Boatloads of Money…or Not

It is days like today that have corporate directors thanking the gods for the creation of the business judgment rule.  Last year, Yahoo passed on a $48bn offer from Microsoft.  Its market cap is now somewhere around $20bn and falling.   Carol Bratz famously said that she’d do the deal with Microsoft that Jerry Yang passed if “boatloads of money” were involved.  Well, she did the deal, sort of, but where’s the money?    The Microhoo link-up is no doubt good for Microsoft, but an extra $275 million a year for the first 5 years for Yahoo hardly seems like “boatloads” given what was on offer.  What happens long-term after Yahoo has handed over search and then ad revenue to Microsoft?  Yahoo says that the cash has been replaced with "boatloads of value."  Unfortunatelty, the source of the new value is "too hard to explain" on a conference call.  Although a lawsuit for breach of fiduciary duties would not doubt fail given the protection afforded by the business judgment rule, I wonder when the first one will be filed.

-bjmq