Microsoft Talks Tough; Proxy Battle Likely

Microsoft, at loggerheads with Yahoo over its $41.6-billion offer for the popular web portal, is talking tough, threatening a proxy battle to unseat Yahoo’s reticent board of directors, reports the Wall Street Journal. But even a win, which experts say would be relatively cheap to achieve, could cost Microsoft in the form of Yahoo employee animosity and attrition.

Microsoft investors, meanwhile, aren’t as certain that Yahoo’s as much a “must have” as is Bill Gates, who yesterday advised Yahoo to "take a hard look" at the deal; since the $31-per-share offer, Microsoft’s stock is down 14%. Yahoo yesterday rolled out enhanced severance benefits—up to two years' salary—for employees who might be laid off after a purchase, making a takeover that much more expensive for Microsoft. (More Yahoo stories.)