Under pressure, Yang still open to higher Microsoft bid

Facing shareholder ire and a plunging stock price, Yahoo CEO Jerry Yang said Yahoo board members would still sell the company to Microsoft or another suitor if the price is right.

According to Bloomberg, Yang said late Monday that Yahoo would be open to a sale as long as the company is not "undervalued" by any potential bidders.

"We've always felt the Yahoo platform has been undervalued or underappreciated by the marketplace,'' he said in an interview with Bloomberg. "Our most important goal is to make sure we have a long-term competitive position."

According to a separate report in Financial Times, Yang said it was Microsoft, not Yahoo, that was unwilling to complete the deal; his company wanted to continue negotiations on a price.

"We did not say it was a take-it-or-leave-it number in the sense that we would never negotiate any more,” he said in an interview with Financial Times. “We were totally willing to do a transaction, and they walked away."

On Saturday, Microsoft withdrew its bid to acquire Yahoo after failing to agree to a price even after Microsoft raised its bid from about US$31 per share, or about $44.6 billion, to $33 a share, which was about $5 billion more than the original offer.

Yang's comments indicate he is backtracking on the position he held during Microsoft's three-month attempt to purchase Yahoo, and they come as the Internet company faces pressure from shareholders who think the company was foolish to pass on the offer.

Yang was reportedly against the deal from the start, and Yahoo made various moves during the three months to avoid an acquisition, such as mulling a partnership with AOL and striking a deal with Google to test Google's AdSense for Search service as one of the Web publishers that carry pay-per-click text ads from Google.

Yahoo also attempted to buy time when Microsoft threatened to mount a proxy battle for the company. For example, on March 5, Yahoo lifted the following week's deadline for nominating directors to its board, an attempt to discourage Microsoft from trying to replace the current board with members willing to approve its Yahoo acquisition bid.

The company also unveiled a flurry of product and strategy announcements in the months following Microsoft's bid, pointing out that each initiative proved it could continue go it alone as an independent company.

Now that the deal is no longer on the table, Yahoo must convince investors it can turn the company around and deliver on promises that it can grow its revenue at a pace that pleases Wall Street and allows Yahoo to compete successfully against Google in online advertising.

Shareholders already are getting restless. Two public pension funds from the city of Detroit already said they plan to expand a complaint, originally filed as two lawsuits on March 5, against Yang and other members of Yahoo's board of directors, saying they failed to act in the best interest of shareholders in rejecting Microsoft's bid to buy Yahoo. It's likely Yahoo will face a barrage of similar class-action suits in the coming months.

The IDG News Service is a Network World affiliate.