updated 06:05 pm EST, Fri February 15, 2008
Yahoo board torn
Yahoo's board of directors is torn between those seeking profit and others who would make an emotional decision to reject Microsoft's buyout attempt, according to sources cited by a report from the New York Post online. Yahoo chief Jerry Yang and several followers are allegedly seeking an alternative to Microsoft's takeover bid of $44.6 million, and could act out of emotion rather than their fiduciary duty to the company's shareholders. "The emotional part of Yang would rather do anything but sell to Microsoft, but he doesn't have the cards to come up with a value-creating, competitive alternative for shareholders," said one source.
"While Yahoo's board has a fiduciary duty to maximize shareholder returns, running the risk of derailing a deal is dangerous to Yahoo shareholders," explained Jefferies analyst Youssef Squali. "We believe Yahoo would have to show substantial re-acceleration in revenue growth and margin expansion for the stock to be back substantially above $30 - something that requires a leap of faith today - if it were to stay independent."
The report cites another source who says Yahoo board members Eric Hippeau of Softbank and Activision chief Robert Kotick are aligned with Yang.
"They're just as emotional as Jerry and as biased against selling to Microsoft as he is," the source said, referring to Hippeau and Kotick.
Yang issued a letter to shareholders on Wednesday this week, claiming that Microsoft's bid significantly undervalues Yahoo.