BlogForward : Money

The game of will they/won’t they acquire Yahoo continues, as Microsoft CEO Steve Ballmer bragged to the media about having money to play with means a deal with Yahoo isn’t a necessity.Though plenty of high-powered wealthy types want to see Microsoft back at the table with Yahoo, to talk about more than just a search and contextual ad deal, Ballmer isn’t ready to play that game publicly yet.

Microsoft’s CEO said in Reuters that going after Yahoo never actually meant going after Yahoo. Wait, what?

“Yahoo was never the strategy we were pursuing, it was a way to accelerate our online advertising business,” he told a packed hall at a technology conference in Moscow.

“We will spend money on some acquisitions. You can do a whole lot of things with 50 billion dollars,” he said.
Some tech pundits suggested Microsoft could acquire every interesting startup in Silicon Valley with that much cash and still have money left over for other ventures. A Facebook acquisition persists as a Microsoft rumor, given the relationship between the two companies at present.

However, Microsoft may fork over some of that cash to Yahoo anyway, if for no other reason than to keep Yahoo from making a search and ad deal with Google. Such a result, barring antitrust objections you can be certain Microsoft would raise, presents the possibility of Google padding its lead in search and leaving Microsoft far in the distance.

Amazon.com launched its response to New York’s attempt to force it to collect state sales taxes by filing a lawsuit.The entirely unexpected response by online retailer Amazon.com to the state of New York’s decision to treat it as having a local presence happened in New York State Supreme Court in Manhattan. New York deemed Amazon’s online affiliates with residences in New York as being the same as having a physical presence in the state.

Such a situation means Amazon has to collect state sales taxes, a potentially lucrative action for New York. Amazon wants no part of such a compulsion and decided to fight back.

The New York Times said New York’s move could net it $50 million. Residents are required to pay such taxes under law anyway; it’s likely most don’t, which led to the legislation making Amazon and similar businesses a tax collector.

Amazon will challenge the Constitutionality of the law on 14th Amendment grounds. Specifically, Amazon wants the court to see the law as a violation of equal protection described by that Amendment, since legislators refer to the law as the ‘Amazon Tax’.

Also, Amazon will argue affiliates are not agents of the company, as the new law contends. The Times said Amazon considers affiliates an advertising outlet, for which it pays commissions as part of the usual course of business.

New York won’t give up an eight-digit payday without a fight. The case could wrap up quickly if the court agrees with Amazon’s 14th Amendment claim, something we expect Amazon to push heavily in its testimony.

The board of directors faces a ticking clock at Yahoo, as a week has passed since Microsoft CEO Steve Ballmer promised Yahoo they needed to make a decision on Microsoft’s takeover bid in 3 weeks.
The ultimatum proved the catalyst for a series of events. First came the expected Yahoo rejection of the idea, albeit with [...]

National security concerns looked like an insurmountable obstacle, causing Bain Capital and China’s Huawei Technologies to back off a $2.2 billion bid for 3Com.3Com aimed at the exit ramp, but ended up slamming into a concrete abutment in the form of the Committee on Foreign Investment in the United States (CFIUS), an office under the Treasury Department. CFIUS determines if mergers will threaten national security by placing sensitive organizations under foreign control.

The networking company accepted the Bain proposal in September 2007. Huawei would have been part of the deal, owning up to a fifth of 3Com based on other provisions.

China’s government controls Huawei, however. That situation raised red flags with CFIUS, as Bloomberg noted:

The Committee on Foreign Investment in the U.S. had planned to block the deal, which would have given Huawei Technologies Co. 16.5 percent of 3Com, Bain said today in a statement. Some U.S. lawmakers objected to the bid because it would have put 3Com’s anti-hacking technology, used by the Pentagon, in Chinese hands.
Bain walked away from a fight with CFIUS, leaving an angered 3Com seeking an agreed-upon $66 million termination fee from Bain:

3Com believes that the reasons cited in Bain Capital’s press release are not grounds for termination of the agreement.

3Com will continue to fulfill its obligations under the terms of the existing merger agreement while it pursues the $66 million termination fee payable under the merger agreement.

3Com acknowledges that Bain Capital did submit non-binding, confidential proposals to the 3Com Board of Directors, however the Board determined that such proposals were not in the best interest of shareholders.
3Com holds its shareholder meeting today at its Marlborough, MA, headquarters. Stockholders will likely want to know how the deal, which would have expanded 3Com’s successful existing reach into the burgeoning Chinese market, failed to coalesce.

The WSJ is reporting that execs from Microsoft met with Yahoo in an effort to convince the company to accept their unsolicited bid.
“he meeting, the first since Microsoft made its unsolicited offer Jan. 31, marks a breakthrough in communication between the two camps following Yahoos rejection of Microsofts offer last month.

Still, the meeting wasnt a negotiation, and no bankers attended, these people said. The session was intended to allow Microsoft to present its vision of a combined company, and Yahoo executives mostly listened, one of the people said. No further talks have been scheduled.”

Does this mean Yahoo is getting ready to accept the offer from Microsoft? Dont hold your breath. Yahoo is holding similar meetings with News Corp, Time Warner, and Dow Jones and the WSJ cant even confirm if Yahoos Jerry Yang or Microsofts Steve Ballmer were in attendance.

What do you think? Is this a sign Yahoos ready to consider Microsofts bid?

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Tag: Microsoft, Yahoo bid

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