Yahoo Makes Case for Independence
On Tuesday, Yahoo filed a three-year plan with the SEC in an effort to convince
investors that the company can offer shareholders value without merging with
Microsoft -- or, at the very least, that Microsoft should significantly raise
its bid for the company.
"The presentation supports the unanimous determination by the Company's
board of directors that Microsoft's January 31, 2008 unsolicited acquisition
proposal substantially undervalues Yahoo," the company said of the plan
in a statement. "Yahoo's global brand, large worldwide audience, significant
recent investments in advertising platforms and future growth prospects, free
cash flow and earnings potential, as well as its substantial unconsolidated
investments [are] factors in its decision."
The plan -- originally reviewed by Yahoo's board in December -- shows Yahoo
hitting Wall Street estimates this year and significantly beating them in three
years. It highlights what Yahoo views as its competitive edges: first in mail,
mobile and personal homepages and second in search, homepage in general and
monetizing search. Yahoo also ranks itself as the No. 1 "U.S. ad network
by page views."
Some of the changes for Yahoo outlined in the plan, available here
in PDF format, include making the company's search more "open, social and
relevant" and delivering a "must-buy" strategy for advertisers,
including a "next-generation" ad platform.
With the plan, Yahoo estimates a year-over-year gain in revenues of 18 to 25 percent, and doubling its cash flow by 2010.
"Yahoo is positioned for accelerated financial growth -- we have a powerful
consumer brand, a huge global audience and a highly profitable operating model,"
commented Yahoo CEO Jerry Yang in the announcement.
"We are pleased to share with the market more details about our business
and our expectations for Yahoo's financial performance, which provided context
for our board's unanimous rejection of Microsoft's unsolicited proposal,"
commented Yahoo's board chairman Roy Bostock. "The board of directors and
management will continue to work closely together to ensure that any strategic
path we pursue capitalizes on that uniqueness and value in a way that maximizes
the benefit to our stockholders."
The plan was released
just days after reports that Microsoft and Yahoo had been talking informally
about the merger. Yahoo rejected Microsoft's unsolicited
bid of $44.6 billion in February, and since then the companies have made
various moves to either, in Microsoft's case, push
the deal through, or, in Yahoo's case, fend
off the acquisition -- at least at the offered price.