It doesn’t matter whether Steve Ballmer, Microsoft’s bombastic CEO, walked away from the negotiating table over the weekend, as Jerry Yang says he did.

The Yahoo! Inc. founder and CEO should’ve never let the talks get to that point. Yes it’s true Rule #1 of negotiations is to never take the first offer from a suitor. But Microsoft, by the software giant’s account at least, raised its offer by US$5-billion at least allowing Yahoo executives to save face. Everyone should’ve walked away happy.

So why wasn’t Yang willing or able to seal the deal? Greed, hubris, ego; Perhaps all the above. As founder of the company, he’s likely having a hard time imagining his beloved baby in the clutches of what has been a mortal enemy; a reaction that can be understood by anyone that has created anything.

The problem is Yang is the steward of a publicly-traded company and has a fiduciary duty to get the best deal possible for his shareholders. Who, after this weekend’s events, believe Yang is acting in the interests of Yahoo shareholders? Next to no one is the correct answer. In fact, shareholders are already organizing to withhold votes for the board members at Yahoo’s annual meeting in June.

“I am extremely angry at Jerry Yang and at the so-called independent board,” Gordon Crawford, portfolio manager for Capital Research Global Investors, told the New York Times. Capital Research Global owns 6 percent of Yahoo. The firm’s parent company owns a total of 16 percent of Yahoo, making it the largest shareholder.

Crawford and others are rightly annoyed at Yahoo’s management team as they’ve given Microsoft an opening to take over the company at a much cheaper price, in effect taking money out of the hands of long-suffering Yahoo shareholders.

Yahoo’s stock, for those whose heads were buried in the sand today, sank almost 15% as the reality of the weekend’s events set in for those that had hoped to make a quick buck by playing the Microsoft takeover attempt.

Assuming Yahoo’s stock stays at current levels (it closed at US$24.47 on the Nasdaq today), Microsoft will be able to swoop in at a later date with its initial offer of a 62% premium or a lower one for that matter, which will leave shareholders with less cash in their pockets on a per share basis.

It says here that Yahoo will be subsumed by Microsoft irrespective of the weekend’s event (or non-event). Microsoft will probably take over the company in three to six months time. Problem is Yahoo’s shareholders will be poorer (on paper) for the ordeal.

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