Microsoft is either cunningly devious or deeply confused. Those are the only conclusions I can come to after reading the muddled statement that Microsoft put out this morning in response to Carl Icahn’s latest letter to Yahoo shareholders. Microsoft firmly declared that it might or might not be interested in buying Yahoo after all. But it will only reach this state of indecision if Yahoo’s shareholders agree to throw out its current board of directors in favor of Mr. Icahn’s slate. Even then, Microsoft might only want to reiterate its recent offer buy Yahoo’s search business: After the shareholder election Microsoft would be interested in discussing with a new board a major transaction with Yahoo!, such as either a transaction to purchase the “Search” function with large financial guarantees or, in the alternative, purchasing the whole company. How is it that Microsoft doesn’t know if it wants to buy Yahoo or not? The company has said it is no longer interested in the full acquisition it first proposed, given the resistance it has faced from Yahoo’s current management. The prospect of a takeover by Mr. Icahn, and all the bloodletting that implies, either makes Yahoo more or less appealing to Microsoft — but Microsoft ought to know which. One explanation for Microsoft’s ambiguity is that the company simply wants to destroy Yahoo rather than buy it. I wrote last month that all the departures of top Yahoo executives, prompted in part by the company’s artless response to Microsoft, may have sent it into a death spiral. And now, if Microsoft can encourage shareholders to back Mr. Icahn but not actually buy the company, Yahoo well could end up even weaker than before. The other explanation is that Steve Ballmer, Microsoft’s chief executive, doesn’t actually know if he wants to own Yahoo or not. There are certainly good arguments on both sides. But if I were a Microsoft shareholder, I would hope that Mr. Ballmer, after spending six months and many millions of dollars pursuing a deal with Yahoo, has decided what he wants. One thing is clear: For Carl Icahn and for Yahoo shareholders considering how to vote, Microsoft seems to be neither a trustworthy partner nor a reliable bidder for Yahoo, no matter who’s on the Yahoo board of directors.
