SAN FRANCISCO — After a three-month standoff with Microsoft Corp., Yahoo Inc. is about to square off against its shareholders.
Incensed that Yahoo rebuffed Microsoft's last-ditch takeover offer worth $47.5 billion, investors sent its shares plunging 15% on Monday, erasing about $6 billion in market value. Many are pressuring Yahoo's board of directors to revive talks with the software giant.
Yahoo held out for $37 a share, $4 more than Microsoft's best bid, but one major investor said Monday that shareholders would have supported a takeover at $34. Portfolio manager Gordon Crawford blamed Yahoo Chief Executive Jerry Yang's "unrealistic" view of the company's value for the collapse of talks.
"Yahoo drove away a willing and fairly generous buyer, and all of us are the poorer for it today," said Crawford, of Los Angeles-based Capital Research Global Investors. Its parent company, Capital Research & Management Co., owns more than 16% of Yahoo's shares, making it the largest holder, according to regulatory filings.
But Yahoo's executive team said it remained confident in its strategy to turn around the Internet pioneer, which has struggled with slowing growth and stumbled in its heated competition with Google Inc. and other players. President Sue Decker said the company planned to be a leader in the lucrative online advertising market, both in search and display.
"At the end of the day, Microsoft made a decision on what it was willing to pay or not pay, and our board made a decision on what it was willing and not willing to sell for," Decker said. "Those two didn't meet."
Yahoo shares fell $4.30 to $24.37 on Monday, closing well below Microsoft's offer of $33 a share but 27% higher than the $19.18 they fetched before Microsoft's initial unsolicited bid was made public Feb. 1.
Brokerages cut ratings and price targets. A few unleashed condemnations.
William Morrison, an analyst with ThinkPanmure, said the rebuff to Microsoft could go down as "one of the most destructive decisions for shareholder value in the history of Internet stocks."
The mood was equally tense on the company's Sunnyvale, Calif., campus, where employees will convene today for an all-hands meeting. At the event, Yang will attempt to quell rising anxiety about Yahoo's future. Recruiters are already pouncing, taking advantage of waning confidence in the vision of Yahoo management, said one longtime employee who asked not to be named because he was not authorized to speak to the media.
