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Yahoo Fights For Its Board; Defends Handling Of Microsoft Deal And Says Google Is Better Partner

As Yahoo (NSDQ: YHOO) prepares for its August 1 board election, the company is once again repeating an the argument: it handled the Microsoft negotiations as best it could, and the new deal with Google (NSDQ: GOOG) is better than any partial one with Microsoft (NSDQ: MSFT). As for Carl Icahn, Yahoo is taking the opportunity to trash his track record. The presentation can be seen here, in a 32-page slideshow filed with the SEC. A concise summary can be found in a separate release.

Some key highlights:

— The company lays out the Microsoft time line on slide 6, and it clarifies that it asked the company twice, on May 17 and June 8 whether it was still interested in doing a full acquisition. Microsoft said no, not even at the previous price that it had offered. Following that, Yahoo argues that Microsoft was inconsistent between its public and private statements and that that casts doubt on whether the company was ever interested in a full acquisition. Lots more after the jump…

— Next they turn to the much-talked about partial search deal with Microsoft, and why it was a bad deal. Among the arguments: the $1 billion upfront payment for the company’s search assets would’ve been taxable and that the separation would have been too complex. It also states that Microsoft would have paid Yahoo TAC of 70 percent of net search revenues, and that this split was too low. Bottom line: Microsoft’s expectations for cost savings and revenue benefit were too optimistic, so there’d be no meaningful improvement in Yahoo’s operating cash flow. Additionally, it would have given Microsoft too much power, namely the ability to veto any other change in control. The full bill of issues can be found starting on slide 10.

— As for the Google deal, the supposed benefits are well known at this point: flexibility, non-exclusivity, increased cash flow, etc. (Slide 15)

— How Yahoo plans to execute and grow as an independent company is arguably the most important part of all this. The gist: Yahoo has tons of users, and it remains a must buy. It continues to rack up new ad partnership, and it’s now in a better position than ever to monetize these assets. On slide 19, Yahoo talks up its recent reorg, claiming it will improve product execution, reinforce P&L accountability, and position themselves better for the convergence of search and display.
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— Once again, Yahoo defends its severance plan: It wouldn’t cost $2.4 billion, and it’s not about thwarting a deal. It’s all about retaining employees.

— On Icahn: Yahoo wants you to forget all that “legendary” investor stuff. On slide 28, it lays out the performance of companies that he’s gotten involved with, and how they’ve done. It’s mainly a bunch of red ink and down arrows, though you can decide for yourself if this just means he targets companies that are performing badly.