We already know the IPO market is nonexistent, but what about M&A? A report put out Tuesday by media-related investment banking firm the Jordan, Edmiston Group Inc. indicates that things aren't so bad in the online media and technology sector and the marketing and interactive services sector, though deal sizes have declined significantly.
According to the report, the total number of transactions for media, information, marketing services and related technologies increased to 404 in the first half of 2008 versus 397 in 2007. Deal value, however, was down dramatically to $23.2 billion from $65.8 billion in 2007.
The decline was most noticeable in $1 billion-plus transactions. There were four in the first half of 2008, accounting for $9.6 billion in value, versus 11 deals worth $46.3 billion in the same period last year, though a sizable amount of that came from Thomson Corp.'s $18 billion acquisition of Reuters.
Yahoo! Inc. (NASDAQ: YHOO) shares fell below the $20 mark in early trading on Tuesday and are approaching the stock's closing price of $19.18 reached on Jan. 31. That's the session before Microsoft Corp. (NASDAQ: MSFT) publicly came out with its $31 a share, $44.6 billion offer to acquire Yahoo! in a saga that is now in its sixth month.
The $20 threshold is significant, if mostly psychologically. Many analysts expected Yahoo! shares to find support ahead of that level on speculation that such a price makes the company vulnerable to another acquisition offer from a strategic or financial buyer. Yahoo! was in an "anyone-but-Microsoft" mode after the original offer and reportedly had talks with the likes of News Corp. (NYSE: NWS) and Time-Warner Inc. (NYSE: TWX), whcih could be interested in some kind of deal now that Yahoo! is cheaper. Indeed, there's talk Yahoo! may already be looking to revive talks with Time Warner-owned AOL L about combining the operations.
It didn't have to be this way. Had Yahoo! negotiated with Microsoft rather than fighting a deal at all costs, shareholders wouldn't be looking at a stock that is now 40% below Microsoft's reported last offer of $33 a share.
Yahoo! Inc.'s (NASDAQ: YHOO) latest reorganization plan that consolidates the company in three divisions has so far failed to wow investors. The reorganization aims to centralize product development and deliver a more efficient global decision-making process.
Jefferies & Co. Inc. analyst Youssef Squali weighs in on the plan today, writing in a research note that its success "is far from certain," especially given that it's likely to result in more departures of high-level Yahoo! execs. But Squalli does see potential benefits from the plan, noting that it will simplify global communication and processes, improve agility in terms of global product launches and cut through redundancies and inefficiencies. Still, Squali says Yahoo! can only restore investor confidence through a "rubber meets the road" execution.
The analyst also addresses Yahoo!'s looming proxy fight with Carl Icahn and the on again-off again negotiations with Microsoft Corp. (NASDAQ: MSFT). Though Icahn has yet to formulate a strategy for how he would run Yahoo! differently if his slate of candidates is elected, Squali believes if the dissident investor were to win a handful of board seats, though not full control, it could bring a "much needed sense of urgency" to Yahoo!, something he says the current board has lacked for more than two years.
On the block since November, supply-chain management software maker i2 Technologies Inc. (NASDAQ: ITWO) has eliminated on obstruction to a possible deal after it settled patent litigation with SAP AG. i2 disclosed in a regulatory filing on Thursday that it will receive $83.3 million as a result of the settlement with the German software giant.
Shares of i2 shot up 10% early in Thursday's session. Trading at $13.92, the company has a market capitalization of roughly $300 million, with a cash position of more than $200 million when accounting for the settlement based on the amount of cash it reported at the end of the first quarter.
In May, i2 disclosed it was in talks with at least two other parties who had shown "credible interest" in the company, but stressed the discussions were preliminary. Nevertheless, company chairman Jackson Wilson said at the time its board of directors agreed that a sale was the best alternative for the company. Continue reading at TechConfidential.com.
Yahoo! Inc. (NASDAQ: YHOO) shares were roughly flat in early trading on Wednesday after gaining 3% on Tuesday on word that the company was again talking deal with Microsoft Corp. (NASDAQ: MSFT). Though shares spiked on reports that talks were in progress, they settled down quickly because of conflicting reports as to the extent of the talks. While technology blog TechCrunch reported the two sides were in discussions on an outright acquisition of Yahoo!, other reports indicated the two had revived discussions of an acquisition of Yahoo!'s search business.
A source close to Yahoo! late Tuesday said the TechCrunch report was "miles off," but could not confirm the two companies were again talking about a deal for the search business. The source did note that when Yahoo! announced it would be outsourcing a portion of its search advertising business to rival Google Inc. (NASDAQ: GOOG), the terms did not preclude Yahoo! from selling all or part of its business.
Put this in your "death by 1,000 cuts" file. Reports resurfaced today that Yahoo! Inc. (NASDAQ: YHOO) and Microsoft Corp. (NASDAQ: MSFT) have resumed talks over a possible deal. It's worth noting that the chatter is coming from a Yahoo! investor, who obviously may have a vested interest in the companies eventually clinching a transaction. But the rumors had enough teeth to drive Yahoo! shares up as high as $23.71, with the stock up 2.2%, to $21.92 in late afternoon trading.
Since the companies formally ended acquisition talks earlier this month, Microsoft has said repeatedly that it's no longer interested in acquiring all of Yahoo!. But with Yahoo! shares sagging, the software giant may think it can get the Internet portal on the cheap or at least for less than its last bid of $33 a share, or $47.5 billion offer. Other reports indicate the two sides could be reviving talks in which Microsoft would acquire Yahoo!'s search business for more than the $9 billion it was reportedly willing to pay previously.
Yahoo!'s situation has eroded since the talks ended. An announced deal to outsource some of its search advertising business to rival Google Inc. (NASDAQ: GOOG) provided only a modest lift to its shares. The company also has seen a number of high-profile executives leave over the past few weeks, and concerns are mounting about its second-quarter numbers. Oh, and Carl Icahn is still around, though he hasn't had much to say about his proxy fight for control of the company's board of directors of late.
Poor Yahoo! Inc. (NASDAQ: YHOO) can't seem to catch a break. The company took a lot of heat last week on news that a number of executives would be leaving the company in advance of a reorganization, though others are taking a more contrarian view and noting it might not be such a bad thing for Yahoo! to shed some of its talent. Today, its second quarter outlook is drawing fire.
Sandeep Aggarwal, an analyst with Collins Stewart LLC, in a research note on Monday writes says that the failed acquisition talks with Microsoft Corp. (NASDAQ: MSFT) has been a major distraction for Yahoo! and, worse, that economic factors are taking a toll on display advertising spending, while the aforementioned executive departures are causing project delays and execution hurdles. He also contends that the reorganization being discussed "only highlights the grass roots level problems and likely margin pressures at Yahoo!."
In addition, Aggarwal isn't impressed with the search deal Yahoo! struck with rival Google Inc. (NASDAQ: GOOG), arguing that an outright sale to Microsoft, or shipping its search business to to the software giant would have been a better alternative. He drops his forecast for Yahoo!'s second quarter revenues to $1.37 billion, from $1.4 billion, and adjusted EBITDA to $460 million, versus $467 million. He continues to rate the stock a "hold," but reduces his price target to $23 a share, from $26. Early in Monday's session, shares of Yahoo! were down less than 1% at $21.85.
Carl Icahn, biggest of the big swinging activists, finally switched on his new blog. Unfortunately, his initial posts for TheIcahnReport center not on his loathing for Yahoo! Inc. (NASDAQ: YHOO), but on the more abstract fear of crummy corporate governance. The fear and loathing are linked, of course. But it appears Icahn will resist the urge to vivisect Jerry Yang in print -- at least until he has liquidated his holdings in the Internet company.
If so, that's too bad. And Carl, just think of the fun you could have!
Yahoodlums smashing innocent SHers! posted on June 19, 2008 - 2:37 p.m.
Testing, testing. We live? Hi everyone, Carl here. Let me begin by saying what a pleasure it is to be here. But let me tell ya, that Jerry Yang. He made a killing in the stock market on this Microsoft business--he shot his broker. Yeah, I wish that nudnik would learn a trade so I'd know what kind of work he's gonna be out of. Can this guy get off my planet, already? Why, all this schmuck does is keep running his mouth--if he keeps talking maybe he'll say something intelligent.
That's it from me, folks. I'm here everyday. Try the prime rib. -- Carl Icahn
Not long after closing the door on the pursuit of Yahoo! Inc. (NASDAQ: YHOO), an acquisition that would have boosted its online advertising business, Microsoft Corp. (NASDAQ: MSFT) is making another purchase -- albeit much smaller -- that could enhance its ad presence in an entirely different way. The software giant is acquiring Navic Networks Inc., a venture-backed company that makes software to enable the placement of targeted ads for television.
While the deal has largely gone under the radar, probably due to its undisclosed purchase price, it is an intriguing move for Microsoft, which over the course of the Yahoo! saga pretty much came clean with its desire to improve its home-grown advertising business. The software giant, however, to date has largely expressed an interest in Internet advertising. The lines between television and Internet are indeed blurring these days, with more cable and network content being made available online and more original content being created for Internet protocol television. Nonetheless, in its statement announcing the Navic purchase, Microsoft seemed mostly interested in the traditional television market, noting that "television media represents the largest percentage of advertisers and agencies' media budget today." The company said it now plans to work more closely with the advertising industry to help advertisers better attain their objectives.
In many ways, today's television advertising looks like a business that time and technology forgot. Advertisers trying to track audience sizes use the same tool they used decades ago: Nielson Media Research. Nielson surveys a representative sample of TV viewers to produce reports estimating the total audience size but uses few of the bells and whistles online advertisers have at their disposal to get not only a more accurate view of the audience size, but to see how engaged that audience was, in the form of click-throughs and other measures.
A shareholder group taking Yahoo! Inc.'s (NASDAQ: YHOO) board of directors to court for allegedly not exercising their fiduciary duty in negotiations with Microsoft Corp. (NASDAQ: MSFT) was dealt a setback after a Delaware judge rejected a request for an expedited trial.
Lawyers representing the Police & Fire Retirement System of the City of Detroit and the General Retirement System of the City of Detroit were looking to speed up a decision on the validity of a severance plan put in place by Yahoo! in February after Microsoft offered to acquire the company. They were hoping to get a decision before Yahoo!'s Aug. 1 shareholder meeting.
But Chancellor William Chandler of the Court of Chancery of the State of Delaware denied the motion, saying the plaintiffs failed to meet their burden for showing why the matter needed to be heard quickly. The judge said he would be able to rule on a motion by lawyers for Yahoo! to dismiss the case before Aug. 1.
Universal has added its catalog of videos to Last.fm's on-demand streaming service and has agreed to share revenue from advertisements running alongside clips. The deal also includes a provision that Last.fm will highlight UMG's videos exclusively for one month after the agreement goes into effect, bringing clips from Jay-Z, Amy Winehouse, the Killers, Kanye West and others into view.
Warner, the first of the majors to cut a deal with Last.fm, pulled its songs from the site's on-demand service earlier this month, although it continues to allow its songs to be streamed through Last.fm's personalized radio service. A source with knowledge of the situation says Warner felt that Last.fm had failed to deliver promised ad revenue and is trying to renegotiate the terms of its agreement. While Warner has taken equity stakes in other companies that provide on-demand streaming music, such as Imeem Inc., Lala.com Inc. and the MySpace Music joint venture, the source says Last.fm will likely have to cough up more cash rather than equity to keep Warner's music on the site. CBS Corp. bought Last.fm for $280 million in May 2007.
Carl Icahn, who hadn't been heard from (at least publicly) since Yahoo! Inc. (NASDAQ: YHOO) announced June 12 that it had broken off talks with Microsoft Corp. (NASDAQ: MSFT) and instead would partner with Google Inc. (NASDAQ: GOOG) for its search-related advertising, finally broke his silence. Icahn told Reuters Yahoo!'s deal with Google "might have some merit," but left open whether he would continue with his proxy fight to replace the company's board of directors.
It would not be a surprise if Icahn were to abandon the fight. His main purpose in trying to take over the company was to facilitate a sale to Microsoft, which appears far less likely today, though some people still think Microsoft could resume its pursuit of Yahoo! at a lesser price. He also was facing a battle to win support from shareholders, who haven't failed to notice that he has yet to articulate a plan for running the company beyond fobbing it off on Microsoft. In addition, Yahoo! sneakily incorporated a clause in its deal with Google that allows either side to terminate the agreement in the event of a change of control, with Yahoo! agreeing to pay the search giant $250 million if that happens. The clause serves as an entrenchment device for Yahoo!'s board at the expense of the challenger since it doesn't apply to the current regime.
Elsewhere, activist investor Eric Jackson weighs in with his thoughts on the proxy fight on Monday, encouraging Yahoo! investors to vote for five of Yahoo!'s candidates for the nine board seats and four Icahn-backed nominees. Though Jackson wants Icahn to win outright, he believes large shareholders are worried about what would happen to the company if the activist investor takes control and that they will instead throw their support behind Yahoo!'s slate. This option seems unlikely to fly as it's difficult for institutions to split their votes. Instead, Icahn stands a better chance of winning representaiton on the board if he runs a minority slate of candidates rather than the full slate he is currently running. He would be much more likely to get support from proxy advisory services and institutions in this scenario.
Yahoo! Inc.'s (NASDAQ: YHOO) search deal with Google Inc. (NASDAQ: GOOG) is playing to mixed reviews on Wall Street. Yahoo! shares were trading down 6.5% at $22 a share early in Friday's session after tumbling 10% on news that the company had broken off all talks with Microsoft Corp. (NASDAQ: MSFT).
Market analysts saw good and bad in Yahoo!'s new search deal with Google, which will place Google's paid search results next to Yahoo!'s in the U.S. and Canada. Yahoo! said it expects the new revenue-sharing agreement to generate earnings of $250 million to $450 million during the first 12 months of the deal.
Though the two companies have structured the deal in an effort to appease antitrust regulators, a business agreement between the top two leaders in search advertising will undoubtedly draw scrutiny. Cowen & Co. analyst Jim Friedland expects Microsoft to immediately begin lobbying against the deal in Washington, although he expects that the transaction will pass muster with regulators "since the market -- not Google -- determines keyword pricing."
Yahoo! Inc. (NASDAQ: YHOO) remains under attack for severance plan it adopted in February in response to Microsoft Corp. (NASDAQ: MSFT) $44.6 billion acquisition offer.
But, as Yahoo! CEO Jerry Yang might say, reports of Yahoo!'s death are being greatly exaggerated. If you're willing to roll the dice, you can still get a job at the company (and benefit from the generous severance in event of a change of control). UBS analyst Benjamin Schachter took a look at the job postings at Yahoo! and Google Inc. (NASDAQ: GOOG) in an attempt to get some insight into areas of emphasis for the two companies.
In the first quarter of 2008, Yahoo! had 1,306 open positions, versus 1,147 last year, though Schachter expects more turnover and difficulty filling open positions due to increased uncertainty at the company. A key focus area revolves around Yahoo!'s next-generation advertising platform, with numerous listings for jobs helping build a platform that better targets and measures display ads. Schachter speculates Yahoo! is attempting to do in display advertising what Google has done for text-based advertising.
Yahoo! Inc. (NASDAQ: YHOO) may be close to losing a top exec, Jeff Weiner, who is executive vice president of the internet company's network division. Though his departure may not be a fait accompli, the possibility that Yahoo! is losing key operational staff carries some serious repercussions. With the company's future mired in uncertainty, it's no surprise that something of a brain drain underway at Yahoo!, and in fact a number of high-profile folks have left the company over the past six months.
Theres' little question that Yahoo!'s middle management ranks are bloated and could stand to be thinned out. But losing some of its senior people raises questions about the company's ability to execute a a turnaround after rebuffing acquisition offers from Microsoft Corp. (NASDAQ: MSFT). If the departures were to accelerate, it also could undermine Microsoft's interest in Yahoo!, or at least cause it to reconsider possible deal terms
In the near-term, an exodus of Yahoo! execs would raise doubts about the efficacy of the company's controversial severance plan, which it adopted following Microsoft's $44.6 billion acquisition offer in February and which is intended to stem a possible tide of defections. The plan has been attacked by Carl Icahn during his proxy contest to take control of Yahoo!'s board of directors, while a shareholder group has taken Yahoo! to court over the severance package and for failing to cut a deal with Microsoft. Continue reading at TechConfidential.com.
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We already know the IPO market is nonexistent, but what about M&A? A report put out Tuesday by media-related investment banking firm the Jordan, Edmiston Group Inc. indicates that things aren't so bad in the online media and technology sector and the marketing and interactive services sector, though deal sizes have declined significantly.
