All Things Digital

Be careful what you wish for, Jerry Yang.

Because after talking to a dozen Yahoo (YHOO) execs over the weekend after the Microsoft (MSFT) takeover deal cratered, most of whom are vice presidents or above, I have to say that your stock drop isn’t the worst thing you will have to deal with this morning when you pull up at work.

The worst? That’ll be the very hairy eyeballs you will be getting from a lot more of your employees, who are scared silly and a lot peeved by the limb many feel you have dragged them and their stock options out onto.

A major decline in the share price today was of prime concern to those I interviewed, with most hoping it would not dip below $20, based on the possibility of signing a long-rumored ad outsourcing deal with Google (GOOG) soon that could potentially keep the stock higher.

Also of concern: making too many sudden moves to placate Wall Street, like a possible alternative merger with AOL (TWX) (which the Yahoo troops still don’t seem to welcome).

But causing particular dismay was the image of Yahoo’s top execs high-fiving after Microsoft CEO Steve Ballmer walked away from the deal, an act reported in the New York Times this weekend after the deal was scotched.

“That was very telling, if it was true,” said one exec, who–like everyone–did not want to be named. “It shows a complete lack of connection to the balance of the company.”

And that was the nice quote!

Last night, Yang tried to placate employees a bit by posting an aptly named communication, “OK, so now what,” on Yahoo’s blog called (not so aptly) Yodel Anecdotal. He also took a slap at, presumably, Microsoft’s PR effort and the press coverage around the takeover attempt.

“By the way, I’m sure you’ve all read or watched the news about this. Frankly, there’s a lot of nonsense and misinformation in what’s being reported. Just so we are all clear, here’s what happened. The board took its mission very seriously. We clearly indicated to Microsoft that we were open to a transaction but only if it were on terms that fully recognized the value of Yahoo and was in the best interests of our stockholders.

“No one is celebrating about the outcome of these past three months… and no one should.”

So no high-fiving anymore, right? And, just so we are all clear, everyone at Yahoo I talked to sure isn’t celebrating.

So, here’s a sampling of the feelings, none of which were positive, even though BoomTown tried mightily to get someone to render a more sanguine spin on the proceedings:

“I am in shock.”

“I don’t know if we won or we lost. I think we lost.”

“I don’t love that it was Microsoft, but I think everyone thought $33 was a pretty good offer from a pretty good tech company.”

“Having to face my staff tomorrow will not be so much fun and I need some Prozac, since I don’t know what I can say to them about how our leadership is going to get our company going again.”

“Where’s the Jelly memo when you need it?”

“I can’t really talk to Jerry, since it is difficult to tell a founder tough things he probably needs to hear.”

And, “Do you think we need to do an intervention with Jerry and the board?”

I am not sure that would work, but most employees I talked to thought a new leader at the top of Yahoo would be a good idea to give employees a fresh start and a new outlook.

Suggestions ranged from former Yahoo COO Dan Rosensweig to former Viacom (VIA) CEO Tom Freston to former eBay (EBAY) CEO Meg Whitman (pictured here).

“Jerry could become chairman, Sue [Decker] could remain president and then someone who can really charge in and make drastic change could be CEO,” suggested one exec. “Do you think Meg Whitman would do it?”

Um, no. But, ironically, Whitman was almost Yahoo CEO in a potential merger between Yahoo and eBay that never happened in the late 1990s.

As they will also say someday about 2008’s stillborn takeover of Yahoo by Microsoft: Could’ve, would’ve, should’ve.

But didn’t.

In the late 1990s, during the height of the bubble of Web 1.0, there was a poolside charity auction at an Industry Standard conference for a variety of items donated by Web luminaries.

A tie from John Doerr, the right to push eBay CEO Meg Whitman in the pool and also the little black dress that then-CEO Katrina Garnett of CrossWorlds Software had worn and made famous in a Richard Avedon-shot ad for the company.

I am blanking on the person who bought the dress, but what was most interesting about that item was that the same person kept upping his own price, and went several rounds bidding against himself before winning the prize for a lot of money.

It was amusing at the time, a symbol of a very frothy time indeed.

Today is not that time, so I was a bit perplexed at why Microsoft (MSFT) would top its own bid and raise its $31-per-share offer for Yahoo (YHOO) to $34 a share, as suggested by Citigroup (C) analyst Mark Mahaney yesterday.

There seem to be no other rivals and not much has changed since the software giant made its unsolicited offer at the start of February, except for time passing.

Of course, the only reason to do so then is to get the deal done sooner than later and perhaps the number was a public message to Microsoft CEO Steve Ballmer of that fact (as I said before, I am sure there are plenty of private messages too).

And while I am in the camp that Yahoo, well run, is probably worth a whole lot more (see this post I did at the start of this slog) than even $34–although perhaps not the $40 that Yahoo claimed last week–it’s still a matter of actually getting Microsoft to pay it by bidding against itself.

As I saw back in the roaring ’90s, it could happen. The question is: What will it take to get Microsoft to do it?

My guess if it happens: Sheer boredom and the cost of wasted time during which rival Google (GOOG) keeps chugging along and a distracted Microsoft and Yahoo do not.

Please see this disclosure related to me and Google.

Look, I love a good takeover rumor as much as the next gossipy reporter.

But all the incessant rumblings of Microsoft sniffing around to buy Yahoo or Yahoo merging with eBay are getting a tad ridiculous.

So, Deal or No Deal? Um, no deal, Howie! Really, no deal at all.

What it feels like to me is a bunch of bored and jobless investment bankers getting together for lunch at the Grill Room at the Four Seasons in Manhattan, cooking up the idea of such mergers and acquisitions and then speed-dialing gullible reporters.

While Yahoo stock was up yesterday on talk of Microsoft’s interest in it via a story in the New York Post–interest that has been written about at least 43 times over the past year–I am here to say that there is nothing new here.

Here’s what is going on and has long been going on: Microsoft continues to cast about for a viable Internet strategy, as it always does, and Yahoo is probably the numero-uno solution on its business development fix-it list.

Why? Well, the software behemoth just can’t catch Google in the lucrative search-ad market no matter how hard it tries and how much money it spends.

If it presumably put together it and No. 2 Yahoo, then presto chango, a real horse race.

But that’s kind of like stitching together Bill Richardson and Dennis Kucinich and getting a potential front-runner for the Democratic presidential nomination.

And, in fact, such a union has been raised in the past, by former Yahoo CEO Terry Semel in a trip he made to see Microsoft CEO Steve Ballmer several years ago.

It never happened then and will not now.

While Microsoft might indeed have renewed interest in such a pairing, I am here to tell you Yahoo execs do not seem to share that enthusiasm, except perhaps as a last resort or if the company’s stock price dips precipitously low.

But anyone who attended Jerry Yang’s speech at the Consumer Electronics Show in Las Vegas could see that the Yahoo co-founder and CEO has no intention of throwing in the towel quite yet.

While he might be thinking of outsourcing its search-ad business–and he should–or focusing more heavily on opening up Yahoo’s platform, a sale is like the red button of bye-bye to him.

Plus, if Yahoo were in play, there would be a feeding frenzy for the still-strong Web property–including obvious interest from Comcast, AT&T and even Google (which would never ever happen because of antitrust issues).

More intriguing is the idea of Yahoo and eBay linking up, which makes a lot more sense, but it also is not in the works.

Interestingly, Yahoo and the dominant auction site almost did merge back in the first dot-com bubble, a deal that was scuttled at the last minute over whether eBay CEO Meg Whitman would be in charge or not.

Now, such a deal seems more of a desperation play rather than a smart move–although the pair together would be serving an awful lot of customers worldwide and have some of the strongest Web brands around.

More likely is even closer ties between Yahoo and eBay, which is–sources told me–in the midst of a top-executive reorganization right now, as it looks toward the day Whitman is not in charge.

So, sorry to burst a bubble–actually, I am not sorry at all–but it is more no deal than deal here.

In fact, here is a piece I did back in late November, when Silicon Alley Insider’s Henry Blodget raised the same Yahoo-Microsoft rumors.

Please see this disclosure related to me and Google.

Here’s some more video from the halls of Web 2.0 Summit, which is taking place this week in San Francisco.

Look to John Paczkowski of Digital Daily for liveblogging from the conference yesterday, which included appearances by Microsoft’s Steve Ballmer and eBay’s Meg Whitman.

Today is the final day, with digital bigshots onstage like: AT&T’s Randall Stephenson, Mike Volpi of Joost and Uber-VC John Doerr.

Of course, most of the action–as always–takes place in the halls of the Palace Hotel, where the schmoozing never stops. We hung out for a bit yesterday and asked everyone their thoughts on the latest hot trend and ridiculous hype. Incredibly, the answer to both was Facebook!

Here’s a video of the scene from Day 2:

Here’s some video from the halls of Web 2.0 Summit, which is taking place this week in San Francisco.

As you will see, it is quite the Bubblefest, with all sorts of geeky bonhomie and aspiring hopefulness of also landing a $15 billion valuation, as Facebook founder Mark Zuckerberg noted he was about to do onstage yesterday.

Other luminaries onstage yesterday included Google exec Marissa Mayer, Nokia’s Anssi Vanjoki, former AOL exec Ted Leonsis and super-VC Mike Moritz. Today’s slate: Microsoft’s Steve Ballmer, eBay’s Meg Whitman, Philippe Dauman of Viacom and other various and sundry Web poo-bahs.

Of course, most of the action–as always–takes place in the halls of the Palace Hotel, where the schmooze factor is always ratcheted up to 11. There’s nothing a bunch of nerds likes to do more than debate each other over code and funding and which start-up is about to tank (not theirs!).

Here’s a video of the scene from Day 1:

Now, in living color, the entire historic joint interview with Microsoft’s Bill Gates and Steve Jobs of Apple.

D: All Things Digital, the annual tech and media conference Walt Mossberg and I host, has been sold out with a long wait list every year we have put it on.

That has meant only a few hundred people can see the interviews we do live onstage with some of the tech and media industry’s most interesting and important players.

That has included Gates and Jobs, as well as Eric Schmidt of Google, IAC’s Barry Diller, Meg Whitman of eBay, Cisco’s John Chambers and many others.

We usually post the photos and videos of the interviews six or more months after they take place on a separate conference site. This year, our Digital Daily’s John Paczkowski liveblogged D5 and also posted video highlights from all of the sessions immediately on our newly launched site here.

Now, today, we are posting videos of every session of the 2007 conference here, in full, and we have made all our photo galleries, hosted by SmugMug and mostly shot by our fabulous Asa Mathat, public too. You can also access our videos via the site’s master player here.

We’ve done this early with our popular interview with Gates and Jobs for download on iTunes (where it is among the most popular video podcasts ever for download), as well Walt’s solo interview with Jobs and Schmidt on this site.

Now, everyday, I am going to highlight a different interview from the conference. And, today, I obviously must kick off with the interview that attracted the most attention: our joint discussion with Gates and Jobs.

There is not much to say about it that has not been said. It’s 83 minutes. It’s historic. It’s funny. It is visionary (and not the cat fight expected between the longtime rivals). It’s surprisingly poignant in parts.

Here you are: