From the What Were They Thinking File:

Yahoo! got its ass served to it by Google by initially powering its search engine by Google.

Now, it’s about to let Google serve some of its ads… this is a dumb move strategically and tactically.

That’s not just desperate, it’s a plain dumb move. Remember one thing: when MSFT threatened to reduce its bid last week, one reason it cited was that YHOO’s cold reaction and the resulting proxy war would have an adverse effect on YHOO’s perceived value…

But now, by opening up its search inventory to Google - even if it’s only 3% of its inventory - does in fact reduce YHOO’s relative value to Google for a buyer such as MSFT.

I am really not sure what Yahoo! gets out of this other than pissing off a buyer.

Sooner or later, someone needs to take the keys away from Jerry Yang. In fact, both Yahoo!’s CEO, President and CFO along with the Board’s handling of this will go down as the worst handling of an M&A opportunity in recent history. What should and could have been a $50B sale to MSFT will go down as a low $40B’s exit.

Note: I sold 87.5% of my holdings but remain long YHOO.  See Part 2 : YHOO Just Checkmate Itself.