Microsoft Sends Ultimatum to Yahoo!

Microsoft's CEO Steven Ballmer sent a strongly worded letter to Yahoo's Board of Directors on Saturday declaring his frustration over the lack of progress on his company's offer to acquire the Internet portal.

On Jan. 31, Microsoft made an offer to purchase Yahoo with a mix of cash and stocks worth $44.6 billion, 62 percent above Yahoo's market value. Since that time, Yahoo CEO Jerry Yang has been busy considering alternatives to save the company including partnerships with Google, News Corp, and AOL. (Source: businessweek.com)

However, no substantive agreements have resulted and Microsoft's offer may be the only viable alternative left as Yahoo's position continues to weaken. The corporation's stock price has dropped from $31 per share in January to just over $28 on April 4, the company's market share (measured by page views and clicks) has declined steadily, while the dominant competitor, Google, continues to grow.

Ballmer has stressed the urgency for Yahoo's board to enter negotiations on a final agreement, setting April 26 as a deadline. Should Yahoo refuse to sit down, Microsoft is prepared to take its fight to the next level. "If we have not concluded an agreement within the next three weeks, we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo! Board," the letter reads. (Source: yahoo.com)

These threats are not new, but they may put Yahoo's board in a precarious position. Reports abound that management is having trouble convincing shareholders the company is worth far more than Microsoft is offering.

In February, we reported that Yahoo delayed its annual shareholder meeting to an unspecified date; a decision many experts believe is an attempt to buy more time and prevent Microsoft from installing a board more agreeable to the takeover offer.

Despite tactics meant to maintain Yahoo's independence, a Microsoft takeover looks increasingly likely.