Now that Microsoft's attempt to buy Yahoo seems to have failed, there's a lot of speculation about Microsoft's strategy.

Deal Journal speculates that Microsoft may be following a "no"-really-means-"maybe" strategy. "In the past, Oracle and PepsiCo backed away from takeover attempts, only to return to the negotiating table after their prey twisted in the wind," Heidi Moore writes.

But here's an even more evocative prey metaphor, from venture capitalist Todd Dagres of Spark Capital: "Microsoft is using the crocodile strategy- - rather than try to eat its prey while it's warm and tough, it's dragging it down to the bottom of the river, sticking it under a rock and eating it later when it's cold and soft."

Either way, is Yahoo eventually dead meat?

Photo: Reuters

We weren’t expecting huge surprises during Yahoo’s earnings conference call, but CEO Jerry Yang was spectacularly vague about the Internet company’s plans vis-a-vis Microsoft or any other potential tie-ups — with Google, Time Warner’s AOL or News Corp — that Yahoo has been working on.

At the very start of the call, Yang essentially said “Don’t go there” to analysts and investors, reminding them about the purpose of the call.

“I’d like to remind you that today’s call is about our Q1 results, so please direct your questions to the quarter if possible,” Yang said.

When he touched on Microsoft — referring to it as three months of “uncertainty” — it was to reiterate the same line: “Our board and management are committed to choosing a path to maximize shareholder value.”

At the same time, Yang was bent on convincing analysts and investors that, despite an unchanged revenue forecast for the year, Yahoo deserves a higher price than the $43 billion cash-and-stock deal that Microsoft has offered. Is that because Yahoo piggybacked on gains from a stake in China’s Alibaba.com to a higher quarterly profit? Or because Yang said Yahoo’s “strategies and investments are beginning to pay off”?

Not that analysts or investors were convinced. Most continue to believe that Yahoo’s earnings are unlikely to put pressure on Microsoft on raise its bid.

Microsoft CEO Steve Ballmer, meanwhile, said before the earnings, “I wish Yahoo all the success with its results, but it doesn’t affect the value of Yahoo to Microsoft.”

So where does that leave Yahoo now? Wednesday might offer some clues, when Yahoo’s two-week test on outsourcing search advertising to Google ends. Or it may not. Yahoo chairman Sue Decker already swatted hopes on the call, saying it’s “premature” to speculate on what sort of deal the two might strike.

Photo: Yahoo CEO Jerry Yang (Reuters)

Trust a start-up to be different.

We’d heard about the “Google 15,” the 15 pounds new employees are rumored to gain feasting off the sumptuous organic foods served at the Googleplex’s cafeteria .

Now comes the Xoopit 10, which is more of a de facto weight loss program. That’s thanks to Xoopit CEO Bijan Marashi’s devotion to fresh, low-carb, organic food. Most of Xoopit’s nine employees say they’ve shed about 10 pounds each in the past year feeding on such low-carb fare as kelp salad, goji berries and dairy-free mousse sweetened with agave. The lentil soup is a staff favorite.

“It’s food as fuel, as opposed to food as feast,” says 35-year-old Marashi, whose start-up aims to make your Gmail in-box more fun and social network-like, by letting you search for videos, files and pictures.

On the menu on Tuesday, when I visited their office in San Francisco’s Mission district: bean soup, toasted bagels with lox and tapenade, mixed greens and artisanal chocolate for dessert. The food was was all communally prepared in their loft-style office.

And when the Xoopit employees are not cooking together or washing up, they spend long hours figuring out how to spend the $5 million they raised last year.

There's something about deadlines that sharpens the mind. Reporters know this and Yahoo is finding out with its decision to get into a Web search advertising test with arch-rival search firm Google Inc.

Yahoo is facing a three-week deadline to sit down with Microsoft, which has offered $42 billion to buy the company, and seems to be getting ever more creative in figuring out ways to resist the advances of its suitor to the North. The length of its limited test with Google? Two weeks.

Google, of course, isn't about to object. "A long-term deal could be the only option that allows Yahoo to remain an independent company," a person close to Google told us.

So why would Yahoo start hooking up with Google? Flaunting its flirtation with the enemy could put pressure on Microsoft to raise the bid. After all, if the test results show a spike in advertising revenue, that could mean Yahoo is worth more to a buyer if it starts outsourcing full time. That could lead to lightening Microsoft's wallet more than the software giant had first anticipated.

But Yahoo plays a dangerous game. Microsoft said a deal between Yahoo and Microsoft could make the Web search market less competitive, just the kind of thing that leads to politicians calling for hearings. And as Microsoft knows, trips to Washington are never fun.

Grand Theft Auto publisher Take-Two, currently fending off a $2 billion hostile bid from Electronic Arts, filed an "8-K" last week, along with an attachment titled "Investor/Media Key Q&A for 14D9 Filing." A Take-Two spokesman couldn't tell us what the document was used for, but the format suggests it's a list of potential questions executives could get asked by journalists, with answers they should stick to. Pretty helpful in these days of M&A warfare, especially when you consider the extra insight on offer -- that Take-Two evidently forgot to delete -- on what to say and how to say it.

Here's Question No. 7, on expressions of interest Take-Two has received (including the part in brackets):

7. What other indications of interest has the company received? How serious have these indications been? Will you disclose other offers?

• We believe Take-Two is a unique and highly attractive asset.
• The Company has received indications of interest from third parties with respect to possible transactions since EA's announcement and has continued to receive additional expressions of serious [are we going with "serious" - I don't know the facts, but saw that serious was bracketed elsewhere] interest since our last filing.
• While no substantive discussions have yet occurred, we intend to actively pursue all strategic alternatives after April29th that may result in a better alternative to the EA Offer.

And here's Question No. 21, on the date for the annual meeting (note the third bullet point):

21. What is the record date of the annual meeting this year? Is there a chance you will need to change the record date?

• February19, 2008.
• We do not intend to change the record date
• If you would like, you could also say something along the lines of "The record date was set in accordance with legal requirements. There is no need to change the record date." Of course, this answer may change if the judge rules against us on April11.

And here's a link to the entire filing: http://sec.gov/Archives/edgar/data/94658 1/000104746908003471/a2184226zex-99_2.ht m

Photo credit: Reuters

In the war of words between CNET and its biggest shareholder, a group led by hedge fund Jana Partners, the two sides might as well be speaking in different tongues.

Jana proclaims that its motives are driven by a desire to rescue CNET -- best known for tech-news site News.com, which has been hit by stiff competition from blogs -- from irrelevance.

CNET prefers to speak the language of corporate bylaws that it believes will protect the company from unwanted attention, despite a recent legal setback that it plans to appeal.

But Jana seems to have understood perfectly CNET chief Neil Ashe's recent letter to employees, where he called the dissidents "opportunistic shareholders" and labeled the proxy fight a chess match. As blogger Michael Arrington -- whose TechCrunch is a big thorn in CNET's side, according to Dealbook -- reported, Jana would rather get rid of Ashe.

The Delaware court ruled in favor of Jana Partners, allowing the hedge fund and its partners to nominate directors to CNET Networks’ board, come the next shareholder meeting.But that decision is “just another move on the chess board,” according to CNET’s CEO Neil Ashe. In an e-mail to employees, Ashe compared fights between activist shareholders and managements for board control to chess matches.”Remember, stockholder activism is more common place today,” Ashe wrote. “We are not alone. The New York Times and IAC are both addressing similar situations. As I’ve said since the beginning, this is like a chess match.”The Times is fighting a proxy battle with hedge fund Harbinger Capital, and IAC and its controlling shareholder Liberty Media have sued each other.CNET said it is reviewing the court’s decision and may appeal. We’re waiting for the next move.Photo: Reuters file

Tech stocks are plummeting, bankers are warning venture-backed companies away from IPOs, and many are convinced that we're heading into a recession. But start-up companies, the little babies of Silicon Valley, have no cause for fear, because the tech grand-daddies -- Microsoft, Cisco, IBM -- continue to be bullish about dealmaking.

Their capacity for huge acquisitions, like Microsoft's bear-hug offer for Yahoo, may be limited, but these cash-rich tech titans love to buy lots of small companies that take them to new markets or make sense for their corporate strategies. At a Redwood City venture capital conference today, executives from across the tech spectrum, including Microsoft, Cisco, News Corp's Fox Interactive Media (which owns MySpace) and McAfee, said they remain gung-ho on acquiring start-up companies. The worsening economy hasn't changed their attitude, it seems -- two months ago, at another VC conference, they said the same thing.

Cisco dealmaker Rob Salvagno said the company has made between 10 and 15 acquisitions every year for the past few years, and he doesn't see that changing this year. They're going to keep up their hunt for the coolest start-ups in international markets as well, he told the crowd.

Fox Interactive Media's Jack Kennedy said they were more opportunistic about buying companies, but are energetically prowling for "game-changers".

And if you thought Microsoft's eyes were trained solely on Yahoo, think again. Dan'l Lewin, Microsoft's head of emerging business development, said the company will do "a lot more of what we've been doing," which is, picking up about 20 companies a year.

Separately, Ebay's M&A chief Lorraine McDonough in a chat with Reuters, said the Web auction giant has the "financial flexibility" -- meaning about $2.4 billion in free cash flow -- to pursue attractive opportunities this year.  Ebay, best known for its buyouts of PayPal and Skype, will continue making targeted acquisitions, she has said before. For start-ups, obviously things are still green in the Valley.

Bill Gates may have splashed cash on Facebook, but that doesn't mean he has to be on it. U.K.'s tabloid newspaper, The Sun, reported last week that the Microsoft billionaire had to delete his Facebook account after being hassled by thousands of fans.

The story also said Gates used to spend up to 30 minutes a day catching up with his buddies via Facebook, but he signed off after he started getting more than 8,000 friend requests a day and "spotted weird fan sites."

But can Gates have really deleted his Facebook account? The New York Times reported earlier this week that being a member might mean you've signed a "lifetime contract" with Facebook. Apparently, Facebook servers keep copies of user information even after they have deactivated accounts, although the network responded to the story, saying it's made it easier for users to delete their accounts permanently.

Facebook's got ya, Gates.

Photo: Facebook founder Mark Zuckerberg, Reuters file

Looks like dealmaking in the tech sector, which has remained relatively unscathed during the subprime and credit crises, might finally capitulate to the limping markets in 2008.

Tech banking could become a bit more "desert-like" this year as dealmaking slows down and the IPO pipeline dries up, tech analysts The 451 Group said in a report that surveyed more than 110 bankers.

The LBO market, which collapsed due to last summer's credit market upheaval after a five-year bull run, is mostly to blame for bankers' dour outlook. About 90 percent of the $172 billion in tech buyout spending last year came in the first half of 2007. After the nightmarish summer, private equity deal flow fell to 2004 levels, with total deal value dropping to $5 billion in the fourth quarter of 2007.What's worse, tech bankers don't expect a return of the LBO market in 2008 -- two out of five bankers think tech buyout spending will shrink even more this year.

Tech bankers didn't even seem excited by the bullishness of corporate acquirers, many of whom have made no secret of their robust appetite for deals in 2008. One would assume all this potential dealmaking from tech giants like Microsoft and Cisco Systems would require all flavors of banking services, but expectations of core merger-and-acquisition advisory services have tailed off, the report said.

Neither will public debuts of tech companies provide succor to bankers. Despite an upswing in tech IPOs, many of them venture-backed, since 2004, current market conditions are a wet blanket to any new and hot tech stocks, bankers said. The median pick stood at just 25 tech IPOs for 2008, compared to a median of 60 last year.

The result of all this doom and gloom? Investment firms are planning to hire less this year and cut headcount, and they're already seeing a dip in banking fee rates. And with less money to go around, those surveyed expect bulge-bracket firms to pull out of tech banking and boutiques to go under.
(Photo: Reuters/Ali Jarekji)