Silicon Alley Insider - Henry Blodget | July 1, 2008 12:01 AM

Kara Swisher’s been chatting up her Yahoo (YHOO) senior management, investor, and board sources again. So we’re pleased to bring you her latest info and our latest analysis:

• “Yahoo’s board and major investors are talking today about various options for the company, including Yahoo’s receptivity to a sweetened deal with Microsoft and also other ways to pull the asset-rich company out of its stock doldrums.” We imagine so. We think Yahoo would likely accept the sweetened deal with Microsoft Kara laid out a few days back, which Microsoft is reportedly developing at the urging of some big Yahoo investors.

• Yahoo’s in talks with Time Warner again about buying all or part of AOL. Good plan, but probably won’t happen, because Microsoft won’t let it happen. If Microsoft is serious about being big in online ads and doesn’t want to acquire Yahoo, why would it allow Yahoo to buy Platform-A (Advertising.com)? Doesn’t make sense. Microsoft’s bid for AOL will be “whatever Yahoo will pay plus $1 billion. Cash.”

• News Corp. (NWS) and Comcast (CMCSA) are considering bids for Yahoo, and some private equity firms might be as well. We just don’t see News Corp or Comcast forking over $30-$35 billion for Yahoo, which means that–in News Corp’s case–a deal would be some cockamamie MySpace+cash for Yahoo swap, and we hate the idea of Yahoo merging with MySpace. We’ve already discussed the logic private equity firms might bring to the situation, which gets more attractive all the time (See “Yahoo Getting Cheap Enough For LBO Firms To Pounce“). And then, of course, there’s Microsoft. At this point, Yahoo’s shareholders would likely be thrilled about an offer of $24-$25, which would probably be more palatable to Microsoft shareholders, too.

• The board is considering replacing Jerry Yang and Sue Decker, who have lost the confidence of investors and employees. The “nice” way to do this (more likely) would be to allow Jerry to retire to non-executive Chairman. The harsh way (less likely) would be for the board to can him. Sue, meanwhile, is too linked to Jerry to survive. Either way, it seems safe to conclude that Jerry and Sue are just about done. So the next question is, who will they get to run the place? (Meanwhile, don’t you just love this newly agitated Yahoo board? That global pasting they got after they snoozed and hallucinated through the Microsoft deal really must have gotten to them.)

• Maybe Ross Levinsohn (ex News Corp) and/or Jon Miller (ex AOL) will be CEO, at least temporarily. After that, maybe Tim Armstrong from Google (good choice) or Kevin Johnson from Microsoft (strange choice). The good news: These names are better than any we’ve heard thus far. We must confess that we’re just not that excited about handing the company over to Carl Icahn’s buddy Frank Biondi.

• New mandate for the new CEO, whoever he or she is? Fire people. Specifically, make the harsh decisions Jerry has been unwilling to make because he’s too close to the company and too nice a guy. We’re on board with that, at least conceptually. We wouldn’t want to see the company cut too much, because we think there’s some good stuff going on (TechTicker!), but we thought the latest round of cuts could have gone further. We’re also tired of seeing senior Yahoos pursue other opportunities. Yahoo should figure out who’s in and who isn’t and show the latter the door.

In any event, as Kara concludes, a lot will likely happen in the next 30 days. Including, we suspect, a lousy Q2.

source: SAI

This entry was posted on Wednesday, July 2nd, 2008 at 5:10 am and is filed under Microsoft, Yahoo, Yahoo vs Microsoft. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.