Jerry Yang Puts on His Poker Face: Propped by Strategic Transaction Communications

By Kyle  Austin

Bold, courageous and inspirational aren’t words often thrown around to describe Yahoo! CEO Jerry Yang.  However, after leaking its pending decision to reject Microsoft’s bid over the weekend to the Wall Street Journal, these descriptors for Mr. Yang are flying around today.   

Yahoo! formally rejected Microsoft’s offer this morning in this short-winded but very calculated press releaseThey followed that up by having Mr. Yang’s internal email to Yahoos fall into the hands of the Wall Street Journal.  Mr. Yang’s email offers much more insight into the board’s decision to term Microsoft’s bid as “substantially undervaluing” the company. 

The key to Yang’s email is his discussion of future growth opportunities.  Something that is mentioned in their press release this morning but not expanded upon.  We all know that Microsoft’s current proposal does not substantially undervalue Yahoo! as it currently stands, so it is crucial that Yang and the rest of the board illustrate its plans for future growth, if it is positioning or even posing to stay an independent company.  Of course, many think this is purely posturing, to get Microsoft to pay $40 per-share (another number that was discretely leaked to the Wall Street Journal over the weekend). 

Robert Hof of BusinessWeek, is still thinking of this as a posturing from Yahoo!.  Very high-risk posturing.  

However, Jerry Yang, Sue Decker and their board of directors do finally deserve applause for having the gall to stand up to Ballmer and company.  It’s the first time in what seems like an eternity that they deserve a round of applause (Especially, after I read this weekend in the most recent Fortune, that Mark Zuckerberg of Facebook had agreed to sell to Yahoo! for $1 billion in the Fall of 2006 but then Yahoo! reneged its offer and left Zuckerberg room to wiggle out).  

However, while you’re standing applauding the often ridiculed Yahoo! senior team, you should really be paying attention to the smoke & mirror show that is their strategic communications strategy.

Yes, you’ve heard that Yahoo! has a “few good men” in its advisors group and in addition to the biggest bankers in the world this also includes strategic communications assistance.  Mr. Yang and company are being assisted through the process by Robinson Lerer & Montgomery as well as The Abernathy MacGregor Group.  Both specialize in transaction communications including unsolicited takeover bids, proxy contests and mergers / acquisitions.

The Abernathy MacGregor Group notes its philosophy as:

“Our approach to transaction communications involves: simple messages, forcefully stated; rigid control of statements; intensely detailed program rollouts; contingency planning; constant feedback from investors; thorough media monitoring and an emphasis on the positive elements of shareholder value creation.”

The simple message is evident in Yahoo!’s official release this morning. The bid-rejection letter was applauded by those at the Dealbook for leaving the door open to Microsoft to negotiate on the bidding rather then slamming the door as Delta did to US Airways in late 2006.  The key being that the release focused on “undervaluing the company” rather harshly stating its disinterest in a takeover.The Silicon Alley Insider’s (SAI) Henry Blodget is also calling Yahoo!’s communications and investor strategy “brilliant” so far.  

The first rule of any negotiation is to create the perception of alternatives. In this case, the alternatives Yahoo wants to create the perception of are:

·  Other bidders ·  Other merger options · The ability to just say no and go it alone


He then takes you through how Yahoo! has achieved this through strategic communications in the last 48 hours. By the way, notice in the reports from the New York Times they cite information to “A source close to Yahoo!.”  This is textbook control leak strategy although Michael Arrington doesn’t seem to know what it means:

“In the past 48 hours the NYT, WSJ, and Times have learned the followingYahoo is seriously considering outsourcing search to Google as an alternative to a Microsoft merger (this isn’t an alternative, but it has been carefully positioned as one, and most media outlets–including blogs–are presenting it that way) Yahoo may start new merger talks with AOL and Disney (two companies that haven’t yet publicly disavowed any interest in the idea. Neither company would be crazy enough to try to outbid Microsoft, but never mind) Yahoo wouldn’t even consider any offer less than $40 a share (i.e., jack your offer up and we’ll talk). Microsoft offered $36 a share for Yahoo just last summer (i.e., even Microsoft thinks the company is worth a lot more than $31).”

Henry is dead on with his analysis and I encourage you to read his full post as he also takes you through how Microsoft is applying strategic communications on their end as well. Expect more of the same in the upcoming week.

I expect Yahoo!’s strategic communications advisors to follow Yang’s note with an exclusive Q&A for him or Sue Decker with a reporter at the New York Times or the Wall Street Journal that they trust and have built a solid relationship with. This would be a similar strategy to what Ballmer and advisors agreed to with Robert Guth of the Wall Street Journal last week.

Let me know who you think they will go with for exclusives. 

Miguel Helft at the New York Times and Kevin Delaney at the Wall Street Journal would seem to be the natural fit given they have followed Yahoo! for the longest time and have been mainstays on this story as it has developed. 

My money would be on Miguel and the NYT’s to land this.       

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