Microsoft News Tracker

The rumors of an Xbox 360 price reduction came true today, but it turned out to only be a clearance sale on the 20GB version as Microsoft has replaced it with an 60GB version at the old price:

Microsoft Corp. is giving consumers more gigabytes for their buck. The company today announced an Xbox 360 console with triple the storage space of the original console, but for the same price of $349 (U.S.) estimated retail price (ERP).

Available in retail stores in the U.S. and Canada starting in early August, the upgraded Xbox 360 will include a 60GB hard drive for storing the growing wealth of digital entertainment available for the console, including music, movies, television shows and game content. In addition, Microsoft today dropped the price of its 20GB Xbox 360 console in the U.S. and Canada to just $299 (U.S.) (ERP) while supplies last, a savings of $50.
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Xbox 360 is just one of three Xbox 360 gaming and entertainment systems Microsoft offers. Microsoft’s Xbox 360 Arcade, which comes with a 256MB memory unit and five Xbox LIVE Arcade games, is a value for the whole family for $279 (U.S.) (ERP), and the premium Xbox 360 Elite console is available with a 120GB hard drive for $449 (U.S.) (ERP).

Presumably cost reductions on the base electronics and on hard drives make it all doable at a profit or not too much of a loss. Don’t expect Nintendo or Sony to follow suit though:

I’m just waiting for Sony’s release now to complete the picture by saying something along the lines of: “No way, our $399 (40GB) and $499 (80GB) models are still bargains, considering you get a Blu-ray player.”

Seriously, Sony has said they’re not going to cut prices during E3, but there is a rumored new model coming in August.

Originally, the Sony PS3 seemed overpriced, but Blu-ray may well have saved the PS3 or the PS3 may have saved Blu-ray depending on how you look at it.

Yahoo’s board of directors has rejected a Friday night joint offer (perhaps a more accurate term would be ultimatum) from takeover artist Carl Icahn and Microsoft:

Yahoo! Inc. (Nasdaq:YHOO), a leading global Internet company, confirmed today that it has rejected a joint proposal from Microsoft Corporation and Carl Icahn for a complex restructuring of Yahoo! that would include the acquisition of Yahoo!’s search business by Microsoft.

The proposal was made on Friday evening and Yahoo! was given less than 24 hours to accept the proposal, the fundamental terms of which Microsoft and Mr. Icahn made clear they were unwilling to negotiate. After reviewing the proposal with its legal and financial advisers, Yahoo!’s Board of Directors determined that accepting the proposal is not in the best interests of its stockholders.

The salient aspects of the offer are that Microsoft would get Yahoo’s search business at what Yahoo’s board felt was an unfairly low price, and Carl Icahn’s band of pirates would get to take over what remains of Yahoo replacing the board and top management.

Mr. Bostock continued, “After negotiating among themselves without the involvement of Yahoo!, Carl Icahn and Microsoft presented us with a ‘take it or leave it’ proposal under which we would be required to restructure the Company, hand over to Microsoft Yahoo!’s valuable search business and to Carl Icahn the rest of the Company, giving us less than 24 hours to respond. It is ludicrous to think that our Board could accept such a proposal. While this type of erratic and unpredictable behavior is consistent with what we have come to expect from Microsoft, we will not be bludgeoned into a transaction that is not in the best interests of our stockholders.”
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Mr. Bostock concluded, “Microsoft and Mr. Icahn are trying to dismantle the Company and deliver our search business to Microsoft on terms that would be disadvantageous to Yahoo! stockholders. We are prepared to let our stockholders, not Microsoft and Carl Icahn, decide what is in their best interests and we look forward to the upcoming vote.”

I seriously doubt that Microsoft and Icahn expected their offer to be accepted so presumably this was merely PR fodder for Icahn’s proxy battle. However, while it does give some creditability to Microsoft’s statement that they would deal with Icahn if he wins, I suspect the style and terms of this offer will merely increase the suspicion that Icahn and Microsoft are trying to stampede the shareholder sheep into a pen for a real trimming.

Finally, despite it all, the Yahoo board is still willing to discuss the sale of the entire company or just the search business and wants the shareholders to know it:

Yahoo!’s Board points out that a transaction to acquire the whole company would be much more straightforward and involve far less risk than the new proposal or any similar alternative. The Board believes a whole company transaction could be negotiated and executed prior to August 1st. In rejecting the Microsoft/Icahn proposal, Yahoo! not only repeated its offer to sell the entire Company to Microsoft for at least $33 per share, but also offered to negotiate an improved search only transaction. Microsoft rejected both offers.

Update July 14: The WSJ has purported details of the Microsoft-Icahn offer plus that group’s slant on the negotiations.