Yahoo defends its actions to shareholders

Yahoo has defended its decision against a Microsoft takeover in a letter to shareholders. The Yahoo leadership explained that the cooperation agreement with search engine operator Google, is a much better deal. Yahoo would continue to operate its search engine and that the non-exclusive agreement allowed displaying sponsored search results from Google, the company claimed. The resulting income would go first to the cooperation partner, which would pay "traffic acquisition costs" to Yahoo, based on the revenue generated.

In the letter, Chairman Roy Bostock and CEO Jerry Yang explained that this "carefully structured agreement" would support the Yahoo strategy of being the jumping off point for a majority of internet users and a must for advertisers. The Google services would fill a gap in the Yahoo offering, while at the same time allowing Yahoo to compete energetically on the search engine market. The letter added that the cooperation with Google would not hold the company back from continuing to seek new business opportunities that would increase value for shareholders.

Furthermore, the leadership of the concern called on shareholders to withhold their support for major shareholder Carl Icahn at the shareholders meeting scheduled for August. The multi-billionaire has been seeking to sell the company and is pushing to get people who share his interests elected to the management Board in order to topple Yahoo boss Jerry Yang.

Following its failed complete takeover of Yahoo, Microsoft suggested purchasing only the search engine business. The letter confirms that Microsoft is ready to pay $1 billion in cash and buy another $8 billion in stock in connection with the offer. But Bostock and Yang explained that Yahoo would then be exclusively bound to Microsoft for a period of 10 years, and that the software concern would gain a right of veto in transactions, such as the sale of Yahoo.

(trk)