macnn/electronista
02/06/2008, 4:15pm, EST
Wednesday, February 6thYahoo resistance costing Microsoft
Yahoo's caution in the face of an acquistion bid by Microsoft may be costing the latter company a good deal of money, one report suggests. The difficulty is that the proposed bid is half cash and half stock, with a share exchange ratio of 0.9509 Yahoo shares for each one from Microsoft. Because Microsoft's share price has fallen approximately 10 percent since the bid was announced, the average compensation for a Yahoo shareholder today would be $29.50 per share.
To avoid paying any more, Microsoft must thus hope either for a sudden reversal in its market value, or lessened expectations from Yahoo. As its stock price falls, it must adjust the exchange rate to return the take-out value to $31 per share, thus increasing dilution and giving current shareholders a shrunken portion of the merged corporation.
The original deal was valued at $44.6 billion, and may still make for one of the most expensive corporate buyouts in history, even running the risk of draining Microsoft's $21 billion in financial reserves. [via Silicon Alley Insider]
Filed under: Investor, industry
Other story tags: Microsoft, Yahoo
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M$, even with the help of Yahoo!, can't become a dominant seach player unless it force-bundles its engine with their dominant browser, explorer. Be it through an difficulty to change search engines (burried in pull-down menus), or homepage difficulty, or any number of the usual M$ bag of tricks.
I, personally, don't know ANYONE who uses M$ seach right now, even those who only us IE.
Yes, times are quite desperate if they want to expand into this arena.
The sooner they merge the better. I think this whole thing is a huge mistake by MS, one of few that they will actually pay for. It has Steve Balmer A.K.A. Monkeyboy written all over it.
This will lead to MS squeezing their current cash crop (Windows OS and Office) so hard that it will cause companies to switch to something else.
Too bad Apple isn't in a position to take full advantage as this plays out (as they don't have a viable corporate software portfolio). Likely that corporations will switch to Linux. Still advantageous to Apple but not quite the same. Either way, it's a good thing.
What you are describing is the time to short Microsoft's stock.