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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]



By Electronista Staff
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  1. jarod

    Fresh-Faced Recruit

    Joined: Apr 2005

    0

    Must Resist

    MS must die!

  1. danviento

    Fresh-Faced Recruit

    Joined: Dec 2005

    0

    Smells like...

    ...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.

  1. MacnTX

    Fresh-Faced Recruit

    Joined: Apr 2004

    0

    Keep Resisting

    The more this desperation move costs Microsloth, the better it is for everyone....

  1. Deal

    Mac Enthusiast

    Joined: Apr 2001

    0

    You got that backwards

    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.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    0

    Re: stuff

    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.

  1. tonton

    Senior User

    Joined: Mar 2001

    0

    Balmer goofed.

    He should be fired for this.

  1. MacScientist

    Junior Member

    Joined: Feb 2000

    0

    re:you got that backwards

    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.

  1. danviento

    Fresh-Faced Recruit

    Joined: Dec 2005

    0

    Interesting

    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.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    0

    Re: you got that backward

    Actually, it isn't the time to short. That would've been before the offer announcement.

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