Microsoft gives Yahoo three weeks to do a deal

Microsoft on Saturday issued an ultimatum to Yahoo, giving the Internet search pioneer three weeks to enter formal merger negotiations and conclude a deal.

The software giant threatened to launch a proxy fight to unseat Yahoo's board of directors, as well as take its case straight to Yahoo investors should no deal be reached in that period.

And as a further cattle prod in getting a deal consummated, Microsoft threatened to lower its existing bid, citing how Yahoo's value will be hurt if it needs to resort to such hostile means.

"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," Steve Ballmer, Microsoft chief executive, stated in his letter to Yahoo's board of directors. "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."

Microsoft initially offered an unsolicited buyout bid of $31 per share for Yahoo back on February 1.
Since its initial offer, executives from both companies met four weeks ago for the first time to discuss the merger and once again last week with no results of moving it into formal talks.

Yahoo's board is expected to discuss Ballmer's letter next week, as well as provide a briefing on how talks between the two companies went last week, one source said.

Ballmer's letter is no slam dunk in driving Yahoo to formal talks. Yahoo, which already rejected Microsoft's initial offer as too low and one that undervalues the company, is leery of entering formal talks without assurances Microsoft's bid will be higher.

"We could enter formal talks and they might increase the bid, or they might not," the source said, noting opening their financial books to the software giant may make little difference. "Our books are already open. We're going to report our earnings in a couple weeks."

Yahoo, meanwhile, is cognizant that Microsoft wants to get the deal done and past federal antitrust regulators, otherwise called the Department of Justice (DOJ), while President Bush is still in office, the source said.

One former high-level antitrust attorney with the DOJ, who is now in private practice, said it usually takes six to eight months to move a deal through the DOJ. There is approximately eight months left before Bush's term ends.

Meanwhile, another source noted back in early March that Microsoft has its opposition slate of directors for Yahoo all ready to go.

The opposition slate would move to unseat Yahoo's 10 directors at the next annual shareholders meeting. Should Microsoft take such action and prevail, it's likely the opposition slate would vote to remove Yahoo's "poison pill," which makes it prohibitively expensive to acquire the company. A poison pill floods the market with additional shares of a target company, should a hostile bidder acquire too many shares of a company's stock.

Ballmer, in his letter, indicated that Microsoft would ask Yahoo investors to tender their shares to the software giant, which would park them until it could get its opposition slate elected. While Microsoft would not be able to gain control of Yahoo by taking that measure, it will send a clear message to Yahoo if enough of the Internet company's investors side with Microsoft. Basically, it would show Yahoo how successful Microsoft would be in getting its opposition slate of directors elected, when those investors are asked to vote on Yahoo's new board.

Yahoo should brace itself for an onslaught of investor wrath come Monday.

One large institutional investor is planning to call Yahoo's independent directors and management on Monday.

"I'm not happy with how Yahoo has handled it. I think they've bungled it while Microsoft has played it pretty well," the investor said. "I like that (Microsoft) has put a clock on this. I previously told Yahoo's independent directors that if they didn't move forward with this, I might support a new board."

And while this investor had a brief thought of banning together a group of major Yahoo investors to make a public statement in support of Microsoft's bid, the institutional investor noted that there would be a number of filing hoops to go through with the Securities and Exchange Commission. He noted a more likely scenario will be for institutional investors to make individual statements.

The investor previously advised Yahoo to move forward and fast in doing a deal with Microsoft, given the changes in January with a new administration in the White House and in the European Union. He also advised Yahoo's management to ditch the idea of doing a roadshow with its three-year strategic plan, and instead spend the time getting a deal in place.

"We all think Microsoft should pay more for Yahoo and, if it is handled right, Microsoft will likely pay more," said the major investor, who thought $34 to $35 per share is a good range.

The investor added: "Microsoft has to do this deal. The paradigm is shifting away from their core business to the Internet. They've already spent billions of dollars but haven't gotten it right. This is such a logical deal for them to do."

Bet on 'Rainbow Six Vegas 2'

A sequel to a great video game shouldn't mess with the original formula too much, yet should still introduce enough new features and improvements to justify the purchase.

This is precisely what the talented Ubisoft Montreal developers did with "Tom Clancy's Rainbow Six Vegas 2," an intense tactical shooter that once again drops you in the middle of Sin City with your elite squad of operatives to put an end to a terrorist siege.

This time you play as team leader Bishop, a veteran sharpshooter tasked with saving the city.

Among your teammates are Park, an electronics and recon expert, and Walter, who specializes in heavy weapons and demolitions .In this game, played from a first-person perspective, you'll sneak through familiar locations from the first game, as well as many new areas, including a huge theater with balconies, a seemingly abandoned loading dock and, as one would expect, a hotel casino.

You will have access to 11 new weapons and a half-dozen pieces of gear, such as smoke grenades, C4 plastic explosives and breaching charges used to blow open doors. New moves include the ability to sprint by holding down the left shoulder button, which helps pick up the pace of the game nicely.

The story is written and voiced well, including some surprising moments when you hear events taking place in your headset before you meet the characters in person.

Visually speaking, this high-definition world looks stunning, with near-photorealistic characters and environments and real-time day-to-night cycles. And talk about personalization, while we didn't try this ourselves, "Rainbow Six Vegas 2" lets you import a photo of your face using a console or PC Web cam to create an in-game model that looks just like you, used in both solo and head-to-head games.

Speaking of multiplayer matches, if the improved enemy artificial intelligence isn't enough for you during the lengthy single-player campaign - including tougher terrorists equipped with night vision, thermal vision and shields - this game can best be enjoyed in new online multiplayer modes, spread out over 13 new maps.

The game supports up to 16 simultaneous players on the Microsoft Xbox 360, Sony PlayStation 3 or PC. One of the more memorable new multiplayer modes is called Team Leader, where you need to protect your squad leader from elimination, which is no easy task.

Interestingly, whatever achievements you earn in multiplayer games, such as increasing your rank, are carried over to the single-player game. Similarly, experience points can be earned during the solo campaign, and spent to upgrade armor, clothing, equipment and more, even for multiplayer games.

You can also turn the single-player mode into a cooperative game at any time, seamlessly, by having an online friend jump into your story mode.

Action fans in search of an intense thriller that looks as good as it plays will win with "Tom Clancy's Rainbow Six Vegas 2." It's a safe bet you'll find it a gripping tactical adventure for you and a bunch of friends.