Yahoo! Weekly News: October 30, 2009

Yahoo! Returns To Make Its Case To Wall Street
(Extracted from The Wall Street Journal, 10/28/2009) Yahoo Inc. held its first official event with Wall Street analysts in over three years on Wednesday, and sought to reinforce the notion that it's on its way to a recovery. "I hope we have earned the right for you to be impressed," Chief Executive Carol Bartz told analysts, after a series of presentations by company executives designed to illustrate the company's technological prowess and plans for increasing sales and profitability. Bartz, appointed in January, has been tasked with overseeing a turnaround at Yahoo (YHOO), which has struggled to compete in the Internet search market with Google Inc. (GOOG), while also dealing with a downturn in spending on online advertising. Yahoo executives demonstrated ways that Yahoo plans to more tightly integrate its search service with other content and services on its Web sites, and highlighted progress in delivering display advertising tailored for individual Internet users. Priority number one, Yahoo said, is "winning in display." Yahoo plans to effectively outsource its search technology to Microsoft Corp. (MSFT) under the terms of a planned partnership, while focusing on its display business. The Microsoft partnership is currently being reviewed by antitrust regulators. In addition, Yahoo said Wednesday that both companies have mutually agreed to extend the negotiating period for the deal, originally scheduled to expire Oct. 27. Bartz told analysts that the companies need more time to iron out details. "We'd like to get it right up front, so we don't have to spend time chatting about it later," she said, adding that there should be no concern that the arrangement will be called off.

Complexity' Delays Microsoft-Yahoo! Deal
(Extracted from Information Week, 10/29/2009) It's taking longer for Microsoft and Yahoo to hammer out the details of their Internet partnership than the companies originally thought it would. The tech giants previously said they would have the deal signed by Oct. 27, but that deadline came and went Tuesday without a formal partnership in place. "Given the complex nature of the transaction, there remain some details to be finalized," Yahoo said in a filing Wednesday with the Securities and Exchange Commission. “The parties are working diligently on finalizing the arrangements, have made good progress to date, and have agreed to execute the agreements as expeditiously as possible," Yahoo said. One possible sticking point may be the complex revenue sharing formula under which the companies will split search dollars. Despite the delay, Yahoo CEO Carol Bartz assured analysts Wednesday that the deal would get done. Yahoo has said it expects the arrangement to add $500 million to annual operating income and $275 million to cash flow while cutting capital expenses by $200 million. Investors shrugged off news of the delay, as shares of both Microsoft and Yahoo were flat in midday trading Thursday.

Yahoo! Japan Posts 13% Net Profit Gain
(Extracted from WSJ, 10/27/2009) Yahoo Japan Corp. said its fiscal second-quarter net profit rose 13% year-to-year as revenue from its shopping, auction and content services grew. The Internet service provider, which is affiliated with Softbank Corp. and Yahoo! Inc., said its net profit in the quarter ended September rose to 20.07 billion yen ($217.7 million) from 17.74 billion a year earlier, while revenue rose 3% to 68.04 billion yen from 66.07 billion yen. The shopping service saw sales rise on new promotional programs such as limited-time discounts, while auction revenue rose on an increase in commissions charged to retailers offering products via the auctions. The content business, which offers movies and music among other products, saw membership revenue continue to grow, despite a rise in monthly fees. For the quarter ending in December, Yahoo Japan forecasts a net profit of between 20 billion yen and 21.3 billion yen. It also expects revenue in the range of 66.8 billion yen and 70 billion yen. The company reports earnings based on Japanese accounting standards.

Carl Icahn To Yahoo! CEO Carol Bartz: ‘I Wish You Could Be Cloned’
(Extracted from WSJ, 10/27/2009) Activist investor Carl Icahn earned his way onto the Yahoo board last year through epistolary warfare, sending Yahoo Chairman Roy Bostock letter after letter blasting him and the board for "sabotaging" Microsoft's attempts to acquire the company. How apt that as Mr. Icahn stepped down from the board last week, citing other demands on his time, he sent Mr. Bostock one more letter, with a very different tone. "I did not believe I would be saying this when I first came on board, but I believe you have acted with great wisdom in guiding the board during the year I have been a member," Mr. Icahn wrote, according to the copy of the letter. "I should like to thank you for inviting me to stand for election to the board this year and it is with a certain sadness that I am resigning." Mr. Icahn concludes his one-paragraph letter, "I mean it sincerely when I say it has been a pleasure to work with you." Mr. Icahn gushed even more in a letter he sent to Ms. Bartz. "I wish you could be cloned because so many of the companies in the country could use a Carol Bartz as CEO," he wrote, adding, "My resignation in a way is a compliment to you in that I do not believe that Yahoo any longer needs an activist shareholder." In a statement, Mr. Bostock said, "Carl has been an important member of our Board and has helped us through some significant transitions. We are all grateful for his active role shaping the future of Yahoo! and wish him well in all his endeavors."