Yahoo to Microsoft: Talk to the hand; we say Nohoo!

[Piotrsama]

http://arstechnica.com/news.ars/post/20080209-yahoo-to-microsoft-talk-to-the-hand-we-say-nohoo.html

2 days old, but (I think) it was not posted.

The Yahoo board has mulled it over, and its answer for Microsoft is a simple "no." The "hostile" $44.6 billion bid was rejected by the board, as largely expected. The question now is, why?

Reported first this morning by the Wall Street Journal, a person "familiar" with the situation says that Yahoo believed the offer of $31 a share "massively undervalues" the company and provides no protections for the risks Yahoo would incur by entering into a deal that would be heavily vetted and possibly overturned by regulators. According to the WSJ's source, Yahoo is looking for bids north of $40 per share, or something in the $56+ billion range. At $31 per share, the board apparently feels as though Microsoft is trying to "steal" the company and take advantage of recent weaknesses. Such "weaknesses" aren't necessarily recent, however. Yahoo's stock price hasn't been north of $40 since the end of 2005.

$44.6 billion was already steep for Microsoft, which has admitted that the company would need to take on debt to get the deal done. Adding another $12+ billion to the price only makes it harder for Microsoft to convince shareholders that this is a good idea. Microsoft's other option is to push forward aggressively with this offer and attempt to battle or overturn the board, but who really expects Microsoft to risk royally irritating the very same people it needs to run Yahoo in the first place? How bad does Microsoft want it?

Yahoo may not truly be looking for $40 per share, however, and could just be stalling for time. Yesterday it was widely reported that the company might form a pact with Google in order to fend off Microsoft, but that move isn't without its own problems. At the very least, Microsoft is reportedly eager to argue that Google's involvement is inappropriate, inasmuch as the #1 player in search ads could be seen as having monopolistic intentions by doing a deal with the #2 player, Yahoo. We all know how Google feels about the deal.

According to the WSJ's source, the Yahoo board will be sending Microsoft a letter on Monday detailing their position.

[Monkeywoman]

isnt bill gates worth 60 billion? looks like yahoo things highly of themselves

[mcoffey]

Sure they do,

Yahoo would have been foolish to take the first non solicited bid. MS will end up getting them, but for a price closer to 40-45 a share, not 31. And MS is well aware of the cat and mouse game along with Yahoo:D

andyc

[GripS]

Sure they do,

Yahoo would have been foolish to take the first non solicited bid. MS will end up getting them, but for a price closer to 40-45 a share, not 31. And MS is well aware of the cat and mouse game along with Yahoo:D

andyc

Closer to 40 maybe.... definitely not 45. I'm betting final selling price will come in ~35 a share.

[Origin_Unknown]

for 40ish billion $$ isnt it just better to make your own?

[XS Janus]

Good. It was way to expensive for what it is!
People might hate it tomorow and than you are left with nothing.

[Drunner611]

Yahoo hasn't traded over $40 a share for 2 years?

Also, 60 billion. $soft should start their own site for that much. They could spend 5 mil on the site and then pay every person that visits it $5. They could afford to pay 12billion people then.

[[XC] 2long4u]

Yahoo hasn't traded over $40 a share for 2 years?

Also, 60 billion. $soft should start their own site for that much. They could spend 5 mil on the site and then pay every person that visits it $5. They could afford to pay 12billion people then.

They do MSN.:rofl:

[situman]

Why don't they just spend all that money to make a better OS? Even if they so desperately need a search engine, I think AOL is much cheaper.

[Origin_Unknown]

2long4u;2764613']They do MSN.:rofl:

im not being paid... where do i claim :rofl:

[mcoffey]

From a strategic standpoint, not about a search engine. It's about the IP that comes along with buying Yahoo, customer base, revenue and expanding MS's footprint.

Not saying that makes any sense regarding the price MS is willing to pay, but that's the rational companies like Cisco and the one I work for use when deciding to aquire another company. To be honest, I never have understood the rational for coming up with those kind of prices, but that's the way it uaually works to be sure.

andyc

[Yoxxy]

$33/share final offering, or let the proxy fight begin.

[mcoffey]

Closer to 40 maybe.... definitely not 45. I'm betting final selling price will come in ~35 a share.

We'll see,

One things for sure, if they go any higher than 35-38, and it's rejected by the BoD's. it's hostile takeover teritory. Depending how bad MS wants it.

andyc

[Shintai]

They can just buy the majority of stocks. And with 90% or so they can force cashin of the rest.

[Calmatory]

Why don't they just spend all that money to make a better OS? Even if they so desperately need a search engine, I think AOL is much cheaper.

Why would they bother making better OS? They just need to put more eyecandy to Vista, make it lighter with MinWin and keep up with the drivers and compatibility. Success guaranteed. They have the monopoly there. No one cares about OpenGL, it is old, it isn't supported and it isn't used. Besides, no one can beat Microsoft tools when it comes to programming. They are just ownageous against anything which tries to compete.

Microsoft does not make as good OS as possible, it makes 6 OS'es to milk some money, before making that "Ultimate OS", which is old junk by then. Then they start over. Thats how to make money.

[Yoxxy]

They can just buy the majority of stocks. And with 90% or so they can force cashin of the rest.

That works in the case of a small company. Not a company with 1.34B.

Once shareholders see the SEC filing (which you are all for government and monopoly breakups according to your other posts) they hold onto their shares for dear lives.

What they can however do is take a seat on the board through a proxy fight and then have the shareholders approve the deal.

When you do things like this (google carl icahn) you tend to get bad moral in the company and they become less productive though.

[tbone8ty]

yahoo will give in sooner or later.

there stock holders will complain when it goes back down to $18 per share from $30

[mcoffey]

They can just buy the majority of stocks. And with 90% or so they can force cashin of the rest.

Well,

The way it works here is, you try buying up stock that's not for sale and the price goes thru the roof. So your not any better off, and there's only so much stock for sale as in supply and demand.

That's Extreme Capitalism:D

andyc

[TigeriS]

Information is so difficult to come by I guess.

FYI, Microsoft has been trying to buy Yahoo for many times.
Yahoo simply doesn't want to be taken over by Microsoft!

And I think that's a good thing! Microsoft is too big and should NOT get bigger. There is NO competition and that is dangerous. I want to have a choice.

I used to use Hotmail until it was taken over by Microsoft. I went to Yahoo and I'm very happy with Yahoo. If they are taken over then I must seek something else. And no, google is NO option for me. I don't like monopoly.
It slows down development and innovation. It drives prices up and service down.

Many don't realize the danger of a big Microsoft. I wish Apple would start selling their OS for general x86 pc's too. That would make internet safer, with a better mix of OS and technologies it makes it difficult for viruses and spyware spread.

Yahoo should never be taken over by Microsoft, that would do more harm than good. Microsoft only wants to compete with google that's all, they'll destroy Yahoo and redirect every Yahoo page to a comparable Microsoft service.

And by the way, what makes you think that stockholders always are for a take over? I don't think many would like Yahoo to be taken over.

[Serra]

And by the way, what makes you think that stockholders always are for a take over? I don't think many would like Yahoo to be taken over.

I'm pretty sure that the whole point to being a shareholder is to make money, no-one purchases stock to simply hold on to and die with. If shareholders decide it's in their best financial interests, they'll sell.

[happychappy]

for 40ish billion $$ isnt it just better to make your own?
They're paying for the eyeballs Yahoo has, what use is your own search engine/social network/whatever if no one uses it?

[sierra_bound]

The entire Yahoo board of directors is up for re-election at the next shareholders meeting this summer. If Microsoft opts for a proxy fight, it could nominate a whole new slate of directors and try to win control of the board.

Yahoo's only real protection is a poison pill provision. If Microsoft decides to make a tender offer directly to shareholders, it would be limited to obtaining only 15% of outstanding shares. Tender offers are often used in takeover battles when a company's board of directors rejects an acquisition.

[Chewbenator]

I think that Microsoft may be worried that Google is getting too big. In my opinion they only want Yahoo so that Google doesn't get their hands in Yahoo's pockets. Really Yahoo has only two choices if they are going to "sell out" Google or Microsoft. All the other companies have dropped their interest.

When you look at it Google is looking more and more like Microsoft and thus monopoly-like. They have a veritable choke hold on the search market and have a wide range of software products, most of which are free. Add to the fact that they are selling hardware/searchware now to businesses and they are a big force to be reckoned with.

Someone stated that Microsoft could just buy AIM, well that wouldn't be wise because AIM uses Google's search tech anyway.

Also, I think that next to Gmail, Yahoo's email is the next best option and I frequently use Yahoo Finance and have not found a better free solution for easy financial data. If anything search wouldn't be my top priority, I think Google does it too well.

[LudLud]

Eh why do people even use yahoo search? It is so primitive and the results are far from accurate compared to what google gives.

I still laugh at people who tell me yahoo is better than google for searching.
You can't even search for exact phrases using quotes (" ") with yahoo... lmao

[TigeriS]

I'm pretty sure that the whole point to being a shareholder is to make money, no-one purchases stock to simply hold on to and die with. If shareholders decide it's in their best financial interests, they'll sell.

Sure they buy stocks to make money. But my point is that stockholders aren't always for a take over. Look at what happened with MS stocks a few days ago when they brought out their bid.

I had the impression that some replies looked as if stockholders are always for a take over, and that's not correct.

[TigeriS]

Eh why do people even use yahoo search? It is so primitive and the results are far from accurate compared to what google gives.

I still laugh at people who tell me yahoo is better than google for searching.
You can't even search for exact phrases using quotes (" ") with yahoo... lmao

LMAO, when was the last time you searched on yahoo?
Maybe this will help : http://help.yahoo.com/l/us/yahoo/search/basics/basics-04.html

Sure, google has some more options but google is nothing special, it's the hype around it and the great marketing campaign that's all.

You just need to know how to use search engines, they don't work all the same. And besides 90% of the time peoples don't use the many options a search engine provide, they just type a word or phrase and see what they get.