Friday, April 4, 2008
Microsoft Reevaluating Bid - Yahoo Tanks
Associated Press - A person familiar with Microsoft's bid for Yahoo says the software company is evaluating its offer in light of the economic climate and the Internet pioneer's deteriorating business. The person, who asked not to be named because he was not authorized to speak publicly, said Yahoo's share of the search market, stock price and overall condition have deteriorated since Microsoft announced its bid Feb. 1.
Oh, and Yahoo (YHOO) fell nearly 5% in after hours trading.
Update 2: So Yahoo dissed Microsoft - Again. In a response letter to Steven Ballmer's letter (see update 1), Yahoo CEO Jerry Yang and Chairman Roy Bostock said that "any transaction with Microsoft 'must be at a value that reflects the value of Yahoo, including any strategic benefits to Microsoft, and on terms that provide certainty to our stockholders...'We are confident that our stockholders understand that our independent board is best positioned to objectively and knowledgeably evaluate our company's alternatives and to maximize value." Here's the full text of the letter.
Like I said (read below), this serenade is going to go on for at least a month and a half, while Microsoft huffs and puffs. Meantime, breakout the popcorn, and bet short on Yahoo. Just remember that the day the deal goes through, Yahoo will top the charts.
On a side note, this update business is getting on my nerves, and I think I'm going to set up a seperate page with full coverage of the 'Microsoft-Yahoo' deal, which will have a timeline and a chronological listing of all the posts I've made on this tech soap opera. Save me from explaining the entire past background of the deal everytime there's some minor update.
Update 1: Steve Ballmer sent an open letter to the Yahoo Board, and gave them 3 weeks to agree and sign on the dotted line or he'll make them walk the plank. From the WSJ - If a deal isn't reached within three weeks, Microsoft would be "compelled" to take its offer directly to shareholders and wage a proxy fight to replace Yahoo's directors, Mr. Ballmer wrote. He also implied that the offer Microsoft would make after the deadline would be lower than the one now on the table. "If we are forced to take an offer directly to your shareholders, that action will have an undesirable impact on the value of your company from our perspective which will be reflected in the terms of our proposal," he wrote. Yahoo's board is reviewing the letter, a person close to the company said. Read the letter here.
In this post a few days ago, I made it pretty explicit that Yahoo, one way or the other, was headed for free fall - a long, long way down. The basic premise of my argument was that there was no alternative buyer, Yahoo was only playing for time while going through the motions of trying to find a buyer, and that the only way for Yahoo shares to rise, or even maintain the current level, was to shake hands with Microsoft, failing which YHOO would begin to drop, sooner or later, and end up way below the pre-Microsoft offer level. Which means that YHOO is actually worth about $10 to $15. It's trading today at about $27 something. That's a big free fall waiting to happen. And nothing, other than agreeing to the Microsoft offer, is going to prevent that.
The only question that remains is this. Will Yahoo shareholders force the board to wave the white flag, or will the board do so on its own? And how long is this process going to take? Because as long as the fight continues, YHOO is going to keep dropping. I don't think Jerry Yang is going to give up so soon, so I'd say we're good for at least a month and a half of rumors and disses to Microsoft, before the tide turns towards Redmond. For the present, situation remains the same. I said Yahoo was going to drop - It dropped. I say its going to drop some more. And then some. Just one rider...If you start hearing rumors about Yahoo agreeing to the offer, the price is gonna shoot up like crazy, so keep your ears open.
Oh, and Yahoo (YHOO) fell nearly 5% in after hours trading.
Update 2: So Yahoo dissed Microsoft - Again. In a response letter to Steven Ballmer's letter (see update 1), Yahoo CEO Jerry Yang and Chairman Roy Bostock said that "any transaction with Microsoft 'must be at a value that reflects the value of Yahoo, including any strategic benefits to Microsoft, and on terms that provide certainty to our stockholders...'We are confident that our stockholders understand that our independent board is best positioned to objectively and knowledgeably evaluate our company's alternatives and to maximize value." Here's the full text of the letter.
Like I said (read below), this serenade is going to go on for at least a month and a half, while Microsoft huffs and puffs. Meantime, breakout the popcorn, and bet short on Yahoo. Just remember that the day the deal goes through, Yahoo will top the charts.
On a side note, this update business is getting on my nerves, and I think I'm going to set up a seperate page with full coverage of the 'Microsoft-Yahoo' deal, which will have a timeline and a chronological listing of all the posts I've made on this tech soap opera. Save me from explaining the entire past background of the deal everytime there's some minor update.
Update 1: Steve Ballmer sent an open letter to the Yahoo Board, and gave them 3 weeks to agree and sign on the dotted line or he'll make them walk the plank. From the WSJ - If a deal isn't reached within three weeks, Microsoft would be "compelled" to take its offer directly to shareholders and wage a proxy fight to replace Yahoo's directors, Mr. Ballmer wrote. He also implied that the offer Microsoft would make after the deadline would be lower than the one now on the table. "If we are forced to take an offer directly to your shareholders, that action will have an undesirable impact on the value of your company from our perspective which will be reflected in the terms of our proposal," he wrote. Yahoo's board is reviewing the letter, a person close to the company said. Read the letter here.
In this post a few days ago, I made it pretty explicit that Yahoo, one way or the other, was headed for free fall - a long, long way down. The basic premise of my argument was that there was no alternative buyer, Yahoo was only playing for time while going through the motions of trying to find a buyer, and that the only way for Yahoo shares to rise, or even maintain the current level, was to shake hands with Microsoft, failing which YHOO would begin to drop, sooner or later, and end up way below the pre-Microsoft offer level. Which means that YHOO is actually worth about $10 to $15. It's trading today at about $27 something. That's a big free fall waiting to happen. And nothing, other than agreeing to the Microsoft offer, is going to prevent that.
The only question that remains is this. Will Yahoo shareholders force the board to wave the white flag, or will the board do so on its own? And how long is this process going to take? Because as long as the fight continues, YHOO is going to keep dropping. I don't think Jerry Yang is going to give up so soon, so I'd say we're good for at least a month and a half of rumors and disses to Microsoft, before the tide turns towards Redmond. For the present, situation remains the same. I said Yahoo was going to drop - It dropped. I say its going to drop some more. And then some. Just one rider...If you start hearing rumors about Yahoo agreeing to the offer, the price is gonna shoot up like crazy, so keep your ears open.
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