Yahoo Says No: Genius or Suicide?

Matthew Magain

News wires around the world are reporting that the Yahoo board are planning on rejecting Microsoft’s $42 billion bid of a week ago. Whether this is a display of brave optimism by Yahoo, or simply a play to convince Microsoft (or another potential buyer — did somebody say the G word?) to raise their bid is anyone’s guess.

Typically, whenever a takeover bid is initiated, the buyer’s stock price takes a bit of a hit. However, I bet Ballmer didn’t count on it being quite this much:

Microsoft closed at $32.60 per share on January 31, hours before the Yahoo bid was placed. On Friday, the stock closed at $28.56, a decline of about 13% and the lowest it has been since 2006. That erased just under $38 billion in Microsoft shareholder value.

Ouch.

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  • ionix5891

    dont worry the market will sort itself out

    yahoo went from 18$ to 30$ a share when this started, today the will go back down as everyone realizes their stock is worth nothing

    the opposite will happen to microsofts stock, since they not dashing out all the money now the company is worth more

  • http://www.DeskPRO.com/ padders

    So basically Microsoft stock fell about as much as the offered for Yahoo. Ouch.

  • wwb_99

    Unless they really decide to go for broke–MS can likely meet any realistic price Yahoo! throws out there. And Balmer does have a history of being rather driven . . .

  • asprookie

    Not good, they’ve been picky, or probably dumb enought to even think Google will buy them for more than that.

    I would say suicide.

  • Curt Monash

    Microsoft can and probably will make the deal happen with a sweetened, all-cash offer. As per http://www.texttechnologies.com/2008/02/10/microsoft-yahoo-cash-deal/ , the can easily afford the cash. As per http://www.texttechnologies.com/2008/02/03/microsoft-yahoo-synergies/ , the deal makes a lot of sense overall.

    CAM

  • http://www.xraysierra.com XraySierra

    I think Microsoft will do whatever it takes to acquire Yahoo! Whether or not Microsoft can afford to go into debt to finance this takeover is another story.

  • ionix5891

    microsoft make 20 billion profit a year thy can more than aford it

    whether they want to is a different story

    they will probably leave yahoo sink, and it will sink further than the 18$/share it was before this

  • http://www.brothercake.com/ brothercake

    I’m no businessman, but I respect Yahoo for refusing to sell-out to the evil empire.

  • http://www.paulcarey.co.uk paulcarey

    yahoo to yahoo! i dread to think what m$ would do with yahoo! yahoo! offer some great services at present and my worst nightmare would be that yahoo! mail becomes anything remotely like hotmail (OK there are worse things that could happen, I suppose). But seriously yahoo! does offer great services at present without the m$ all or nothing feel, like for example yahoo!’s great Ajax ui libraries, I’ll eat my hat (if i had one) the day m$ release a nice (useful) freebie like that. The day yahoo! known for its independence(at least to me) and originality as one of the webs innovators (not haters like m$ once was) is sold to the likes of monopoly giants like m$ is a sad day. I’m not a m$ hater btw if anything I admire them but in a different way to yahoo! I just dont think m$ and yahoo! would mix well if you catch my drift.

  • Drky

    As an employee in the financial markets, I have to say this is a good move by Microsoft. Yahoo! would be smart to accept the offer. I saw a few comments about selling out to the evil empire M$, the truth is Google has a stronghold on search, search advertisement and the advertisers (us). With a Microsoft & Yahoo! partnership we can see that stronghold be broken, thus Google’s public condemnation.

    Though the cultures for both companies are totally different, I believe with Microsoft’s current rate of improvement they’ll do justice for an amazing company like Yahoo!. Its not a matter of selling out.

    Also, a Microsoft-Yahoo! deal has better chances of working out than a Google-Yahoo! deal. The reason being antitrust laws will see a Google-Yahoo! deal as a more evident monopoloy on the internet services market than a Microsoft-Yahoo marriage. The key factor is due to Microsoft’s diversification in many different areas of technology and Google and Yahoo!’s centralization in internet.

  • Anonymous

    Yahoo is still a VERY PROFITABLE company. It made $205 million in profit in the Q4 2007. This notion that Yahoo isn’t worth anything is absurd.

    They are a viable company alone. They do not need Microsoft screwing them up! Everything Microsoft touches turns to crap. I depend on Yahoo as my search engine as I find its results superior to Google’s. (No sandbox, so I actually find stuff!) Microsoft has been unable to make their search engine competitive. Do we want them to run Yahoo? I say no.

  • programPHP
  • Drky

    programPHP, I have read that article. Nice article. I, personally think that won’t happen because Microsoft and Facebook already have a minor agreement in place. This agreement would clearly address problems such as takeovers from competing companies.

    Sure there may be clauses that gives Facebook the freedom to sell out to anybody, but it won’t be at the likes of hampering Microsoft with the existing partnership.

  • Drky

    Anonymous, Yahoo is an amazing search engine, but people use Google more than them. There are things Yahoo does better where people opt to use the competitors’ products. Microsoft and Google are both powerhouses. Microsoft is established with a conglomerate of products, Google really isn’t as much. Yahoo is centralized in its offerings (with the exception of all its acquisitions), though one can argue that it is still centralized to the internet.

    Whats to say that Microsoft wouldn’t maintain Yahoo’s existing culture, even adopt Yahoo’s search technology as their own and scrap their proprietary search system?