Still, the deal ends the prospect that Icahn, who has favored a sale of the company to Microsoft (MSFT), would end up in control of the board. That outcome appeared to be a longshot after Legg Mason Value Trust manager Bill Miller, a major Yahoo shareholder, said last week that he would support management's slate. But apparently Yahoo didn't want to take a chance. The deal comes two months after Icahn started agitating for change at Yahoo in the wake of the collapse of merger talks with Microsoft. Yahoo shares crept up 1% early Monday.

"While I continue to believe that the sale of the whole company or the sale of its Search business in the right transaction must be given full consideration, I share the view that Yahoo!’s valuable collection of assets positions it well to continue expanding its online leadership and enhancing returns to stockholders," Icahn said. "I am happy that the board has agreed in the settlement agreement that any meaningful transaction, including the strategy in dealing with that transaction, will be fully discussed with the entire board before any final decision is made."

The letter says Yahoo would sell itself or its search business to Microsoft, and is considering a spinoff of its Asia assets and return of cash to shareholders. But any deal would have to provide "real value to our stockholders," Yahoo adds. The company also castigates Microsoft and Icahn for what it calls their "conflicting and confusing statements."

Of course, there's been no shortage of confusion in this deal. The latest salvo from Yahoo comes as Microsoft meets with execs at another possible acquisition target, the AOL unit of Fortune's parent, Time Warner (TWX). And as Fortune's Adam Lashinsky pointed out Monday, when Yahoo first made note of its desire to sell at $33, "That’s a price it easily could have gotten in February but one that Microsoft doesn’t appear willing to pay today." Maybe both sides just like all the attention they're getting more than they like the prospect of an actual deal. Yahoo shares, after closing at $22.48 Wednesday, traded as high as $23.80 in premarket action Thursday.

It's now clear that strategy failed and I'm sticking to my prediction when all this began - Yahoo will be sold to Microsoft, who might work with other partners in the deal, for very close to $35 per share.

Microsoft and Yahoo are clearly back at the table and I think it is even clearer than before that a deal will be done.    I'm compelled to say "I told you so" and I'm looking forward to looking up the many foolish stories written last month that suggested the deal was clearly over when it was obvious then and now that this is a deal that is very unlikely to die.

Disclosure:  Long on YHOO

Yahoo stock popped 6% in morning trading on hopes that a deal with Microsoft may be reached.

The government is investigating Google's agreement to provide search advertising for Yahoo, according to the Post report, and will demand documents from Google, Yahoo, and other large Internet and media companies to determine whether the agreement violates antitrust laws.

When the Google deal was announced, Yahoo said that it would undergo a voluntary Justice Department review, and the company contends the request was to be expected. However, the Post, citing sources close to the case, says that the DoJ has launched a formal investigation, which signals that the department may have found some cause for concern. Lawyers tell the paper that the kind of legal requests being issued by the Justice Department in this case are not used for routine matters.

Meanwhile, the WSJ says Microsoft has held discussions with Time Warner (TWX) - the parent company of Fortune.com - and News Corp. (NWS) about working together to effectively carve up Yahoo. In the past, Microsoft has floated the idea of taking Yahoo's search business while, say, News Corp.'s MySpace or Time Warner's AOL would take the remains.

This move by Microsoft is the latest in a takeover battle royale that has revealed shortcomings at both companies and raised questions as to whether Yahoo founder Yang is fit to run the company. Shareholders want an agreement of some sort to be reached, but it is clear that both sides remain far apart on what a merger or acquisition might look like. Microsoft has even gone so far as to say that Yang is obstructing any kind of transaction. Activist investor Carl Icahn agrees, saying that Yahoo's refusal to play ball is hurting shareholders.

What a crazy year it has been for Yahoo! It's almost like a drama... and for the PR in Sunnyvale, this must be a bloody nightmare... First we had Steve laying a siege at Yahoo!'s doors with a $44.6 billion take over in Feb, which Yahoo! declined. It was all over the news for 3 months (poor PR folks....) until Microsoft made a final offer with an ultimatum of a hostile takeover. Yahoo!'s response was still a no... and the response from Yahoo!'s blog was amazingly extreme... At the same time, the rumors of a Google partnership was adrift

Then Carl comes bawling like a baby about how Yahoo! doesn't have the best interest in their shareholders. Luckily, this time, Carl was seen to be the bad guy on the Yahoo!'s blog response. (Hell, that kicked ass!) But throw in that with the lawsuit of the severance program, man, talk about being in the limelight for the wrong reasons... Managing company rep like this is a nightmare...

Now Microsoft and Yahoo! opened up talks again with Yahoo! in my opinion throwing a red herring to Microsoft saying

we remain open to pursuing any transaction which is in the best interest of our stockholders

And Yahoo! shocks the world by saying it has partnered rival Google for online advertising. Man, and what a bunch of mixed responses on the Yahoo! blog, although not as extreme as the rejection of the Microsoft deal... Of course, this is still with the legal side breathing down their necks...

You can read more about it here, here, and here.... (Many more but i'm kindda lazy... lol... )

It's crazy the amount of media attnetion this saga has generated. How does a PR handle this? Not just with the anaylyst, media and other partners. How do you handle the bloggers? It'll be interesting to see how this develops.

Although some might think this is the start of the end for Yahoo!, i gotta admit their internal comms has been fantastic. Don't know if I'm allowed to say much about it but i think in this day and age, to rally a battle cry based on trust is hard. But if Yahoo! can get through this, it's gonna make an awesome case study for managing rep! (I'm so gonna do that course next sem!)

Social networking sites

Facebook has surpassed MySpace!!! Well, most ppl seem excited about it, and it just shows how fast Facebook is growing...

I think Sarah presents a good look into the future of social networking sites. The important takeaway is that social networking sites provide another medium. Although the nice market is gone and making way for the masses as more ppl join social networking sites, this medium is a good consideration for spreading your message should you do a integrated media campaign.

However, as more ppl join social networking sites, masses will demand niches again. What do i mean? It seems to be a vicious cycle. When a niche turns mass, masses will break out and go into niches again. Facebook was for college students, now its for the masses. Throw in the Google's open social, (which i think that post didn't take into consideration) and social networking sites aren't just going to be popular cause of fancy widgets and apps. It'll boil back down to the ppl and the 'long tail' theory will prevail... who knows though where we'll go...

Anyways, these 2 topics just kept coming up in my blog and i tot i share m y2 cents worth of what i tot about them.... Have a good weekend! Citizen journalism is interesting!! Stay tuned!!

That means, as The Wall Street Journal reported earlier, that Microsoft isn't willing any longer to buy the Sunnyvale, Calif., company for the $33 a share it offered before talks broke up more than a month ago. The news deals a setback to billionaire investor Carl Icahn's effort to force the sides into a merger, which started after Microsoft stepped away from the table the first time, and could pave the way for a search tie-up between Yahoo and rival Google (GOOG). Yahoo had no comment on that, though, stating instead that management rather generically "remains focused on maximizing value for stockholders by continuing to execute on its strategy of being the 'starting point' for the most consumers on the Internet and a 'must buy' for advertisers."

Microsoft later confirmed that the companies weren't able to reach an agreement, though it says it remains open to a deal, however far-fetched that now appears. "In the weeks since Microsoft withdrew its offer to acquire Yahoo, the two companies have continued to discuss an alternative transaction that Microsoft believes would have delivered in excess of $33 per share to the Yahoo! shareholders," Microsoft said. "As stated on May 3rd and reiterated on May 18th Microsoft was not interested in rebidding for all of Yahoo. Our alternative transaction remains available for discussion."

Yahoo investors aren't liking the news, because it seems to confirm Microsoft deal hopes are dead, once and for all. Shares of Yahoo tumbled 10% in heavy trading Thursday afternoon to $23.52, while Microsoft advanced 4% to $28.24.

"Carl Icahn is a smart guy," Pickens said Tuesday in an interview on CBNC. "He does great things for shareholders and now I'm a shareholder. When I saw what he did, I jumped in behind him."

Pickens is also bullish on oil prices. He told CNBC he expects the price of crude oil, up 73% over the past year at a record $129 a barrel on Tuesday, to hit $150 this year. Of course, the call suits him: Pickens said his BP Capital hedge fund, which has more than $4 billion under management, was long in both crude oil and natural gas, Reuters reports. Luckily, the end may be in sight: Pickens' upcoming book - due out in September and titled, believe it or not, The First Billion Is the Hardest - "lays out a comprehensive solution" to the nation's rising oil-import tab, his Web site reports. 

Icahn last week said he has taken a big stake in Yahoo and sent the company's board a letter questioning its failure to bring Microsoft's previous $33-a-share bid to shareholders. Joining Icahn in wagering that Yahoo shares will head higher is hedge fund manager John Paulson, whose Paulson & Co. took a 50 million-share stake in Yahoo in the first quarter. Coming weeks will show whether restive shareholders can apply enough pressure to make Yahoo take action.

Update: Paulson will support Icahn's effort to unseat the Yahoo board, Bloomberg reports. "We intend to support the Icahn slate but sincerely hope that Yahoo will negotiate an agreement with Microsoft, thereby making a proxy fight unnecessary,'' Paulson said in a statement emailed to Bloomberg. "We were disappointed that Yahoo failed to reach an agreement with Microsoft."

Others on Icahn's board slate - besides himself and standbys such as his right-hand man Keith Meister and former Viacom (VIA) chief Frank Biondi - include New Line Cinema chief Robert Shaye, investors John Chapple, Brian Posner and Edward Meyer, Michael Dell's brother Adam and Harvard Law School professor Lucian Bebchuck.

But Cuban's name stands out, because of his history with Yahoo and his success in building businesses on the Internet. On Thursday, for instance, he has a post up on his Blogmaverick.com site musing on how to take down Google (GOOG). While that's a question Yahoo execs are presumably tackling, the last few months have clearly left some shareholders with the sense that management is more focused on saving its own skin - which is why Icahn's spoiling for a fight.

Icahn isn't allowing his perplexity to stand in the way of action, however. He says he owns 59 million shares, has assembled a 10-member alternative board slate and has asked the Federal Trade Commission for permission to buy as much as $2.5 billion worth of stock. Icahn's current stake is worth $1.6 billion at Thursday's price of $27.45 a Yahoo share.

"During the past week, a number of shareholders have asked me to lead a proxy fight to attempt to remove the current board and to establish a new board which would attempt to negotiate a successful merger with Microsoft, something that in my opinion the current board has completely botched," he writes in a letter to shareholders. "I believe that a combination between Microsoft and Yahoo is by far the most sensible path for both companies."

The backlash against Jerry Yang continued after Yahoo publically admitted it would have been willing to sell to Microsoft below $37 a share. Portfolio manager Gordon Crawford, whose Capital Research owns over 6% of Yahoo, expressed out-and-out disgust at Mr. Yang for what he characterized in the WSJ as "overplaying a weak hand." (Cynopsis 5/7, http://www.latimes.com/business/la-fi-yahoo7-2008may07,0,264309.story 5/7)

Yahoo expects to sell out 50% of its video ad inventory during its "upfront" meetings with advertisers this year, according to Silicon Alley Insider including inventory on partner sites such as Comcast, Forbes, MobiTV and MLB.com. That's up from 30% presales achieved last year. (Cynopsis 5/7)

Microsoft won't be pursuing tie-ups or takeovers to replace its failed Yahoo bid, says chairman Bill Gates. Microsoft dropped its three-month pursuit of Yahoo on Saturday. The software giant had "put a lot of effort into talking to Yahoo" and is now "focused on its independent strategy." (Iwantmedia 5/7, http://www.pcworld.com/businesscenter/article/145574/microsoft_wont_pursue_other_partnerships_says_gates.html 5/7)

If MySpace were to lose its top spot among social networks, it would have a long way to fall. Though U.S. visits to the powerhouse are down 5% since last year, the News Corp. site still commands nearly 74% of the social networking market, according to Hitwise.  (Iwantmedia 5/7, http://www.webpronews.com/topnews/2008/05/06/myspace-facebook-still-on-top 5/6)

Web video startups like MyDamnChannel.com are vying for attention at Digital Hollywood, the annual conference in Los Angeles. However, one observer notes that a destination site may be "antithetical to the nature of the Web, where the point is to bounce around." (Iwantmedia 5/7, http://www.usatoday.com/tech/webguide/internetlife/2008-05-06-digital-hollywood_N.htm 5/6)

Coolspotters, a new site from Connecticut based startup Fanzter, will launch later today. It’s an eye-candy celebrity-focused site that shows users the products celebrities are wearing in various photos. Users can then talk about and, of course, purchase those items. (http://www.techcrunch.com/2008/05/07/want-to-dress-just-like-celebrities-youll-like-coolspotters 5/7)

Pope Benedict will text message thousands of young Catholics on their mobile phones during World Youth Day in Sydney in July, hoping going digital will help him connect better with younger audiences. The church also will set up a social networking site akin to a "Catholic Facebook." (Iwantmedia 5/7, http://www.reuters.com/article/internetNews/idUSSYD19071020080507 5/7)

Let’s call it a battle of the religious social networking sites. God’s Social Network launched late last week allowing users to meet other Christians,  post prayers, post blessings, upload/download sermons, get inspiration, etc.  Just to refresh your memory, Godtube launched in August of ’07 and has peaked at just under a million users as of this posting.

Cartoon Network is inviting kids to play along with Ben 10 using a new online tool allowing web savvy kids to construct their own games around the show. Prepackaged Ben 10 games currently dominate the top 10 most popular games at CartoonNetwork.com, according to the network, holding five of the top ten spots. (Cynopsis 5/7)

MSNBC.com introduced a new online toolbox called NewsWare to serve as a storehouse and incubator for in house and user generated apps and widgets. A selection of customizable news tickers, visualization tools and the Facebook app NewsBlaster are up there now. (Cynopsis 5/7)

Entertainment Rights inked deals with YouTube, Joost and Babelgum to provide all three digital platforms with a selection of its kid/family-targeted animated content with the launch of the Retro Heroes channel.  Under the deal, YouTube debuts a version of Retro Heroes featuring short-form webisodes from ER's library, while Joost and Babelgum will also feature selected long-form programming.  Entertainment Rights programming includes He-Man, She-Ra, Felix the Cat, Rocky & Bullwinkle, The Archies, Fat Albert and Casper the Friendly Ghost. (Cynopsis 5/7)

CBS Radio will launch an Internet radio network in June that will provide access to all 140 CBS stations, as well as the AOL Radio network, through a single media player. Later in the summer, CBS will introduce Play.it, an online portal allowing users to create their own radio stations. (Iwantmedia 5/7, http://www.crainsnewyork.com/apps/pbcs.dll/article?AID=/20080506/FREE/607707191/1084 5/6)

Accenture's annual Global Media Content Survey indicated media executives are determined to focus on new platforms to drive growth in advertising, film, music, publishing, radio, the internet, videogames and television. When asked to identify the largest drivers of revenue growth over the next five years, two-thirds (66%) of respondents cited new platforms or new ways of delivering content. And nearly two-thirds (63%) of respondents said they will pursue a "multi-screen" distribution strategy, which includes television, online and mobile delivery. (Cynopsis 5/7)

"This past quarter was among the most difficult we have ever faced and we are disappointed with our results," said CEO Mark Fetting. "We remain a fundamentally strong firm today, but we know we have work to do."

Indeed, assets under management fell 5% from a year ago to $950 billion, as the company's portfolio suffered market losses of $28 billion and customer cash outflows of $19 billion.  Equity outflows were $17 billion and fixed income outflows were $7 billion for the quarter, while liquidity inflows totaled $5 billion.

"We have major managers who are performing very well in a tough investment climate, and we are seeing growth outside the U.S.," Fetting said, "but we know that we need our U.S. equity managers to return to form, and this is a top priority."

Among the managers who need to return to form is Legg Mason Value Trust manager Bill Miller, whose fund lost 20% of its value in the first quarter after bad bets on struggling financial firms such as Bear Stearns (BSC) and Countrywide (CFC). The losses haven't curbed Miller's appetite for publicity, however. A day after he called on Yahoo (YHOO) to buy back stock, he told Bloomberg in an interview that he expects Microsoft (MSFT) to come back to the table with a new offer for the Internet giant - though perhaps not for a while. "If I'm sitting in their shoes, I'll go away and see what happens," Miller said of Microsoft. "I can come back and the worst case is, I'll pay six months more of my free cash flow.'' 

Miller indicates in an interview with The New York Times that he's surprised by Microsoft's decision to walk away from Yahoo, and eager to see Yahoo do something to justify shareholders' patience. He wants to see CEO Jerry Yang turn some of Yahoo's cash holdings toward a share buyback, he says in the interview. "It would be almost incoherent not to do so," Miller said. "You can’t maintain that $33 undervalues your company, have your stock trade below that, and not buy back stock."

Despite the Yahoo selloff and Monday's decline in another big Legg Mason holding, Countrywide (CFC), Miller's doing better in the second quarter. He noted two weeks ago in his first-quarter letter to Value Trust shareholders that the fund was ahead of the S&P, and a look at Legg Mason's biggest holdings as of March 31 shows that only two of his top 10 stocks - UnitedHealth (UNH) and General Electric (GE) - are down this quarter. "I think we will do better from here on," Miller wrote on April 23, "and that by far the worst is behind us." So far, so good.

Microsoft chief Steve Ballmer questioned Yahoo's decision to demand more money, noting that Microsoft's revised proposal would have given Yahoo shareholders a 70% premium to their shares' trading price as of Jan. 31, the day before Microsoft floored tech watchers by unveiling its $44.6 billion bid. "I still believe even today that our offer remains the only alternative put forward that provides your stockholders full and fair value for their shares," Ballmer wrote in a letter to Yahoo CEO Jerry Yang. "By failing to reach an agreement with us, you and your stockholders have left significant value on the table."

Ballmer also criticized Yahoo's decision to consider outsourcing some of its search business to rival Google (GOOG), and suggested that only this week did he appreciate the lengths Yahoo would travel to avoid a Microsoft deal. "I feel that our discussions this week have been particularly useful, providing me for the first time with real clarity on what is and is not possible," Ballmer said. "After giving this week's conversations further thought, it is clear to me that it is not sensible for Microsoft to take our offer directly to your shareholders."

By walking away, Microsoft will put pressure on Yahoo to show its shareholders why they should stick around to watch Yahoo struggle to keep pace with Google. While Yahoo says it remains "steadfast in our belief that Microsoft’s offer undervalued the company, and we are pleased that so many of our shareholders joined us in expressing that view," the question now is how understanding Yahoo shareholders will be on Monday, when the company's stock opens for trading without the Microsoft proposal off the table.

Under the possible Yahoo-AOL deal, Time Warner would put some cash into Yahoo and get a 20% stake in the combined Yahoo-AOL. Yahoo would then buy back billions of dollars in stock in a bid to support its share price, which is likely to fall if Microsoft's $31-a-share bid is pulled. The deal comes just a day after Yahoo unveiled a deal to test out a combination of its search ad business with Google's (GOOG).  

But Microsoft (MSFT), which has been pursuing Yahoo for more than two months, isn't standing still either: The New York Times reports it is talking with Myspace owner News Corp. (NWS) about a joint bid for Yahoo. Some investors expect the AOL talks to only strengthen Microsoft's resolve to complete the deal - and to lead to the higher price Yahoo chief Jerry Yang has been demanding.

"Yahoo is a strategic necessity for Microsoft," Gamco Investors portfolio manager Larry Haverty told Bloomberg television. "Microsoft cannot allow this deal to happen," he added, referring to a possible AOL-Yahoo tie-up. He expects Microsoft to raise its bid and says he believes a fair value for Yahoo to Microsoft is $35 a share. The AOL talks, he concludes, have "raised the floor" on Yahoo stock. Yahoo shares rose modestly in early trading Thursday, rising 42 cents to $28.19.

The comments, which suggest Microsoft is considering walking away should Yahoo fail to agree to terms, come on the heels of reports that executives at the two tech titans met this week but failed to reach an agreement on the cash-and-stock offer. Microsoft's worried that a slowing economy and changes in Yahoo's business stand to lower its value, Reuters reports.

Yahoo's top brass is to meet Monday to discuss the situation, CNBC reports. It seems unlikely that either side would let the deal collapse at this point, given Microsoft's strategic challenges in competing with Google (GOOG) and the apparent failure of Yahoo to attract any rival bidders. But Friday's late action shows that Yahoo shareholders, who have seen the value of their investment jump 48% since Microsoft unveiled its offer on Feb. 1, are starting to get nervous.

Earlier, The New York Times reported that Yahoo was considering extending the board-nomination deadline in a bid to avoid capitulating to Microsoft. But that's not how Yahoo sees it. The new deadline falls a week after the company's annual meeting, whose date has yet to be set - giving Yahoo more time to seek alternatives, as they say, to maximize shareholder value. Everyone, the company adds, should be happy with this arrangement.

"As the company has not yet announced the date of this year's annual meeting," Yahoo said, "the amendment will give stockholders who want to nominate one or more directors, including Microsoft Corporation, more time to do so." Microsoft will surely be grateful for the gesture.

Citando pessoas com conhecimento do assunto, o site do Times publicou que a Microsoft, que pode elevar a oferta composta por dinheiro e ações e avaliada originalmente em 44,6 bilhões de dólares, tentará nomear um grupo de diretores até 13 de março se o conselho do Yahoo não aceitar negociar.

Um porta-voz da Microsoft informou que a companhia sempre afirmou que se reservou direito de exercer todas as opções, mas não comentou especificamente sobre a informação do Dealbook.

Uma fonte próxima do assunto disse à Reuters que a compra hostil de ações custará de 20 milhões a 30 milhões de dólares. Apesar disso, a fonte disse que não tem conhecimento se a companhia tomou a decisão de promover a estratégia.

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