Good Morning Silicon Valley

If Yahoo’s board, as rumored, is meeting even as we speak to come up with a response to Microsoft’s takeover bid, we’re already prepared with a quote from noted tech analyst Winston Churchill: “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

TechCrunch cites sources saying the board members are poised to decide the fate of the company today after getting a full rundown on the remaining options, including advice from outside consultants that they take the offer, pleas by some senior executives to work a deal with Google, and speculation on whether Microsoft might be willing to sweeten the deal. But that doesn’t necessarily mean we should expect an immediate or definitive response. BoomTown’s Kara Swisher says her sources tell her today’s meeting is a phone-in, and there’s an in-person board meeting scheduled Wednesday at Yahoo HQ. And even if the board concludes that it has no choice but to talk to Microsoft, the first thing we’re likely to hear is the sound of the corporate-governance gears turning. To satisfy their fiduciary obligations and ever-watchful regulators, the board members have to carefully follow certain steps. Said Nell Minow, editor of the Corporate Library, “You have to automatically convene a special committee of outside directors and retain an investment bank to look at the bid. …You no longer have the luxury of saying, ‘It’s too low. Good-bye.’ You have essentially to outsource your due diligence.” And Patrick McGurn, special counsel at RiskMetrics Group, said, “It’s very much like Kabuki theater — it’s scripted out. It’s a formalized ritual they’re going through.” But the process does have to at least get started soon, McGurn said: “I think we’re really talking two weeks here. They can’t just stonewall for more than a couple of weeks before the heat is turned up. … The clock is ticking.”

That clock has already been ticking far too long for some critics who see in the slow response yet another example of a board gone bad. “Their silence — a week is long enough for them to say yeah, neah, or give us more money — is typical of their lackluster performance as a board,” writes Om Malik. “It was on their watch that a culture of mediocrity enveloped this once-iconic company. The board, instead of being proactive, sat idly by as the company lost its direction, focus and eventually, its market leadership. … Where was the board when the company was making one strategic blunder after another -– losing its technology focus and instead chasing the ephemeral opportunities in la-la land? Where were they when politics and bureaucracy started to eat at Yahoo’s insides? Whatever spin you might read in the news media about Yahoo’s board, simply put, they have failed in their duties.”

Microsoft’s strategy has its share of critics as well, not least among them the investors who’ve been beating on the stock since the bid was announced. “There is going to be a lot of red tape, bureaucracy and (cost cutting), so one would think there could be long wait before we see any benefits to this deal,” said Cantor Fitzgerald analyst Derek Brown. “While all that is going on, Google will be stepping on the accelerator.” And in an open letter to Steve Ballmer, BusinessWeek’s Arik Hesseldahl calls the Yahoo bid “a profoundly bad idea” and urges the Microsoft CEO to stay focused, like that other Steve.