Yahoo to Shareholders: We Don’t Need Microsoft

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Yahoo CEO Jerry Yang doesnit think his company needs Microsoft or its unsolicited buyout offer to survive, and heis taking his message to Yahoois shareholders. He thinks the online advertising market is ready to explode, and that Yahoo is in a strong position to take advantage of that growth.

"We have a huge market opportunity -- and are uniquely positioned to capitalize on it. The global online advertising market is projected to grow from $45 billion in 2007 to $75 billion in 2010," Mr. Yang said. "And we are moving quickly to take advantage of what we see as a unique window of time in the growth -- and evolution -- of this market to build market share and to create value for stockholders."

He added that Yahoo had US$2 billion in the bank at the end of 2007, and expects to see double digit growth for the company in 2009.

Microsoft presented the Internet search company with an unsolicited buyout offer of $44.6 billion on February 1. The Redmond-based company presented its offer after Yahoo reported a substantial drop in quarterly earnings and warned that it was planning to lay off about 1,000 employees.

Yahoo rejected Microsoftis offer on February 11, and Microsoft made it clear that it intends to continue pursuing a buyout strategy. "The Yahoo response does not change our belief in the strategic and financial merits of our proposal. As we have said previously, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoois shareholders are provided with the opportunity to realize the value inherent in our proposal," Microsoft said in a prepared statement.

Microsoftis next move will likely be to sway Yahoo shareholders into pressuring its Board of Directors to agree to the buyout. Yahoois board, however, feels Microsoft is grossly undervaluing the company, and Mr. Yangis letter is likely a first step in an effort to keep Yahoo shareholders on his side.

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