value and the opportunity to participate in the upside of the combined company".

"As we have said previously, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo's shareholders are provided with the opportunity to realise the value inherent in our proposal," the filing said.

Yahoo bolsters

Meanwhile, Yahoo issued several statements yesterday around partnerships, acquisitions and new offerings.

In the first, Yahoo announced it had entered into a strategic partnership with T-Mobile. This will see Yahoo's mobile services delivered to T-Mobile's European customers.

"This agreement sets the stage for Yahoo oneSearch to become the exclusive mobile search service for T-Mobile customers beginning at the end of March 2008," it said.

Following this announcement, Yahoo revealed it would unveil its plans for its Yahoo oneConnect service. This service is expected to be available in the second quarter of this year.

"Yahoo oneConnect will be the first mobile product with an open architecture that aggregates communications tools - e-mail, instant messaging, text messaging, and social networks - for a new level of convenience in mobile communications," it said.

Finally, Yahoo announced it had acquired Maven Networks for approximately $160 million.

"Yahoo and Maven will be able to offer publishers a full portfolio of technology and media solutions. Yahoo already has the largest library of professionally produced legally licensed video content and has video advertising relationships with over 75% of the top TV advertisers. Additionally, Yahoo has advertising relationships with a growing number of premium publishers, including eBay, Comcast, Newspaper Consortium, Forbes.com and others," it said.

The company pointed out that Maven's platform is used to manage, distribute and monetise premium online video content for over 30 major media companies, including Fox News, Sony BMG, CBS Sports, Hearst, Gannett, Scripps Networks, and the Financial Times as well as hundreds of their affiliates.

Yahoo's executive VP of global partner solutions, Hilary Schneider, added: "Video is projected to be the fastest growing segment of the online ad market, and Maven will significantly help advance Yahoo's strategy, expanding the video opportunity for publishers and increasing the efficiency and effectiveness for advertisers. This is a big win for publishers, advertisers, consumers and for Yahoo."