Year in review: The Microhoo saga

By all accounts, it's been a hellish year for Yahoo and its CEO Jerry Yang.

A battle over the Microsoft buyout bid, a proxy fight with billionaire investor Carl Icahn, a game of chicken with antitrust regulators, and finally, a search for a new CEO, have all left Yahoo and Yang ready to tell Father Time goodnight.

What a year it's been for Yahoo. The company took center stage in the technology sector, grabbing headlines left and right with each twist and turn in its various battles.

The drama began in February when Microsoft announced its unsolicited buyout bid valued at $31 a share, or $44.6 billion. That quickly drove Yahoo's share price from its slumbering $19 range to as high as $30.25, as investors began frothing at the mouth.

But Yahoo issued a public rejection two weeks later, saying the deal undervalued the company. For the next six weeks, various members of Yahoo's management team talked with Microsoft execs, but never in a formalized fashion.

Frustrated by the lack of progress with the talks, and aware Yahoo was out seeking a white knight, Microsoft CEO Steve Ballmer sent a letter to Yahoo's board with an ultimatum--do the deal within a three-week deadline, or face a proxy fight, a possible lowering of the offer, or an abandonment of the deal.

That deadline came and went with no response from Yahoo. In the following days, the parties set up their now infamous meeting, where Yang and co-founder David Filo met with Ballmer and crew.

Photo collage credit: Dan Farber/CNET News

The Microhoo drama played out in real life and in our imagination.

There at the meeting, Ballmer upped the buyout price to $33 a share, to which Yang countered with $37 a share and also a threat that Yahoo would initiate a search advertising deal with Google if Microsoft waged a proxy fight. That negotiation session was the last between the companies for a full buyout of Yahoo.

With that deal kaput, Yahoo shareholder activist Carl Icahn entered the picture less than two weeks later, announcing his proxy fight to unseat Yahoo's current board. Icahn, as well as a number of other large Yahoo investors, were fuming that the deal had been lost and were ready to charge like raging bulls.

Several days later, Microsoft re-emerged on the scene with an offer to acquire just Yahoo's search business. That deal, however, was rejected.

By mid-June, Yahoo announced that Microsoft was no longer interested in acquiring the company and that it would, instead, partner with rival Google on search advertising. Yahoo's stock took a hit on the news.

A month later, Microsoft teamed up with Icahn to again make a partial bid for just Yahoo's search business. That deal, too, was shot down.

In the backdrop of the drama, Yahoo's shareholder meeting date was fast approaching and would give Icahn a chance to try to unseat Yahoo's existing board and convince shareholders to elect his slate. But before it got to that point, Icahn and Yahoo reached a settlement that called for Icahn and two of the members from his dissident slate to join Yahoo's board of directors.

Yahoo was able to avert the Icahn crisis. But as that wound down, another fight was brewing on the antitrust front. The U.S. Department of Justice decided to investigate Yahoo's search advertising deal with Google, which had been put on hold until regulators could determine whether it would violate antitrust laws. Yahoo's ad customers, via the Association of National Advertisers, had also weighed in with the DOJ to oppose the deal.

After numerous meetings and various proposals to change the agreement, Yahoo and Google ultimately walked away from the deal when the DOJ informed the companies in early November it would file a lawsuit to block the partnership from going forward.

Yahoo's plans to generate as much as $800 million in revenues from Google in the first year of the partnership disappeared with the deal.

Less than two weeks later--in mid-November--Yahoo announced that Yang will step down as CEO as soon a replacement is found. The co-founder of the Internet search pioneer, however, will remain on the company's board and resume his title as "Chief Yahoo."

And so 2008 ends on a "no" note: no Microsoft deal, no Google deal, and soon, no CEO with the last name of Yang.