Yahoo! Execs in Alternate Universe

5/5 - "Did Microsoft (MSFT) really walk away from the Yahoo (YHOO) deal? Or was the weekend's behavior just yet another negotiating tactic? Or, more importantly, if it wasn't intended to be a negotiating tactic, will it become one, as Yahoo's shareholder rebellion grows?"

"It doesn't seem inconceivable that, over the next few days, Yahoo shareholders will effectively insist that negotiations be re-opened--in which case, Microsoft will have "gone hostile" without going hostile, just by walking away. And if negotiations are reopened as a result of shareholder unrest, of course, the advantage will have shifted overwhelmingly to Microsoft."

5/5 - "I was convinced that Microsoft (NASDAQ: MSFT) would go hostile on Yahoo! (NASDAQ: YHOO). Microsoft is known as a tough player, right? And Yahoo seems to be a good strategic fit."

"...if you look at Oracle (NASDAQ: ORCL), you will see that hostile takeovers do work – even though they can be complicated and protracted (especially in the case of PeopleSoft transaction). With a hostile deal, though, there is no question about who is in control, which makes it easier to slash costs.

In other words, I'm a bit perplexed. Is Microsoft getting too cautious? Has it lost its killer instinct?

Now, it's still possible that Microsoft will come back with a hostile bid as Yahoo shares collapse; this is what Oracle did in its pursuit of BEA...It would certainly be a Machiavellian move and kind of clever. More importantly, it would show the Microsoft hasn't gone soft."

5/4 - "What got Microsoft Corp. (NASDAQ: MSFT) started on its Yahoo! (NASDAQ: YHOO) takeover proposal was a fairly boneheaded idea that it could turn its money-losing online advertising unit -- known as the Online Services Business (OSB) which in the last nine months lost $775 million -- into a profitable contender to Google Inc. (NASDAQ: GOOG).

"At this point, the only thing that keeps Microsoft "investing" in OSB is pure ego. It can't stand the idea that another company -- Google -- has come along and created a new business that leaves Microsoft out of the limelight. But Microsoft has yet to prove that it can create a process that outperforms Google at giving advertisers better returns on their online advertising investment. So Microsoft has been steadily losing share.

Why it thought a combination with Yahoo would help is hard for me to grasp. If I owned Microsoft shares, I'd feel that there was no way that I would ever get a return on OSB and therefore it's time to close it. "

5/5 - "Piper Jaffray notes that while Microsoft officially pulled the bid to acquire Yahoo!, there are still many pieces and players that need to sort out before the dust truly settles. First, there is the obvious possibility that Yahoo! and Microsoft do hold further talks to potentially reach an agreement. As detailed in their 5/2 industry note on the proposed deal, Piper continues to believe that Microsoft needs help to create a formidable online advertising presence and believe Yahoo! still makes the most sense as an acquisition...Maintains Neutral on YHOO stock with tgt lowered to $23 from $31."

"ThinkPanmure (what an earth of a name is this?! What happened to good old ThinkEquity?) notes that in what may likely to go down as one of the more destructive decisions for shareholder value in the history of Internet stocks, Yahoo!'s management and Board rejected Microsoft's final offer of $33 per share...Rating is lowered to Sell (from Acc) with tgt going to $20 from $31."

"Citigroup is lowering their rating to Sell saying YHOO stock will go down materially today...In Citi's opinion, YHOO has gone from an Event Stock to a Scenario Stock. They simplify to Three Scenarios. 1) Back To Business As Usual: With '08 remaining another major investment year and the company likely a sustainable low-double-digit EBITDA grower warranting a Media Multiple - 45% probability/$22 Stock = 8X '09 EBITDA; 2) Major Strategic Alternative: Google Search Outsourcing, AOL or MySpace Partnership, Asia Asset Sale & Substantial Buyback - 40% probability/$26 Stock - biggest upside is likely Google Outsource, which could add $1B+ in cashflow worth $6 per share to YHOO; & 3) MSFT-YHOO Deal Happens: 7% solution found and deal happens at $35 -- 15% probability/$35 Stock. Weight average these and YHOO now worth $26. Hence the Sell."

"Notablecalls: I suspect MSFT is playing hardball with YHOO here. Yahoo will get sold to MSFT in the next 6 months as major holders like Legg Mason's Bill Miller will push the deal through. Buying YHOO @ $22 leaves ample upside w/ no significant downside risk. An ideal trade many hedgies will put on as soon as today. My gut tells me YHOO will trade over $23 level today...I'm a buyer here around $22 and change."

5/4 - "Yahoo (YHOO) CEO Jerry Yang will be slammed in the media over the next coming weeks. In my opinion, the criticism will be well founded. It is very tough to make an argument that Mr. Yang is acting in the best interest of his shareholders in rejecting Microsoft's (MSFT) buyout offer."

"The MSFT/YHOO situation triggers deeper questions as to corporate governance in America. More specifically, what can regulators of U.S. companies enact that will allow shareholders to actually become owners of the companies."

"Currently, I don’t believe that CEOs and board of directors are personally accountable. In many cases, management has nothing to lose if bad decisions are made. If Jerry Yang was personally liable to YHOO shareholders for lost shareholder value, would he make the same decisions he is making now?"