Yahoo Battling 7 Shareholder Suits

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Things were bad enough for Yahoo long before Microsoft offered to buy the company but it seems things just keep getting worse by the day. Last week, Yahoo was facing one lawsuit from one of its biggest shareholders, this week that number is now seven. Yikes.

Yahoo's board believes Microsoft's offer, originally valued at $44.6 billion, is insufficient. Microsoft, though, has stood firm and is now preparing to overthrow Yahoo's 10-member board, which includes the company's co-founder and chief executive, Jerry Yang. Microsoft faces a March 14 deadline to nominate an alternate slate of directors.
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I’m telling you right now, if I was Yahoo, I’d take the money and run….there ain’t now way Yang is puling them out of this one.
 
even if they didn't act in the best interest of thier shareholders... do you think its a good idea to sue a company you own stock in? especially when you might could possibly win (and open up the floodgates to more lawsuits)

i guess the shareholders are just going to be greedy bastards and take it all and not leave anything left for those stockholders who wanted to let yahoo make the decision...

greed is all around us and there is no stopping it... ya gotta stop thinking about it or you'll go nuts
 
It is one of those things. Had they accepted the offer, they would also have been sued by someone. The problem with a publicly owned company, is that it is publicly owned. You many have built it, turned it into what it is, but once you go public, it no longer belongs to you. If someone comes along and offers you an amount of money that is more than the current worth, you have to look at the offer seriously despite any disdain you may feel for the prospective buyer. If you turn the offer down, you have to prove to the owners(shareholders) that it was the right decision, that you will be able to make them even more money than the prospective buyer. Otherwise they are going to sue you for failing you fiduciary responsibility to the owners(shareholders).
 
It's important to define "shareholder" in this context. These aren't individual stock holders, but institutions--pension funds, in this case.

These companies have a responsibility to get the most return for the individual investors that they manage funds for. They aren't investing in Yahoo for the nonexistent dividends. A takeover offer is exactly the windfall that would make them hold on to something as craptastic as a direct competitor of Google's.

Let's ask the guy who's been sitting on his ass at the Wayne County DMV for 20 years whether he thinks his pension fund should act greedy.
 
srangara said:
It's important to define "shareholder" in this context. These aren't individual stock holders, but institutions--pension funds, in this case.

These companies have a responsibility to get the most return for the individual investors that they manage funds for. They aren't investing in Yahoo for the nonexistent dividends. A takeover offer is exactly the windfall that would make them hold on to something as craptastic as a direct competitor of Google's.

Let's ask the guy who's been sitting on his ass at the Wayne County DMV for 20 years whether he thinks his pension fund should act greedy.
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Do we really want to set a legal precedent where companies have to automatically hand their themselves over to anybody that makes an offer higher than their current stock value, though?

There are other ramifications to consider, above those of a stupid board at Yahoo.
 
UrielDagda said:
Do we really want to set a legal precedent where companies have to automatically hand their themselves over to anybody that makes an offer higher than their current stock value, though?

There are other ramifications to consider, above those of a stupid board at Yahoo.
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this is so true. Imagine the fun walmart would have with this as an example
 
Greed knows no bound. People keep thinking things like this are bad. unfortunately, it is how it works. cooperations are amoral objects that we made to efficiently collect money for us, through any means, and sometimes it means breaking the law. Just because it is made by people and are legally treated as a person does not mean it is a person.

maybe we should stop treating cooperations as a 'person' and think it has a moral compass.
 
goodcooper said:
even if they didn't act in the best interest of thier shareholders... do you think its a good idea to sue a company you own stock in? especially when you might could possibly win (and open up the floodgates to more lawsuits)

i guess the shareholders are just going to be greedy bastards and take it all and not leave anything left for those stockholders who wanted to let yahoo make the decision...

greed is all around us and there is no stopping it... ya gotta stop thinking about it or you'll go nuts
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aren't you aware of this? how many shareholders pulled out from nvidia and microsoft recently when their profits weren't as high as they had expected? the stock market is ridiculous and is run by mainly greedy and fearful people. greed and fear.
 
UrielDagda said:
Do we really want to set a legal precedent where companies have to automatically hand their themselves over to anybody that makes an offer higher than their current stock value, though?

There are other ramifications to consider, above those of a stupid board at Yahoo.
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Automatically, no. But on the other hand, you've got to have a pretty good reason to reject an offer that's initially 62% above your current market value. Being the founder isn't one of them.

A proxy fight seems the most "democratic" way to settle this.
 
UrielDagda said:
Do we really want to set a legal precedent where companies have to automatically hand their themselves over to anybody that makes an offer higher than their current stock value, though?

There are other ramifications to consider, above those of a stupid board at Yahoo.
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It's a public traded company, so yes, this should be possible.
 
By what you guys are saying Take-Two should have been forced to sell to EA when they gave them an offer for more than they are worth.
 
Exavior said:
By what you guys are saying Take-Two should have been forced to sell to EA when they gave them an offer for more than they are worth.
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EA has the option to purchase all the availible shares and gain full control of the company (hostile takeover). You need to be a majority stock holder and you pretty much get all the pushing you need.

This is the bad and the good about offering your company up on the public market, you no longer own it, your shareholders owns it. You get lots of money by going public but companies and individuals can now own a portion of your company, or enough to be able to oust you.
 
marylandman said:
aren't you aware of this? how many shareholders pulled out from nvidia and microsoft recently when their profits weren't as high as they had expected? the stock market is ridiculous and is run by mainly greedy and fearful people. greed and fear.
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You forgot compulsive gamblers with fanciful and bizarre concepts of how to pick a winner/loser.
 
Exavior said:
By what you guys are saying Take-Two should have been forced to sell to EA when they gave them an offer for more than they are worth.
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The board has to evaluate each offer and make a recommendation after performing due diligence.

EA didn't make a fair offer. They made a play at the bottom of Take-Two's product cycle. Take-Two's stock has already exceeded the offer price of $26 and some expect it to go as high as $33 once GTA4 comes out, I don't hear anyone expecting the same growth from Yahoo.

I'm forced to agree with Ockie's views on this. And another piece of my soul dies...
 
UrielDagda said:
Do we really want to set a legal precedent where companies have to automatically hand their themselves over to anybody that makes an offer higher than their current stock value, though?
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It wouldn't be the first time it has happened, and it will happen again. Hell, the same thing is going on with the EA/TTWO takeover bid right now. You combine a distressed stock that actually has inherent value with a bear market and ancy investors, that's a great combination for a hostile takeover.
 
srangara said:
Take-Two's stock has already exceeded the offer price of $26 and some expect it to go as high as $33 once GTA4 comes out
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The only reason TTWO was $26 on Monday is because of the EA offer, and the only reason TTWO isn't trading at .50 cents instead of $17 last week is because of GTA. You are putting the cart before the horse.
 
Ok, 50 cents was exaggeration for the sake of argument. :)

Bottom line though is that the prospect of GTA is the main reason why the stock was already as high as it was before the EA offer. As far as the market was concerned it was already priced in. Now, is the GTA franchise worth a lot? Absolutely. The thing is you need to look at the bigger picture with that company. They have huge huge problems, mainly issues with their board and upper management. A year ago shareholders even had to vote to replace the board that was there at the time. On top of that they have bled money for a while now, plus we are in the middle of an ugly ugly bear market that is killing companies that actually have solid books, cash flow, and management (unlike TTWO).

TTWO is what is known as a good deal, but $17 is still what Wall Street was willing to pay for it at the time. It may be worth more than what EA was offering due to GTA but that doesn't matter given everything else going on. I myself looked at TTWO for over two years but I couldn't bring myself to buy any stock due to all the problems I mentioned that they had going on (the one game related stock I have bought was Nintendo, bought at $30, $45, $55, all sold for $74 on Jan 2nd).
 
goodcooper said:
even if they didn't act in the best interest of thier shareholders... do you think its a good idea to sue a company you own stock in? especially when you might could possibly win (and open up the floodgates to more lawsuits)

i guess the shareholders are just going to be greedy bastards and take it all and not leave anything left for those stockholders who wanted to let yahoo make the decision...

greed is all around us and there is no stopping it... ya gotta stop thinking about it or you'll go nuts
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Why is it everytime a company says they will sue, that people bandwagon and say, well "open the floodgates" to other lawsuits? A court will decide if the company executives acted inappropriatly. If the court finds that shareholders got screwed, then who are you to say that they shouldn't?

I understand that you/everyone has their opinions, but consider that lawsuits are not won or lost on groundless facts. Someone is either negligent, or they are not. If they are (as in Yahoo's case) then every shareholder who got screwed has a claim.

It's not even greed at this point. It's about principle. People put their hard-earned money and trust into the hands of an executive team whos only job is to maintain and grow profits/dividends. Yahoo has been losing marketshare and stock value for some time now and Microsoft was overly generous in their bid. Yahoo has been unsuccessful in providing a workable business strategy to ensure future growth. They are just treading water at this point- thanks to the CEO and his team. Eventually you get tired and drown. Microsoft was just throwing them a life jacket and they refused because they didn't like the colour or size.

Should the shareholders go down with Yahoo?

That does not imply that when one public corporation makes a strong bid for another, that it's a certainty.. but if the board refuses the offer, there has to be disclosure on why the deal failed and reasons how it would negatively impact the shareholders.

Yahoo executives barely opened the offer sheet. They did not cite valid reasons to refuse the offer and they made a decision against the wishes of the shareholders.
 
Serpico said:
The only reason TTWO was $26 on Monday is because of the EA offer, and the only reason TTWO isn't trading at .50 cents instead of $17 last week is because of GTA. You are putting the cart before the horse.
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Correction: The stock price went to $26 and remains there because investors recognize that the initial offer was too low and will have to be increased.

If $17 was fair market value, the offer bump would not have met the offer price quite so quickly.
 
srangara said:
Correction: The stock price went to $26 and remains there because investors recognize that the initial offer was too low and will have to be increased.

If $17 was fair market value, the offer bump would not have met the offer price quite so quickly.
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Uh, no. EA says we want to buy the company for $26 a share. Therefore a stock trader will want to pay more for it. Everyone will jump on board, sending it up to that level. It is the same thing that happened with YHOO. The day before MSFT made their offer, YHOO tanked on quarter 2 forward guidance they gave out and hit a four year low of $19. The following day MSFT made their offer and the price immediately jumped up to meet that offering price.

This sort of thing happens all the time with takeover bids, even if it isn't 100% sure it is going to happen. Just the possibility of that sort of thing will bring a stock price up to the bid price. Remember, stock prices are a reflection of the near term, which is why they fluctuate so rapidly.

I'm not saying that TTWO isn't a steal at that price (it is), but these are also fair prices considering the broken state that the company is on the inside and the bear market we are in. But you are basically telling me that TTWO was going to be $26 that day anyway, with or without a bid from EA. Sure thing.
 
I should have edited my post before hitting the post button.

TTWO remains at that price because the prospect of a takeover from EA is still there. The majority of new traders have bought at that price and are going to tough it out as long as they can, basically until EA says they are not interested in a takeover anymore. The prospect of EA raising their bid is what is keeping them in there.

Same deal with YHOO. It has been about a month since MSFT made their bid and it is still trading in a narrow range around where it popped up to. Until the prospect of a takeover is eliminated, it will remain there.
 
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