Journalists are starting to discuss what financial analysts realized earlier this month: 90 percent institutional owners of Yahoo stock are also Microsoft shareholders. See this CNET article for details.
Fund managers don’t like to bid against themselves
This places companies like T. Rowe Price and the Capital Group in an awkward position. Yahoo CEO Jerry Yang has vowed to fight the Microsoft offer, even though a Microsoft takeover makes some sense for both companies. If Yahoo is seriously negotiating with News Corporation and AOL, as this report indicates, Yahoo CXOs must be quite desperate to avoid assimilation into the redmond hive mind.
An institution that holds YHOO and MSFT must balance its risk
Institutional fund managers may want an offer of US$40 per share for their Yahoo stock, but what happens if Microsoft’s stock price stumbles? These fund managers might consider a US$35 offer if it means a quick resolution to this battle. A proxy fight might take months to settle, and would send Yahoo into a tailspin as employees defect and CXOs waste time defending their firm.
On Thursday, the New York Times commented on this blog article by Bradley Horowitz, who announced on his blog that he was leaving Yahoo. Horowitz had been the VP of Yahoo’s Advanced Development Division, and his farewell message includes a few “ADD” puns. He wasn’t laid off – he simply left Yahoo to take a new position at Google.
The endgame plays out
The remaining Yahoo CXOs may not be ready to admit defeat, but it is clear that Yahoo management has less control over the company’s fate with each passing day.
See my earlier posts on the Microsoft-Yahoo debacle:
- 7 February 2008: Microsoft’s rocket ship
- 4 February 2008: Microsoft acquisition of Yahoo faces roadblocks
- 1 February 2008: Microsoft makes offer for Yahoo
