How to Say NO

Yahoo Chief Explains Rejection of Microsoft Bid
by: Jerry Liao

By now, most of you have heard that the Yahoo’s Board of Directors has rejected the offer of Microsoft. But that doesn’t mean that Yahoo is already out of the woods – not yet. After the announcement, other companies have send feelers to talk to Yahoo for a possible tie up or acquisition. As to who will company choose is still a question waiting for an answer.

But why did Yahoo rejected the Microsoft offer? It can be explain by a letter sent out a letter to the company’s shareholders by Yahoo’s chief executive Jerry Yang :

“The Board of Directors, after a careful review by Yahoo!’s management along with our financial and legal advisors, believes that Microsoft’s proposal substantially undervalues Yahoo! and is not in the best interests of our stockholders.

Most importantly, I want you to know that your Board is continuously evaluating all of Yahoo!’s strategic options in the context of the rapidly evolving industry environment, and we remain committed to pursuing initiatives that maximize value for all our stockholders.

Yahoo!’s assets – our brand and its audience, our relationships with marketers, our financial strength, our technology, and our strategic investments are the core of our value and our leadership position in the industry.

We have a huge market opportunity – and are uniquely positioned to capitalize on it. The global online advertising market is projected to grow from $45 billion in 2007 to $75 billion in 2010. And we are moving quickly to take advantage of what we see as a unique window of time in the growth – and evolution – of this market to build market share and to create value for stockholders.

We are executing our strategy – and making headway. We have taken significant but disciplined steps to refocus our business on our objectives to become the starting point for the most consumers and the must buy for the most advertisers and enhance Yahoo!’s long-term performance.

Starting Point Objective: Our goal is to grow visits to key Yahoo! starting points and properties, where users enter the Internet, by 15% per year over the next several years. We are the most visited site in the U.S., and we continue to grow – we experienced double-digit growth in U.S. users in 2007 on our Yahoo.com home page.

In addition to traditional starting points on the PC – including our home pages, mail, My Yahoo! and search, we are particularly excited about our growth prospects in mobile, the biggest emerging starting point in the world. Globally, there are twice as many users of mobile devices as users of personal computers, and mobile advertising is projected to grow substantially in the coming years. We have an important competitive edge as the number one mobile destination in the U.S., and we are building a superior mobile experience for Yahoo! users globally so we can further capitalize on this opportunity.

Must Buy Objective: We are working to make online advertising easier and more effective for marketers, opening up new ways for them to connect with consumers. We’ve successfully completed the global roll-out of our search marketing system, Panama, which improved the search experience for our users, boosted returns for our advertisers, and increased revenue for Yahoo!. Last year, we bought Right Media, an exchange that enables buyers and sellers of online advertising to come together. Another 2007 acquisition, Blue Lithium, brings us best-in-class performance marketing capabilities, complementing Yahoo!’s existing offerings for advertisers. We also integrated our search advertising and display advertising sales forces, creating a one-stop shop for all of advertisers’ online marketing needs. All of these – Panama, Right Media, Blue Lithium, and our combined sales efforts – complement and enhance Yahoo!’s existing capabilities and will make it easier for advertisers and online publishers to buy and sell advertising online.

We are also creating a unique and valuable network of premium websites to serve our advertisers. We are making it easier for our advertisers to provide interesting and relevant offers to our users by combining advertising space on Yahoo!’s owned sites with that from a growing group of premium partners including eBay, Comcast, AT&T, a consortium of over 600 newspapers and many others.

As we reach more users both on our own websites and on the sites of our premium partners, and better monetize the ad space on Yahoo!’s owned and operated sites, we are striving to increase the percentage of total online advertising demand we touch from an estimated 15% in 2007 to 20% over the next several years.

These key strategies will be enhanced by our adoption of new, more open technology platforms that will encourage the development of new applications and the involvement of third-party developers – and help enrich the user experience. We have accomplished a great deal in a very short time – and we are focused on building this momentum.

Today, Yahoo! is a faster-moving, better-organized, more nimble company than it was just a few months ago. We have redeployed our resources to drive Yahoo!’s key strategic priorities – taking important steps to streamline our organization and close down or scale back businesses that don’t support these critical growth initiatives. We are well on our way to transforming the experiences of Yahoo!’s users, advertisers, publishers and developers – an important shift that is at the heart of our plan to create stockholder value.”

What happens to Yahoo! will be entirely in their hands. They have to accept the fact that they have relinguished their leadership to Google and they are now in trouble – operationally and financially. Choosing the right partner is very critical. Yahoo! should select a partner that can compliment or enhance their offering rather than just to add more visitors to either one of them (partner).

I wish Yahoo! all the best – because I don’t want Yahoo to turn to HooHoo!

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