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Nov 6, 2008

A Tale of Two Silicon Valley Giants - Yahoo and Apple

Rumor: Internal Yahoo memo suggests CEO Jerry Yang may be out

Updated: Yahoo is vehemently denying the rumor.

Here’s a rumor (printed below) that we got and which has apparently been making the rounds. It’s important to note that the NYT has since written a story saying that Yahoo has denied the rumor, and that both Yahoo and Microsoft say rumors of a merger deal are also false. Apparently, the Microsoft merger deal first gained credibility when a Bloomberg story mentioned it this morning (link to updated version).

[Update: I just got off the phone with Boomtown's Kara Swisher, who is convinced the rumors are being driven by stock manipulators, trying to manipulate Yahoo's stock. What is interesting is that despite the denial by Yahoo and Microsoft of a deal between them, Yahoo's stock is still up markedly. So if this is being driven by manipulators, they are having their way.]

[Update II: I'm told by a very good Yahoo source that the rumors are complete baloney. It's now 10:15am. We should see the stock drop soon, as Yahoo gets the message out. Yahoo is not talking on the record, however.]

Employees at Yahoo are said to have just received an internal memo, time-stamped at 8:00 PST, to expect a “major & historical announcement” today some time after 2pm PST. Sources are saying that Yahoo chief executive [Jerry] “Yang has agreed to leave his post effective today and that Yahoo is again in late-stage talks to sell the whole company to Microsoft.” The deal is imminent and could be done by tonight, they say. The price being mentioned is $17~$19 per share.

Here’s the big caveat. On the one hand, this rumor is entirely consistent with the latest developments: Jerry Yang has failed entirely in his effort to give direction to Yahoo, and is under increasing pressure from shareholders to either do something or leave, and it’s widely known that Microsoft continues to mull a possible acquistion of Yahoo. However, on the other, there is so much speculation about this company that it could be that traders are trying to manipulate the stock. We’re trying to get more details on this one, and will update when possible.

Yahoo: Poor, Alone and Sad

Six months ago Jerry Yang took the stage at the D Conference to talk about the state of his business. His painted a picture of a Yahoo that was spinning in circles with no clear future.

Fast forward six months and nothing has changed.

Except Yahoo has been left at the altar as Google walks away from their Yahoo search marketing deal.

Except that Yahoo’s share price has eroded another $13, destroying $18 billion in shareholder value

Except that most of Yahoo’s top managers have left the company...

iWork ‘08 indeed: Apple bucks the layoff trend so far

Here’s my routine the last several weeks: Wake up, open my feed reader, read story after story about layoffs at FILL-IN-THE-BLANK tech company — it’s depressing. So it’s nice today to be able to report about one that has seen huge job growth this year: Apple.

The computer, iPod and iPhone maker saw its number of employees grow almost 50 percent in the past year, the company’s annual 10-K SEC filing revealed. By the end of September, the company had 32,000 full-time employees, compared to last year when it had just 26,100 (plus addition temporary workers). Its employment numbers are nearly double what they were just two years ago, as TechFlash notes.

Business has been booming the past few years for Apple thanks to a mixture of strong computer sales (particularly laptops), iPods and most recently the iPhone (the new 3G version has seen especially strong sales). But, with layoffs hitting companies like Dell, Yahoo and AMD and hiring freezes even in place at Google, Apple, like every other company, will have to be cautious of the way it controls its business over the next several months. (Though it has plenty of cash on hand.)

Also a good sign for the company is that a lot of the new employees are likely workers at Apple’s retail stores, and probably not highly paid engineers, as Silicon Alley Insider notes.

Apple’s Fadell gets one heck of a (Fa)deal to advise Jobs

Departing Apple executive Tony Fadell is getting a pretty nice deal to stay on as an advisor and not go to any other company, an SEC filing reveals. Specifically, he’ll be getting a $300,000 annual salary and restricted stock options that are potentially worth millions.

Apple confirmed yesterday that Fadell, its senior vice president of the iPod Division, was stepping down. The reason the company gave for the departure is that Fadell wanted to spend more time with his young family. His wife, who also worked for Apple, is leaving as well. But Apple also announced that Fadell would remain affiliated with the company as an advisor to chief executive Steve Jobs, a gig which apparently pays very well.

Of course, “restricted” is the key word for the stock options. Fadell’s 77,500 options won’t vest until March 24, 2010, which means that if he were to leave, he’d forfeit the right to those millions of dollars. That means that Microsoft or whoever else might want to get their hands on the man who has been hailed as the “father of the iPod” won’t be getting access to him anytime soon.

This key part of the filing:

On November 3, 2008, Tony Fadell, Senior Vice President, iPod Division of the Company became Special Advisor to the Company’s Chief Executive Officer. In this new position, Mr. Fadell no longer will be an executive officer of the Company. In connection therewith, Mr. Fadell and the Company have entered into a Transition Agreement and a Settlement Agreement and Release (the “Transition Agreement” and the “Settlement Agreement,” respectively), under which Mr. Fadell will receive a salary of three hundred thousand dollars annually, and will be entitled to bonus and other health and welfare benefits generally available to other senior managers for the duration of the Transition Agreement, which remains in effect until March 24, 2010. The Transition Agreement also provides for the cancellation of outstanding and unvested 155,000 restricted stock units held by Mr. Fadell. Upon approval by the Compensation Committee of the Company’s Board of Directors, Mr. Fadell will be granted 77,500 restricted stock units that will vest in full on March 24, 2010, subject to his continued employment with the Company through the vesting date and further subject to accelerated vesting if the Company terminates his employment without cause. The restricted stock units are payable upon vesting in shares of the Company’s common stock on a one-for-one basis. The Settlement Agreement includes Mr. Fadell’s release of claims against the Company and agreement not to solicit the Company’s employees for one year following the termination of his employment.

The Final Chapter: Yahoo Now Wants to Be Acquired by Microsoft


Talk about a 180. Yahoo’s CEO Jerry Yang spoke at the Web 2.0 Summit in San Francisco; he and his company are tired, battered and bruised. But his message is now - suddenly, and amazingly - clear: Yahoo wants to be bought by Microsoft.

His exact words?

“To this day, I have to say that the best thing for Microsoft to do is to buy Yahoo. I don’t think that is a bad idea at all…at the right price, whatever the price is, we are willing to sell the company. We were ready to negotiate, we wanted to negotiate a deal, and we felt that we weren’t that far apart. But at the end of the day, they withdrew and they since have been very clear about not wanting to buy the company.”

Perhaps I have a bad memory, but Yahoo did not want Microsoft to acquire them following their initial offer which, in the light of perhaps inevitable economic recession and current Yahoo share price, now seems generous...

Yahoo Says It Is Looking At Acquisitions Again

By Tom Foremski - November 7, 2008

Yahoo says that the distractions of Microsoft's hostile bid are over and that it will resume making acquisitions especially in advertising related sectors.

Jonathan Dillon, VP of Strategic Partnerships & Acquisition Integration at Yahoo said that the company had suspended its acquisitions because the board was distracted by the Microsoft bid.

"We are resuming acquisitions and we will be looking to shore up our leading position in display advertising and other advertising related areas," said Mr Dillon.

He was speaking on a panel Thursday evening organized by the Irish Network of San Francisco and Enterprise Ireland. Other panelists included Richard Alfonsi, Director Online Sales and Operations at Google, Tom Costello, CEO ofCuil, Jason Devitt, CEO of Skydeck, and Ivan MacDonald, CEO of Dial 2 Do.

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