Yahoo resistance costing Microsoft
updated 04:15 pm EST, Wed February 6, 2008
Yahoo fight costs MS
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 $21 billion in financial reserves. [via Silicon Alley Insider]
Must Resist
02/06, 04:33pm reply
MS must die!
jarod
Fresh-Faced Recruit
Joined: Apr 2005
Smells like...
02/06, 05:14pm reply
...the sharp scent of desperation.
M$, 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.
danviento
Fresh-Faced Recruit
Joined: Dec 2005
Keep Resisting
02/06, 05:18pm reply
The more this desperation move costs Microsloth, the better it is for everyone....
MacnTX
Fresh-Faced Recruit
Joined: Apr 2004
You got that backwards
02/06, 05:47pm reply
If they resist too much, it won't happen and no harm to MS done. In fact, it would be a great time to buy MS stock if this falls through as the price will shoot up again.
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.
Deal
Mac Enthusiast
Joined: Apr 2001
Re: stuff
02/06, 05:56pm reply
Actually, it's not Yahoo's resistance as it is the buyout itself. Investors have spoken, and the $10/share drop is an indicator that it is not seen as a good play for MS. Someone should point that out to them.
testudo
Fresh-Faced Recruit
Joined: Aug 2001
Balmer goofed.
02/07, 04:06am reply
He should be fired for this.
tonton
Mac Enthusiast
Joined: Mar 2001
re:you got that backwards
02/07, 09:09am reply
deal wrote: .... In fact, it would be a great time to buy MS stock if this falls through as the price will shoot up again.
What you are describing is the time to short Microsoft's stock.
MacScientist
Fresh-Faced Recruit
Joined: Feb 2000
Interesting
02/07, 09:09am reply
While such a design plan wouldn't fly at apple, this would definitely appeal to the build-your-own-PC crowd. If you have some spare cash, you might want to invest in this one, once you see their initial product launch and prices.
danviento
Fresh-Faced Recruit
Joined: Dec 2005
Re: you got that backward
02/07, 10:09am reply
Actually, it isn't the time to short. That would've been before the offer announcement.
testudo
Fresh-Faced Recruit
Joined: Aug 2001