All Things Digital

Earlier this week, BoomTown posted our speaker list for the sixth edition of D: All Things Digital, which will take place in a few weeks–May 27 to 29, to be exact–in Carlsbad, Calif.

The annual gathering of tech and media luminaries was created and is run by my partner Walt Mossberg and me.

D6 tech and media speakers include: Microsoft Bill Gates and Steve Ballmer of Microsoft (MSFT); News Corp.’s (NWS) Rupert Murdoch; Jeff Bewkes of Time Warner (TWX); Mark Zuckerberg and Sheryl Sandberg of Facebook; Michael Dell of Dell Computer (DELL); IAC’s (IACI) Barry Diller; Amazon’s (AMZN) Jeff Bezos; Howard Stringer of Sony (SNE); and TiVo’s (TIVO) Tom Rogers.

Also: Tom Glocer of Thomson Reuters (TRI); Melinda Gates of the Gates Foundation; FCC Chairman Kevin Martin; Lowell McAdam of Verizon Wireless (VZ); Activision’s (ATVI) Robert Kotick; and former Microsoft tech guru Nathan Myhrvold of Intellectual Ventures.

Just recently, we added Jerry Yang, CEO and co-founder of Yahoo (YHOO), and now he is being joined onstage at the conference by Yahoo President Sue Decker (pictured here in a lovely Wall Street Journal dot-drawing).

The pairing should make for a lively session, given all the heat around Yahoo of late, largely related to the scuttled attempt by Microsoft to buy the company.

What would you like to know about that and anything else about Yahoo?

As it so happens, you can ask!

While the conference is sold out, you can submit questions that you would like answered to Yang and Decker or any of the speakers via text or video. Walt and I will pick the best ones and let loose.

Ask early and often here!

In addition, the whole conference will be online at AllThingsD during the conference, via live blogs and reports of breaking news (and there will be breaking news, as there always is), along with video highlights.

And videos of all the interviews will be posted soon after it is over.

Bill Gates and Steve Ballmer of Microsoft (MSFT). News Corp.’s (NWS) Rupert Murdoch. Jeff Bewkes of Time Warner (TWX). Yahoo’s (YHOO) Jerry Yang.

All of them engaged in roiling Internet deal-making of late and all of them in just three weeks on the same stage–but not, thankfully, at the same time, or we’d need a professional negotiator–at the 6th D: All Things Digital conference in Carlsbad, Calif.

The annual gathering of tech and media luminaries was created and is run by my amazing partner Walt Mossberg and me (see us here at D5) and will take place May 27 to 29.

The conference, as we describe it on our Web site, is “unlike any other executive conference.” What we mean by that is that we try to determine the next direction of the digital revolution via unscripted and informal, but pointed, conversations about the impact of digital technology with industry leaders.

In other words, Walt and I needling at the major players of the digital sector, until they give up the good stuff.

The other digital and media leaders coming? That would be: Mark Zuckerberg and Sheryl Sandberg of Facebook; Michael Dell of Dell Computer (DELL); IAC’s (IACI) Barry Diller; Amazon’s (AMZN) Jeff Bezos; Howard Stringer of Sony (SNE); and TiVo’s (TIVO) Tom Rogers.

Also: Tom Glocer of Thomson Reuters (TRI); Melinda Gates of the Gates Foundation; FCC Chairman Kevin Martin; Lowell McAdam of Verizon Wireless (VZ); Activision’s (ATVI) Robert Kotick; and former Microsoft tech guru and Nathan Myhrvold of Intellectual Ventures.

To say our timing is impeccably planned would be undeserved–we had no idea so much news related to all these companies and their leaders would break out, from the tough economy to takeover battles to court face-offs to mergers to trying to create a whole new way of reading.

Also, there will be some–as yet under wraps–amazing demos onstage too.

While the analog conference has been sold out for many months, the action will be on the AllThingsD.com site throughout the conference with round-the-clock live blogging by Digital Daily’s John Paczkowski, as well as video highlights from stage.

In addition, we’ll be pointing all over the Web to important tech and media news that breaks at D6.

And we will also stream the entire conference in the weeks after the conference takes place, so ATD’s audience can experience the whole thing, even if they cannot all attend.

But anyone’s questions can be there, though–this year, you can submit questions to any of the speakers via text or video that you would like answered. Walt and I will pick the best ones and let loose. Ask early and often here!

Walt and I are very excited for D6, even after last year, when we brought together industry legends Bill Gates and Apple’s Steve Jobs, for an historic joint interview.

At the time, Walt and I joked that we would not be able to top that amazing event (the video of the entire interview is below).

That interview was nearly unbeatable, but we also think that with the top-level interviewees we have assembled for D6, that it is game on.

Until then, here’s the Gates/Jobs video from D5:

Who in the Internet sector hasn’t enjoyed the always amusing stylings of Mr. Ross Levinsohn, the high-profile former head of Fox Interactive Media a.k.a. “The Guy Who Bought MySpace for News Corp.”?

Today, he added another song to his silky smooth repertoire as the “Internet guy who dissed Yahoo.”

In a nice scoop, TechCrunch reported that Levinsohn was going to be a nominee to the board that Microsoft (MSFT) has been forming as part its potential proxy fight to take over Yahoo (YHOO).

That’s true, several sources have told me. Levinsohn, who was recruited by Microsoft’s Yusuf Mehdi, has even filled out paperwork as part of the process.

And once the i’s are dotted and the t’s crossed, that makes him the highest profile Internet figure on the board, which is made up of–let’s just say it, shall we?–pretty unimpressive former execs, none of whom has had any substantial Internet experience.

While many well-known Web figures were approached by Microsoft, few in Silicon Valley have been willing to be part of an effort to snuff out an independent Yahoo, one of its most important and iconic brands.

Not so the entrepreneurially inclined Levinsohn, apparently, who has a maverick nature.

He left FIM in 2006, for example, after deciding he wanted to be more than an overpaid employee of Rupert Murdoch and Peter Chernin.

Now, the Los Angeles-based Levinsohn runs an investment fund called Velocity Interactive Group with former AOL (TWX) head Jon Miller. Armed with $1.5 billion, the investment focus of the new enterprise will be on digital media and communications.

Given possible News Corp. (NWS) involvement as a possible partner in the Microsoft deal (more on that later), including a desire by Murdoch to spin MySpace into Yahoo, it’ll be interesting that Levinsohn might now have some power over his former bosses.

Or not. Most expect the board to be a rubber stamp for Microsoft, although several sources say those asked have been told that they can vote in the way they think is best for Yahoo.

Kind of like superdelegates! Except geekier!

Here is a video interview I did with Levinsohn in December of 2007, where he talks about the future of digital media on the Web, as the tech and entertainment industries and its many players seek to figure out how to make the painful digital shift and find new monetization plans that will replace crumbling old-media businesses.

At the end, months before Microsoft’s unsolicited bid for Yahoo was launched, after I asked him what will be coming, the psychic Levinsohn eerily predicted: “Something happening with Yahoo, I think, this year.”

Something indeed.

Here is the video:

Yes, the board of Yahoo is meeting today to try to devise new and more dastardly ways of wringing more money out of Microsoft.

For viewers just tuning in, so far this week on “As the Tiny-Incestuous-Petty-Juvenile-Digital World Turns,” Yahoo (YHOO) has been plenty busy:

An AOL (TWX) mashup deal!

A Google (GOOG) search-ad partnership!

Even–cue the trumpets!!!–the late entrance of that man-about-Silicon-Valley from Web 1.0, Frank Quattrone, working for Google, which is helping Yahoo on AOL (and, fun, snake-eating-itself fact: as a banker, Quattrone worked for Yahoo when it was contemplating buying eBay).

This is so deliciously sweet, in terms of geek soap opera, that I fear I may get a major cavity soon.

But like any hungry viewer, I want more! What, what, what could be the next twist and turn?

Here are three of my more creative brainstorms:

1. Reunite the dream team in United States v. Microsoft to scare the living daylights out of Steve Ballmer.

It will be like an antitrust version of “I Know What You Did Last Summer.” I am almost certain that Joel Klein, Janet Reno, David Boies and the ever-irascible Judge Thomas Penfield Jackson (the latter two pictured here) still are capable of giving Microsoft (MSFT) the willies.

2. If you want make former Yahoo merger partner and now Microsoft merger parter News Corp.’s (NWS) Rupert Murdoch squirm, there’s nothing like adding yet another wizened media mogul to the mix. My No. 1 choice would be some kind of hopelessly complex mashup with the properties of Sumner Redstone (pictured here), who controls both CBS (CBS) and Viacom (VIA). I am thinking something that includes SpongeBob SquarePants and those irksome girls from “The Hills” (also pictured here) and, say, Katie Couric.

3. Of course, the most surefire way to get more money from Microsoft: Hire Mark Zuckerberg (pictured here). So far, the 23-year-old wunderkind and his team at Facebook (well played, Owen Van Natta, well played!) have been the only ones able to get Microsoft to fork over an ungodly amount of money for a chance to own a small part of a hope and a dream and not-a-very-impressive bottom line.

If Zuckerberg can get a $15 billion valuation by putting up only SuperPokes and news feeds as collateral, I would find what he is drinking and get me some for myself.

Please see this disclosure related to me and Google.

Everybody remain calm.

While it might have looked like it was the rapture for major Internet players yesterday–what with everyone and his mother getting sucked up into the Yahoo-Microsoft takeover tussle and disappearing into the ether of confusion that now reigns over the situation–it is best to keep moving toward the light of harsh reality for illumination.

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Could we resist? No, we could not.

Thus, BoomTown’s translation of Saturday’s letter from Microsoft (MSFT) CEO Steve Ballmer to the Yahoo (YHOO) Board of Directors, which has been resisting the software giant’s efforts to buy the troubled Internet portal for $31 a share in an unsolicited takeover.

The well-written letter was surprising in its clarity, but it still masked several secret messages.

Ballmer wrote: April 5, 2008
Board of Directors
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089

Dear Members of the Board:

Translation: Dear Members of the Board, whom I will be replacing very soon with my own slate, which includes the three judges from “American Idol” (Simon promises to behave and Paula promises not to), as well as the sock puppet from Pets.com, the PC Guy in those #@#*! Apple commercials and also Microsoft Bob.

Ballmer wrote: It has now been more than two months since we made our proposal to acquire Yahoo at a 62% premium to its closing price on Jan. 31, 2008, the day prior to our announcement. Our goal in making such a generous offer was to create the basis for a speedy and ultimately friendly transaction. Despite this, the pace of the last two months has been anything but speedy.

Translation: What? A middle of the night crank call from me, yelling and screaming and threatening “Terminator”-like destruction if you did not acquiesce was too much?

Didn’t you get the flowers I sent the next day?

Ballmer wrote: While there has been some limited interaction between management of our two companies, there has been no meaningful negotiation to conclude an agreement. We understand that you have been meeting to consider and assess your alternatives, including alternative transactions with others in the industry, but we’ve seen no indication that you have authorized Yahoo management to negotiate with Microsoft. This is despite the fact that our proposal is the only alternative put forward that offers your shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers, and consumers.

Translation: I tried not to be annoyed when you had dinner with News Corp.’s (NWS) deal-loving Rupert Murdoch, or when you flirted with those we-gotta-make-some-move-any-move execs at AOL (TWX) (Bebo for $850 million in cash=Microsoft’s $240 million investment in Facebook).

But dithering around with Google (GOOG), whose secret corporate motto is “Poke Microsoft With a Stick Often,” even after it has been slapping you around Silicon Valley for years?

Ballmer wrote: During these two months of inactivity, the Internet has continued to march on, while the public equity markets and overall economic conditions have weakened considerably, both in general and for other Internet-focused companies in particular. At the same time, public indicators suggest that Yahoo’s search and page view shares have declined. Finally, you have adopted new plans at the company that have made any change of control more costly.

Translation: Google keeps slapping you silly in search, then you slap us with a costly severance plan. It’s like we’re Curly in a Web-version of “The Three Stooges.”

Why I oughta….

Ballmer wrote: By any fair measure, the large premium we offered in January is even more significant today. We believe that the majority of your shareholders share this assessment, even after reviewing your public disclosures relating to your future prospects.

Translation: Legg Mason and Cap Re and Citi and the rest of them are with us and not with you. Why? They like us, they really like us. Also, we are much scarier.

Ballmer wrote: Given these developments, we believe now is the time for our respective companies to authorize teams to sit down and negotiate a definitive agreement on a combination of our companies that will deliver superior value to our respective shareholders, creating a more efficient and competitive company that will provide greater value and service to our customers. If we have not concluded an agreement within the next three weeks, we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo board. The substantial premium reflected in our initial proposal anticipated a friendly transaction with you. If we are forced to take an offer directly to your shareholders, that action will have an undesirable impact on the value of your company from our perspective, which will be reflected in the terms of our proposal.

Translation: We can do this the easy way or the hard way. The easy way includes tasty breakfast pastries and yummy hot cocoa (unlimited marshmallows, of course!) and lots and lots of hugging.

The hard way? Tepid lattes in the Silicon Valley soup kitchen lines for you, after your stock drops to the bottom of a bottomless well when we pull out!

Ballmer wrote: It is unfortunate that by choosing not to enter into substantive negotiations with us, you have failed to give due consideration to a transaction that has tremendous benefits for Yahoo’s shareholders and employees. We think it is critically important not to let this window of opportunity pass.

Translation: Like I said before, I won’t be ignored, Jerry! I have a very sharp proxy firm and I am not afraid to use it!

Also, I am not above boiling your annoying exclamation point.

Ballmer wrote: Sincerely,

Steven A. Ballmer
Chief Executive Office
Microsoft Corp.

Translation: If you’ll be my bodyguard,/I can be your long lost pal!/I can call you Jerry,/And Jerry, when you call me,/You can call me Steve!

So, for the last week or so since Yahoo rejected Microsoft’s unsolicited bid of $31 a share as too low, all has been relatively quiet on the Western front.

Sure, Yahoo (YHOO) continued its tango with News Corp.’s Rupert Murdoch (lots of those dramatic cross-country flights to meet in secret, like they were rendezvousing at Hernando’s Hideaway, details of which somehow always get leaked to the press).

In turn, while threatening a proxy fight, Microsoft (MSFT) trotted out its execs–including its iconic Chairman Bill Gates–to restate that its offer was “fair” and leaked its own internal memos, including emails from top brass to company minions.

So, one wonders, what could get this party started?

Well, for one, the looming March 13 date by which Microsoft might wage that proxy battle by naming its own board (including some high-profile tech figures it is looking for in Silicon Valley, as we reported here) could add some frisson to the situation soon.

But, what if, before that, Microsoft actually lowered its bid? It is not such an unlikely idea, according to many sources close to the situation.

That’s especially possible after Yahoo’s share of the search market showed continued weakness last week, even as the number of searches went up. According to comScore results last week, the second-ranked Yahoo clocked in with a 22.2% share of the market in January, down from 22.9% in December.

“The pressures are going to get worse,” said one person. “Time is not on Yahoo’s side.”

Indeed, if signs of business weakness at Yahoo worsen, several people suggested to me that Microsoft should make a slightly lower offer for Yahoo and promise the difference between its old bid and new one to Yahoo employees as a rich retention plan.

Is it such a crazy idea? BoomTown can tell you Microsoft execs had to have been annoyed when Yahoo rolled out a pricey severance plan last week to all its employees, as was first reported here.

The plan could cost Microsoft billions of dollars, if the company wins the Yahoo fight and lays off employees as part of the deal. Sources told me Microsoft execs thought it a stunt by Yahoo and not a very funny one at that.

And we need some fun right about now, don’t you think? So to start off the week right, here’s that infectious Pink video of her hit “Get the Party Started,” as well as the fantastic “Hernando’s Hideaway” number from “The Pajama Game”:

BoomTown is suffering from Rupert Murdoch déjà vu.

Back in July, I actually wrote a post about the head of News Corp. (owner of Dow Jones and this site) in which the first sentence was: “MySpace and Yahoo should merge.”

I was referencing a very interesting comment that Murdoch (pictured here) made in an interview in June of 2007 with Time’s Eric Pooley.

In it, he floated the idea of trading a 25% stake of Yahoo for MySpace.

As the Time article noted:

MySpace’s much smaller archrival, Facebook, is surging: what started as a narrower college site is broadening and accelerating. … But as MySpace showed signs of reaching saturation, Murdoch began very preliminary, exploratory talks about trading the site for 25% or more of Yahoo. ‘Terry Semel was enthusiastic about it,’ he says of the then Yahoo CEO. ‘We were looking to see if it was a good idea. I wasn’t sure.’ Now Semel is gone, and Murdoch needs to see what Yahoo will become under its new boss, co-founder Jerry Yang.”

And as I noted in my post:

In one fell swoop, Murdoch had confirmed the talks, but made it seem as if it was Yahoo’s execs who were desperate to do a deal (and you know Semel and Yang would never talk about how they felt about it), while also giving MySpace an instant valuation of $8 billion at today’s nearly $32 billion Yahoo valuation…

It is no small leap to imagine the sly Murdoch calculating that he should be thinking right about now about getting while the getting is good and the hype is at an all-time high.”

Well, nothing much seems to have changed with the news yesterday that News Corp. was interested in grabbing just under 20% stake in Yahoo in exchange for MySpace and News Corp.’s other online properties in its Fox Interactive Media group.

(The discussions were first reported on the blogs Silicon Alley Insider and TechCrunch.)

This is an unusual switcheroo, since, on Feb. 4, Murdoch had publicly said it was unlikely News Corp. would vie for Yahoo. “We are definitely not going to make a bid on Yahoo,” said Murdoch on a conference call with analysts.

It depends on your definition of “definitely” and “a bid for Yahoo,” I guess. Classic rope-a-dope that even Muhammad Ali would admire!

This time the idea is reportedly to value MySpace at $10 billion (which is actually $5 billion less than the $15 billion that Microsoft’s recent $240 million investment gave smaller MySpace rival Facebook).

Of course, such a Yahoo mash-up with News Corp. would likely be a hopelessly complex deal, especially compared to the cleaner and simpler giant-pile-of-cash-and-stock that Microsoft is offering that big shareholders are likely to prefer.

“The only one who would understand such a complicated News Corp./Yahoo tie-up is Murdoch,” said one large Yahoo investor. “It is too much to figure out and not enough clarity compared to Microsoft’s bid.”

In any case, according to The Wall Street Journal, Yahoo CEO Yang supped with Murdoch and News Corp.’s President Peter Chernin last week to talk about the idea.

Presumably, the thinking is the same as I noted more than six months ago:

To merge his massively popular social network with Yahoo’s still-powerful-despite-struggles ad and search empire would create a powerful media and technology giant that would have a lot of key elements for the next generation of Web interaction.

For Yahoo, which is in need of a dramatic move, this would deliver a smack to Google (which still has reportedly not completely closed its $900 million ad deal with MySpace), solve its inability to enter the social-networking space and boost its distribution network dramatically.

For MySpace, Murdoch gets to unload a service that is increasingly going to need a major dose of technology expertise and own a big chunk of what could be a drastically undervalued property.”

The more things change…

Please see this disclosure related to me and Google.

As a continuing public service, BoomTown translates the letter that Microsoft CEO Steve Ballmer sent to Yahoo’s Board of Directors last week, informing them of the software giant’s unsolicited offer to buy the troubled Internet portal for $31 a share.

Steve wrote: January 31, 2008

Dear Members of the Board:

Translation: [With Steve channeling Alex Forrest in “Fatal Attraction”] Well, what am I supposed to do? You won’t answer my calls, you change your number. I mean, I’m not gonna be ignored, Jerry!

Steve wrote: I am writing on behalf of the Board of Directors of Microsoft to make a proposal for a business combination of Microsoft and Yahoo! Under our proposal, Microsoft would acquire all of the outstanding shares of Yahoo! common stock for per-share consideration of $31 based on Microsoft’s closing share price on January 31, 2008, payable in the form of $31 in cash or 0.9509 of a share of Microsoft common stock. Microsoft would provide each Yahoo! shareholder with the ability to choose whether to receive the consideration in cash or Microsoft common stock, subject to pro-ration so that in the aggregate one-half of the Yahoo! common shares will be exchanged for shares of Microsoft common stock and one-half of the Yahoo! common shares will be converted into the right to receive cash. Our proposal is not subject to any financing condition.

Translation: First, we’re patient, waiting out that goofy 100-day plan, those sacred cows, all that noise about revival, until you turned in yet another depressing quarter and your stock dropped below $20 a share.

Second, we’re cheap, because that makes $31 seems like Christmas in July for beaten-down Yahoo shareholders, even though–let’s be honest–it’s kind of like stealing candy from a baby.

Third, no financing conditions! In other words, we’re rich! Rich! And did we mention? RICH!

Steve wrote: Our proposal represents a 62% premium above the closing price of Yahoo! common stock of $19.18 on January 31, 2008. The implied premium for the operating assets of the company clearly is considerably greater when adjusted for the minority, noncontrolled assets and cash. By whatever financial measure you use–EBITDA, free cash flow, operating cash flow, net income or analyst target prices–this proposal represents a compelling value realization event for your shareholders.

Translation: Once again, with feeling! You=losers. Us=rich!

Steve wrote: We believe that Microsoft common stock represents a very attractive investment opportunity for Yahoo!’s shareholders. Microsoft has generated revenue growth of 15%, earnings growth of 26% and a return on equity of 35% on average for the last three years. Microsoft’s share price has generated shareholder returns of 8% during the last one-year period and 28% during the last three-year period, significantly outperforming the S&P 500. It is our view that Microsoft has significant potential upside, given the continued solid growth in our core businesses, the recent launch of Windows Vista and other strategic initiatives.

Translation: OK, that’s good if you’re an old-media company! Or some crappy industrial dinosaur. But, in Internet terms, of course, 8% is pretty much what Google gets when it sneezes and calls it a new business selling ads on Kleenex.

Steve wrote: Microsoft’s consistent belief has been that the combination of Microsoft and Yahoo! clearly represents the best way to deliver maximum value to our respective shareholders, as well as create a more efficient and competitive company that would provide greater value and service to our customers. In late 2006 and early 2007, we jointly explored a broad range of ways in which our two companies might work together. These discussions were based on a vision that the online businesses of Microsoft and Yahoo! should be aligned in some way to create a more effective competitor in the online marketplace. We discussed a number of alternatives ranging from commercial partnerships to a merger proposal, which you rejected. While a commercial partnership may have made sense at one time, Microsoft believes that the only alternative now is the combination of Microsoft and Yahoo! that we are proposing.

Translation: Look, you can’t beat Google. We can’t beat Google. We decided that by partnering, we can’t beat Google. So by force-merging together two companies that can’t beat Google, we’ll beat Google! (By the way, this is the kind of logical thinking that led to the brown Zune!)

Steve wrote: In February 2007, I received a letter from your chairman indicating the view of the Yahoo! Board that “now is not the right time from the perspective of our shareholders to enter into discussions regarding an acquisition transaction.” According to that letter, the principal reason for this view was the Yahoo! Board’s confidence in the “potential upside” if management successfully executed on a reformulated strategy based on certain operational initiatives, such as Project Panama, and a significant organizational realignment. A year has gone by, and the competitive situation has not improved.

Translation: I will not be ignored by you either, Terry!

Steve writes: While online advertising growth continues, there are significant benefits of scale in advertising platform economics, in capital costs for search index build-out, and in research and development, making this a time of industry consolidation and convergence. Today, the market is increasingly dominated by one player who is consolidating its dominance through acquisition.

Translation: By consistently refusing to say Google’s name out loud, as if this is not our primary motivation, we hope the press won’t realize this is the most expensive temper tantrum in history.

Steve wrote: Together, Microsoft and Yahoo! can offer a credible alternative for consumers, advertisers and publishers.

Translation: By credible, we mean we imagine another ridiculously gigantic behemoth, with Microsoft in charge, looks like David versus those fruity-colored Goliaths of Google. Well, it does if you squint really hard when you look at it.

Steve wrote: Synergies of this combination fall into four areas:

Translation: Scale, schmale, Google is kicking both our butts, so let’s join forces to see if that works. Plus, then we can lay off a lot of people and save some money. Of course, all the really good engineers will probably be scooped up by Google, and then we’re back to square one.

Steve wrote: We would value the opportunity to further discuss with you how to optimize the integration of our respective businesses to create a leading global technology company with exceptional display and search advertising capabilities. You should also be aware that we intend to offer significant retention packages to your engineers, key leaders and employees across all disciplines.

Translation: [Again, in an Alex Forrest voice] You play fair with me, I’ll play fair with you.

Steve wrote: We have dedicated considerable time and resources to an analysis of a potential transaction and are confident that the combination will receive all necessary regulatory approvals. We look forward to discussing this with you, and both our internal legal team and outside counsel are available to meet with your counsel at their earliest convenience.

Translation: Let’s review the key issues! We. Will. Not. Be. Ignored.

Steve wrote: Our proposal is subject to the negotiation of a definitive merger agreement and our having the opportunity to conduct certain limited and confirmatory due diligence. In addition, because a portion of the aggregate merger consideration would consist of Microsoft common stock, we would provide Yahoo! the opportunity to conduct appropriate limited due diligence with respect to Microsoft. We are prepared to deliver a draft merger agreement to you and begin discussions immediately.

Translation: Just try and get another bid from those gun-shy Time Warner wimps or that not-that-crazy Rupert Murdoch and we’ll be launching the warheads on them. And if you so much as glance in Eric Schmidt’s direction–well, we can’t be responsible for our actions.

Steve wrote: In light of the significance of this proposal to your shareholders and ours, as well as the potential for selective disclosures, our intention is to publicly release the text of this letter tomorrow morning.

Translation: I love the smell of napalm in the morning!

Steve wrote: Due to the importance of these discussions and the value represented by our proposal, we expect the Yahoo! Board to engage in a full review of our proposal.

My leadership team and I would be happy to make ourselves available to meet with you and your Board at your earliest convenience. Depending on the nature of your response, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!’s shareholders are provided with the opportunity to realize the value inherent in our proposal.

Translation: Let’s not call it an offer you can’t refuse, which sounds so thuggish. Let’s call it an offer the refusal of which you can’t.

Steve wrote: We believe this proposal represents a unique opportunity to create significant value for Yahoo!’s shareholders and employees, and the combined company will be better positioned to provide an enhanced value proposition to users and advertisers. We hope that you and your Board share our enthusiasm, and we look forward to a prompt and favorable reply.

Translation: By unique opportunity, we mean rock and a hard place. By enthusiasm, we mean try not to look ill. By prompt and favorable, we mean we think sacred cows are very tasty when boiled!

Steve wrote: Sincerely yours,

Steven A. Ballmer
Chief Executive Officer
Microsoft Corporation

Translation: Tony “Monkey Boy” Soprano

And, as a special added bonus, here’s BoomTown’s decoding of Yahoo’s response to the Microsoft offer:

Yahoo wrote: Yahoo! Board of Directors to Evaluate Unsolicited Proposal From Microsoft

SUNNYVALE, Calif.–February 01, 2008–Yahoo! Inc. (Nasdaq:YHOO), a leading global Internet company, today said that it has received an unsolicited proposal from Microsoft to acquire the company. The company said that its Board of Directors will evaluate this proposal carefully and promptly in the context of Yahoo!’s strategic plans and pursue the best course of action to maximize long-term value for shareholders.

Translation: Omigod. Omigod. Omigod. We’re cooked! But do you think Microsoft will let us keep the exclamation point?

Please see this disclosure related to me and Google.

The Wall Street Journal gave a big hello to its new owner, Rupert Murdoch, who takes over Dow Jones (owner of this site) today, by publishing this tough piece also today on the disaster of News Corp.’s investment in Gemstar-TV Guide International.

It comes from breakingviews, an online financial commentary Web site that the news organization regularly adds to its print paper and online site. Dow Jones also is a minority investor in the site, which was writing about the recently announced deal for Macrovision to buy Gemstar, in which News Corp. owns a 41% stake.

Money (or, more precisely, non-money) quote:

But in gross terms, Mr. Murdoch looks to have paid $1.6 billion–after selling the magazines in 1991 and receiving cash from Mr. Malone in 2000–for the first half of his Gemstar stake. He paid $6 billion in News Corp. stock for the other half. That is nearly $8 billion for an investment valued at $1 billion today.”

Ouch!

Life under media mogul Rupert Murdoch will be full of surprises, at least.

Earlier this week, the News Corp. CEO and chairman said while in Australia that he is leaning toward making The Wall Street Journal’s fee-based Web site free, which appears to be getting some resistance from, well, the execs running the flagship newspaper.

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Did I wangle a seat right next to soon-to-be Dow Jones owner Rupert Murdoch last night at the Web 2.0 Summit dinner?

Of course I did, continuing in the shameless BoomTown tradition of trying to get gratis meals with moguls (like our ongoing efforts to raise money for DonorsChoose.org and get a free lunch with Yahoo CEO Jerry Yang).

(Here’s a picture above that I nicked from Valleywag, as they called me “abrasive” in their post and said I was carrying water for News Corp.-owned MySpace with my incessant questions about rival Facebook’s business model and insane valuation. To the first, I say that’s like a commercial sander calling Comet abrasive and, to the second, I obviously now have to start slapping MySpace co-founder Chris DeWolfe’s handsome face around to maintain my scratchy cred.)

In any case, the News Corp. chairman and CEO could Web 2.0 it up with the rest of the geeks, as it turned out, and managed to touch on topics ranging from the Facebook valuation to the state of the media industry to the need for even more digitization across the landscape.

If you want to see Murdoch in action, here’s some snippets of his onstage interview, along with MySpace co-founder Chris DeWolfe with conference co-host John Battelle. It’s a little hard to hear, but worth the watch.

He talks about such topics as his love of Silicon Valley, the future of MySpace (owned by News Corp.), the renewal of DeWolfe’s contract, Google, Facebook, his hope for the New York Times (Would he like to kill it? “That’d be nice,” he answered.), the “half-dead” CNBC (the main competitor of his new Fox Business channel) and, of course, his plans for his newest shiny toy, The Wall Street Journal (more culture!).

I asked him, no surprise, about the $15 billion Facebook valuation, which prompted Murdoch to say News Corp. was drastically undervalued. That’s cheeky!

Thanks also to the other Web 2.0 Co-Host Tim O’Reilly for asking Murdoch when he was going to fire BoomTown! Job security? Nope! Rupe’s answer: “There’s still time!” (Hopefully, after he shivs the Times and CNBC.)

Here the video:

At the end of the night of the first day of the Web 2.0 Summit, MySpace threw a party at San Francisco’s Museum of Modern Art, where the No. 1 social-networking site showed off its Beverly Hills style and planted a flag (in the form of a new office about to open in the city soon) to counter Facebook’s much-hyped popularity with Silicon Valley types.

It was quite a fancy shindig, with more Web kingpins than you can shake a third-party app at, including YouTube Co-Founder Chad Hurley, News Corp. head Rupert Murdoch (owner of MySpace), VC Ron Conway and, of course, a clutch of Facebook execs (who are deep in negotiations over new funding and deals, but managed to travel an hour north for a free drink).

Here’s the video:

For those making plans for next week on this lovely Friday, here’s a few things to look forward to in BoomTown, including a visit to San Francisco by our new Big Boss Rupert Murdoch of News Corp.

(And should we take it personally that he still hasn’t called to ask to inspect AllThingsD HQ–also known as the ramshackle cottage behind my house–when he is here?):

1. YAHOO EARNINGS! Of course, we’re going to obsessively cover the Yahoo earnings call on Tuesday and also begin our 10-day countdown of the end of Yahoo CEO Jerry Yang’s 100-Day No-Sacred-Cow Vision Quest.

Let’s hope it’s unsurprising financial news or a lot of fatted calves are in big trouble over at the Internet giant.

Besides news of earnings, many are looking for a more significant move from Yahoo at the end of the top-to-bottom look Yang has been taking at the company. Right now, there are rumors flying through Yahoo about another reorganization of the management ranks, especially after both Yang and President Sue Decker told the crowd of 300 vice presidents they gathered recently that such change would be constant at the company.

In addition to Yahoo, IBM and Intel will report Tuesday; eBay and Apple on Wednesday; and Google on Thursday. And Amazon, Apple and Microsoft will report the following week.

2. FACEBOOK FUNDING: Expect a possible end to the ridiculously inflated funding discussions at the hot social network, when Mark Zuckerberg makes his choice in Silicon Valley’s equivalent of the dating game.

Reportedly, there are terms sheets with a variety of proposals in Facebook’s hot little hands from all three.

Microsoft CEO Steve Ballmer will doubtlessly be making an appearance at Facebook next week, when he is scheduled to be here (see below), to convince the execs at Facebook that his