Leaked Yahoo memo indicates reticence toward Microsoft bid

While Jerry Yang continues to advocate a bright and cheery attitude, there are clear indications that he's feeling trapped.

A Yahoo employees memo written yesterday by CEO Jerry Yang was leaked to the online industry publication Valleywag, and has apparently been verified by IDG through a check of the SEC database where such communications are also filed. The memo indicates that although Yang and his fellow executives have not yet reached a decision as to whether to accept Microsoft's takeover bid, his preference for now is to continue growing his company as though Microsoft had never said anything.

Writing in his trademark all-lowercase, Yang said, "the board [of directors] is focused on maximizing the value of yahoo!s tremendous assets for our shareholders. and it is going to take the time it needs to do it right."

The fact that Microsoft is interested in the company, Yang went on, underscores its value; and one element which makes it valuable, he listed, is "our open ad network." This refers to the advertising platform which Yahoo is continuing to develop, and to which Yahoo contributed greatly last year through the acquisition of the Right Media advertising exchange. Curiously, in its publicly distributed proposal letter last Friday, Microsoft made no mention of its interest in that component of Yahoo, instead touting the abilities of its own platform and citing the possibilities its own engineers could realize if Yahoo's engineers would join them.

The case could be made, therefore, that Yang -- knowing his memo would inevitably be leaked, and probably to Valleywag -- could be making indirect communication with Microsoft in lieu of formal negotiations, and may be making a signal here that Right Media, the next-generation Panama platform project, and all other Yahoo technology components must come with any deal. Yang may not yet be ready to formally lay down terms, though this could be the only means his board makes available to him today to tell Microsoft it does not get to pick and choose -- it's all or nothing.

Yesterday, the Wall Street Journal speculated that Yahoo's board, headed since just last Thursday night by new non-executive chairman Roy Bostock, is more actively considering an alliance with Google that would enable Yahoo to remain somewhat independent, if somewhat less competitive in the advertising space. Yang's memo yesterday makes no mention of Google.