Hotmail too busy to serve users!!

As I was checking my Hotmail today, a note telling that the Hotmail servers are too busy has opened instead of my Inbox. The note reads:

Server Too Busy
We are experiencing higher than normal volume and are therefore unable to service your request at this time. Try one of the following:

In your browser, click Refresh
In your browser, click Back, and try again
Wait a few minutes and try again
We apologize for this inconvenience.

This comes at a bad time for Microsoft as they were trying to buy Yahoo! while the can’t even serve there users.

Here Come the Shareholder Lawsuits Against Yahoo

The inevitable shareholder lawsuits have started to be filed against Yahoo for not accepting Microsoft’s bid. Yesterday, the Wayne County Employee’s Retirement System of Michigan, was the first to file suit. The retirement fund owns 13,600 shares. You can expect more shareholders to pile on board, especially if this thing drags out.In fact, that is not the only shareholder suit Yahoo is facing. On February 1, the day Microsoft made its recent offer, another shareholder lawsuit was filed against Yahoo in California for failing to accept Microsoft’s bid from the year before. They might want to amend that lawsuit to include Yahoo’s most recent rejection as well.

The more that Yahoo fights the merger, the more shareholder lawsuits will pop up. The reports in the media typically note how this is increasing the pressure on Yahoo. Nothing against Wayne County, but 13,600 shares is a tiny stake for an institutional investor. If bigger investors started suing, then the pressure would be noticeable. But big investors don’t sue, they vote their shares.

Yahoo And News Corp. Continue Marathon Discussions; Possible Bid To Counter Microsoft

At the start of the Microsoft/Yahoo saga we reported that News Corp. was scrambling to put together a bid to compete with Microsoft, but backed down because they were unable to find outside funding to make the deal lucrative enough (the sorry state of the debt markets contributed to the problem).

Yesterday Silicon Alley Insider reported that talks between the two were continuing. We’ve confirmed the rumor – Yahoo and News Corp. are in the middle of marathon discussions, and have more details.

According to our source, the deal structure would spin off Fox Interactive Media (the primary asset is MySpace, but IGN, Scout Media, Photobucket, Fox Sports, AmericanIdol.com, Flektor, Ksolo; plus investments in Hulu, Simply Hired and Snocap are also assets of FIM) into Yahoo, along with a big cash injection from News Corp. and an unnamed private equity fund. The total investment would be valued at around $15 billion.

Yahoo would be valued at somewhere around $50 billion before the transaction, north of Microsoft’s $44.6 billion bid. That would leave News Corp., plus the private equity group, with more than 20% of the combined entity. They’d be the largest single stockholder and effectively in control of the combined Yahoo/FIM entity and their nearly 150 billion monthly page views (which would be second only to Google).

The negotiating team is said to be trying to iron out the details in the next 48 hours, in time for Yahoo’s upcoming board meeting to review its options.

Microsoft is largely expected to increase their bid to the $35 range in the next couple of days based on Yahoo’s formal rejection of their first offer (effectively raising their bid to $50 billion). Any competing offer needs to be in that range or higher.

One major snag – it is widely believed that, even with a News Corp. deal, Yahoo would need to outsource search marketing to Google to make the numbers work. While Google is likely happy to do that deal, it’s unlikely U.S. regulatory agencies would approve it (we discuss this in detail here). Without the revenue boost and cost savings from outsourcing, the News Corp. bid may not pencil out.

Yahoo, of course, isn’t too worried about that right now. All they want is any kind of bona fide competing bid to at least get Microsoft to increase their offer. Yahoo execs are saying privately that they think a Microsoft acquisition is now fait accompli. Still, if News Corp. can somehow make a compelling offer (and getting a private equity group on board was a huge first step), Yahoo’s board may recommend the deal to stockholders.

It’s Official: Yahoo Rejects Microsoft Bid

Over to you, Microsoft.

Yahoo, confirming reports over the weekend that it would reject Microsoft’s unsolicited takeover bid, said early Monday that its board had found the $44.6 billion offer was “not in the best interest of Yahoo! and our stockholders.” In a short news release, Yahoo said the $31-per-share proposal “substantially undervalues” the Internet company, its brand and its investments. The formal rejection sets the stage for Microsoft to take its next step, and there are plenty of options. It could raise its offer, canvass Yahoo’s major shareholders for support or even wage a battle to replace Yahoo’s board.

Below, the full text of Yahoo’s bid rejection:

“Yahoo! Inc. (Nasdaq: YHOO), a leading global Internet company, today said the Yahoo! Board of Directors has carefully reviewed Microsoft’s unsolicited proposal with Yahoo!’s management team and financial and legal advisors and has unanimously concluded that the proposal is not in the best interests of Yahoo! and our stockholders.

After careful evaluation, the Board believes that Microsoft’s proposal substantially undervalues Yahoo! including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as our substantial unconsolidated investments. The Board of Directors is continually evaluating all of its strategic options in the context of the rapidly evolving industry environment and we remain committed to pursuing initiatives that maximize value for all stockholders.

Goldman, Sachs & Co., Lehman Brothers and Moelis & Company are acting as financial advisors to Yahoo!. Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor to Yahoo!, and Munger Tolles & Olson LLP is acting as counsel to the outside directors of Yahoo!.”

Go to Press Release via the Securities and Exchange Commission »

Yahoo to Reject Microsoft Bid

Yahoo’s board is planning to reject Microsoft’s $44.6 billion offer, arguing that it “massively undervalues” the company, according to a Wall Street Journal report. The board reportedly won’t consider an offer below $40 per share, which, as we understand it, was a number that was tossed out by Microsoft last year. The board also argues that the current offer doesn’t adequately reflect the risk that the deal could be overturned by regulators.

The board is reportedly planning on sending a letter on Monday, a little more than a week after Microsoft submitted an unsolicited bid of $31 per share, or $44.6 billion, for Yahoo.

Although the company has repeatedly asked for time to review its options, most analysts believe it will only be a matter of time — and money — before Yahoo succumbs to Microsoft’s offer.

Given the size of Microsoft’s bid, the likelihood of a higher offer from another bidder is minuscule and the list of potential suitors is very short. Still, Yahoo is rumored to be toying with the idea reorganizing the company and outsourcing its search-based advertising to Google in an effort to bolster revenue and remain a standalone company. Some industry watchers have also speculated that Yahoo could be trying to arrange an alternative deal with AOL.

Yahoo’s intentions could become clearer in another week (or by mid-February), when the company is expected to cut about 1,000 positions. Hypothetically, if it proceeds with the layoffs, that could indicate its seriousness at remaining independent, according to experts.

Microsoft to Acquire Yahoo! for $44.6 Billion

Microsoft will offer $44.6 billion to buy web pioneer Yahoo. Let’s just say we’d expect some pretty interesting changes to some popular web mail, web apps and instant messaging clients if it happens. Read more at: TechCrunch, DealBook, Google Blogoscoped.

Yahoo To Announce Large Video Acquisition—Maven Networks For $150 Million.

We’ve gotten word that Yahoo will make an acquisition announcement of a video startup today or tomorrow. At first we thought the target might be Metacafe, which was almost acquired by Yahoo just following the Google/YouTube deal in 2006. Shortly after, it made a small acquisition in Jumpcut, a Web-based video editor. But It’s not a video aggregator, we’ve heard, but a platform company. And the price is north of $100 million.The price point limits the number of candidates. Brightcove is our top guess. If it is Brightcove, the price would have to be well north of $100 million, given that investors have poured $86 million into the company so far. More as this develops.

For an excellent overview of the online video space and its participants, see this post written by Brightcove CEO Jeremy Allaire and SVP Marketing Adam Berrey.

Update: It is not Brightcove. It is Maven Networks, another Boston-based video startup, three independent sources confirm. And the price is believed to be $150 million. Maven is a video-hosting platform for media sites, including Fox News, CBS Sports, CNet, and Scripps Networks. But Yahoo would probably want it more for its video-ad network, targeting, and insertion technologies. Maven has raised $30 million to date from investors include Accel, General Catalyst, and Prism Ventures.

Source: TechCrunch

Yahoo profits drop, 1000 employees will be fired

After announcing a sharp drop in fourth-quarter profits Tuesday, Yahoo issued a disappointing outlook for this year, suggesting that investors would have to wait until 2009 for a turnaround. Yahoo also said that as part of its plan to revive its fortunes, it would cut 1,000 jobs by mid-February to reduce costs and narrow its focus to its most important businesses. The company, however, said it planned to invest aggressively in some areas, like advertising technology and selected portions of its Internet portal, as it tries to capture a larger share of online ad dollars. Since some laid-off employees could apply for new jobs at Yahoo, the net effect on the work force, which recently grew to 14,300, was not clear.

Jerry Yang, the chief executive, warned investors of “head winds” this year. Yahoo’s projections for revenue growth and profitability in 2008 were either at the low end of analysts’ expectations or below them. Yahoo said that its fourth-quarter net income fell to $206 million, or 15 cents a share, down 23 percent from $269 million, or 19 cents a share, in the same quarter a year ago. Revenue grew 8 percent to $1.8 billion. Excluding commissions paid to certain advertising partners, revenue was $1.4 billion, in line with analysts’ expectations. Mr. Yang, the Yahoo co-founder who was named chief executive last summer amid growing shareholder discontent, has promised to focus on three objectives: becoming a starting point for consumers on the Web; making the company a top choice for marketers seeking to place ads on sites across the Web; and opening Yahoo’s technology infrastructure to third-party programmers and publishers. It looks Google is really becoming a dominant search engine with no real competitors.

Source: Washington Post, NYTimes