Yang Warns Employees Of Icahn

14 07 2008

With the fight between Yahoo and investor activist Carl Icahn expected to accelerate in the coming weeks leading up to the company’s August 1 shareholder meeting, Yahoo CEO and founder Jerry Yang sent an e-mail to employees warning them of the pending mess and offered a Q&A:

Subject: over the weekend — joint microsoft/carl icahn proposal

yahoos,

on friday evening, our board received a search and restructuring
proposal from microsoft and carl icahn. in essence, this proposal would
hand over to microsoft yahoo’s search business and the rest of the
business to carl icahn. our board rejected this for a number of
reasons, that boil down to a determination that this deal would be
disadvantageous to yahoo stockholders. with our annual meeting quickly
approaching on august 1, i want to give you an idea of what to expect
over the coming days and weeks.

proposals and attacks by microsoft and carl icahn leading up to our
meeting are likely to get even more contentious. i know this could is
distracting at the very least. but i know that we can count on all of
you to continue to focus on what we do best — transforming the
experiences of our users, advertisers, publishers and developers. i
also realize that you, and our customers and partners, may have
additional questions. to address these, below is a brief faq that
should help.

please be assured that the board, the management team, and i
are all focused on doing what’s best for the business and our
stockholders. we are prepared to let our stockholders, not microsoft
and carl icahn, decide what is in their best interests. and we look
forward to the upcoming vote at our stockholder meeting. thank you for
your hard work and commitment to yahoo.

jerry

Questions and Answers for Employees

Is Yahoo’s management now considering selling off search and splitting up the company?

Microsoft and Carl Icahn made a
joint proposal for restructuring Yahoo which included the acquisition
of Yahoo’s search business by Microsoft.

Yahoo’s Board rejected the
proposal, concluding that delivering our search business to Microsoft
on terms that would be disadvantageous to Yahoo stockholders does not
make sense.

We remain committed to being a
principal in algorithmic and paid search and believe that financial
benefits from our announced agreement with Google will allow Yahoo to
advance its ability to compete in the convergence of display and search
advertising by allowing us to accelerate investment in sponsored
search, display and Web search businesses in parallel.

Does Yahoo believe that being a principal in both search and display is the best way to maximize stockholder value?

We believe that the convergence of
search and display is the next major development in the evolution of
the rapidly changing online advertising industry.

Our strategies–including our
recently announced agreement with Google–are specifically designed to
capitalize on this convergence.

What exactly did Microsoft and Carl Icahn propose to Yahoo?

Microsoft and Carl Icahn jointly
proposed a complex restructuring of Yahoo that would include the
acquisition of Yahoo’s search business by Microsoft.

The Microsoft/Icahn proposal would
require the immediate replacement of the current Board and removal of
the top management team at Yahoo. The Yahoo Board believes these moves
would destabilize Yahoo during the up to the one year it would take to
gain regulatory approval for this deal.

Yahoo’s Board of Directors determined that accepting the proposal is not in the best interests of its stockholders.

As an employee, what can I do to support Yahoo during this time?

We ask that you continue to focus
on what we do best–transforming the experiences of our users,
advertisers, publishers and developers, all while enhancing our
leadership position in the online marketplace.

Additional Customer / Partner Questions and Answers

With all the commotion surrounding the Microsoft/Icahn proposal, as
a customer/partner–should I be concerned that Yahoo is taking its eye
off the ball?

Yahoo is very focused on
continuing to provide its customers and partners with the high-quality
level of service and attention that they have come to expect from all
Yahoo employees, including management.

While this public volley can be
challenging for everyone, it does nothing to change Yahoo’s fundamental
commitment to maintaining the highest standards of service.

Is Yahoo’s management now considering selling off search and splitting up the company?

Yahoo’s Board rejected the joint
Microsoft/Icahn restructuring proposal that would have included the
acquisition of its search business by Microsoft.

Yahoo remains committed to being a
principal in algorithmic and paid search and believes that the
financial benefits of our announced agreement with Google will allow
Yahoo to advance its ability to compete in the convergence of display
and search advertising by allowing us to accelerate investment in
sponsored search, display, and Web search businesses in parallel.

What exactly did Microsoft and Carl Icahn propose to Yahoo?

Microsoft and Carl Icahn jointly
proposed a complex restructuring of Yahoo that would include the
acquisition of Yahoo’s search business by Microsoft.

The Microsoft/Icahn proposal would
require the immediate replacement of the current Board and removal of
the top management team at Yahoo. The Yahoo Board believes these moves
would destabilize Yahoo during the up to the one year it would take to
gain regulatory approval for this deal.

Yahoo’s Board of Directors determined that accepting the proposal is not in the best interests of its stockholders.


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