Does Microsoft Really 'Undervalue' Yahoo?

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So what do you think? Does Microsoft really undervalue Yahoo? You already know what I think, Yahoo will be lucky to get the amount Microsoft is offering and, if their stockholders are smart, they’ll jump on it when they get the chance.

It's tricky math, especially given overall declines in Internet stocks and the fact that Yahoo's worth is different depending on whether you consider it a standalone company or a part of Microsoft, which said it expects "at least $1 billion in annual synergy" from an acquisition. But we surveyed a number of analysts--call it the wisdom of the equity analyst crowd. Opinions varied, but we didn't run into anyone who thought Yahoo could expect a dramatically higher price.
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I don't think so. They have been declining in value over the past few years. With some better management they might be able to turn around but as it stands the more that times goes on the futher into the ground Yahoo will go. For about half of Yahoo, Microsoft would almost just be buying their customers and users. I'd assume that SBC Yahoo DSL would go Microsoft so they would probably just combine that with their MSN internet. Verizon and Qwest already have DSL with MSN. So that would just be them taking their customers and throwing them in with the rest of them. Although I doubt that MSN or Yahoo make much money from the DSL services I'd expect probably 90% of the money goes to SBC, Verizon, or what ever the Telco is teaming up with them. So that probably wouldn't give them that much compared to everything else.

Same for all the email, toolbar, game users. That can be combined with msn/hotmail/live. I doubt that yahoo doesn't anything special with their mail that would be any different from hotmail/live so they aren't really going to gain anything there. Same for the toolbar. I myself normally only see toolbars when I am removing them off of somebody else's machine. But they all look about the same to me so I don't see them gaining anything there but a install base. Same with games. They both already have online games, and I would assume in some cases have the exact same games in their game area, so again they aren't really gaining much there but a user base.

So right there really isn't anything special. Yes they will make money from all of those, but I don't see them being huge cash cows.

Considering the current state of Yahoo. What it would take if Microsoft merged their techologies with Yahoo to make them part of Microsoft instead of keeping them a standalone to reduce redundent techologies... I say they gave them a pretty fair offer. Its not like they will make back the money from the purchase overnight.
 
I personally think that Microsoft should drop their offering and go ahead with the proxy... it'll at least make for some worthwhile reading. Can't wait to see the photoshop pictures of Steve Ballmer in a pirate outfit making Jerry Yang walk the plank. Arrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr!
 
Could this be one case where I think the corporate behemoth of Microsoft is/would be right to just take their asses over? I think hell has frozen over! The Yahoo board is obviously populated by total 'tards, they should have taken the offer when they had the chance. They're obviously looking out for their own asses and not the shareholders. And personally, I think if MS doesn't get the approval, or end up taking them over by a hostile takeover or something, the board and it's shareholders may *regret* not taking the deal in a few months when the stock tanks hard. I'm kind of surprised the IT sector has been as shielded from the fucked economy (err "slight economic downturn"; goddamn retards) as well as it has so far - won't last though.

And no, I don't really see what's so special about Yahoo's e-mail service - my sister uses them, and while I haven't looked too hard into it, it's web interface and overall feel is akin to Hotmail in a way.

I still fail to see what the hell is so special about Yahoo, what could they possibly have coming down the pipe that makes them act in such an arrogant way? R*, with GTA4 I can see they have a reason to tell EA to go piss off... Perhaps R* is *still* pissed off about the Grand Theft Scratchy bit in the last Simpsons game ;) Whiny little wusses.
 
ps I know where Hector Ruiz can get his next job, once AMD's board/shareholders finally get their heads out of their asses and kick him to the curb... That is if Yahoo somehow manages to weather the onslaught of the Ballmer armada. Then again if their stock hasn't tanked by then, it surely would after the Ruiz effect.
 
Ill give you $1 BILLION for it..... not a penny more, and even then I'm nutz. :eek::rolleyes::p

All I see when I read about this is ... Fatty McBaldFuck desperately trying to tank MSoft. :cool:
 
I would say that their offer is right on par with what they are worth. Especially considering the redicularity at the top, and history of mismanagement.

At the end of the day, there are FAR worse companies to be owned by than Microsoft. They didn't get where they are because they are stupid or make bad decisions.
 
Lots of strong companies are "undervalued" in market cap right now, given the mess the financial markets are in and how they've dragged down every other stock sector with it. Microsoft, and EA with their TTWO bid, are being very smart in trying to make acquisitions like this when things are so distressed and stock holders are skittish.

I said it right back when this started but Microsoft will go straight to the shareholders if Yahoo continues to turn them down. Looks like this is inevitable now. They have a choice, watch their already troubled stock plummet back to below $19 should the deal collapse, or get a "get out of jail free" card with the exchange for MSFT stock.

Remember, the day before Microsoft made their offer, Yahoo plummeted to an almost five year low. Shareholders want out and Microsoft is the way it is going to happen, even with what may be, in the longterm, a lowball bid.
 
Something is only worth what someone is willing to sell for or buy for

Yahoo shareholders think they are worth more and at the end of the day they are the ONLY ones that know what the company is worth - or at least their portion of it
 
I actually hope Yahoo resists... the market diversity in this sector is already so poor, pretty soon it'll just be google and m$oft..

I wonder how many of you critics from above own Yahoo stock and stand to profit from this, eh?? ... you sure its your brain, or your greed talking?

I'm for an independent Yahoo.

Last but not least... M$ is not stupid in financial terms, they would not offer $ for something they didnt think was going to bring them a bigger return... they KNOW they're underbidding Yahoo, and the yahoos that are the shareholders are lapping it up... they love this bad economy and greed-driven-paranoia..
 
Is MS offering Yahoo a fair price at 60% above stock price? YES

Is Yahoo worth more than that long term? Yes.

Is this bad? No

The idea of buying anything, a Car, a Cellphone, a Company is that there is value in it. A Car may cost $30k but it will get you to and from your $50k job for 6 years or more, so the value of a $30k car is $300k.

Likewise, Yahoo may be purchased at 60% over stock price today, but in 5 years MS will own a serious chunk of online commerce by it. Value then may be 8x current stock price.

Still. If Yahoo's board doesn't accept a 60% over stock price, the shareholders will and the deal will go through anyway.
 
The Red said:
Last but not least... M$ is not stupid in financial terms, they would not offer $ for something they didnt think was going to bring them a bigger return... they KNOW they're underbidding Yahoo, and the yahoos that are the shareholders are lapping it up... they love this bad economy and greed-driven-paranoia..
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Yup. You also see it with the EA hostile bid for Take Two, a stock that has also seen its share of fear over the last couple years that has been pushed over the edge in recent months. The biggest example of this is the Bear Stearns takeover.

Frigging amazing what a little fear will do.
 
Brantoc said:
Is MS offering Yahoo a fair price at 60% above stock price? YES

Is Yahoo worth more than that long term? Yes.

Is this bad? No

The idea of buying anything, a Car, a Cellphone, a Company is that there is value in it. A Car may cost $30k but it will get you to and from your $50k job for 6 years or more, so the value of a $30k car is $300k.

Likewise, Yahoo may be purchased at 60% over stock price today, but in 5 years MS will own a serious chunk of online commerce by it. Value then may be 8x current stock price.

Still. If Yahoo's board doesn't accept a 60% over stock price, the shareholders will and the deal will go through anyway.
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They will only be worth 8x their current price to microsoft. If they stay on their own they wouldn't be worth shit. They have been losing value, not gaining any. I can say that in 12 years I'm going to be worth $897 million, that doesn't mean I will be. Looking at my current status, income vs bills,... I'd come up with a completely different guess at my actual worth in 12 years if I stated on my current track. Same with Yahoo. Unless they can turn themselves around they will be worth less in the future. Only with some better leadership can they actually turn around to be worth 8x their current value.

Although neither way is a good way to try to decide something. They could turn around and start to make a profit in the future. But who is to say how much. That would be like that car in your example costing you an extra 10% of your future income due to what they think you will make over the time you own the car. But then you lose your job a month later when it is outsourced to Asia.
 
Brantoc said:
Is MS offering Yahoo a fair price at 60% above stock price? YES

Is Yahoo worth more than that long term? Yes.

Is this bad? No

The idea of buying anything, a Car, a Cellphone, a Company is that there is value in it. A Car may cost $30k but it will get you to and from your $50k job for 6 years or more, so the value of a $30k car is $300k.

Likewise, Yahoo may be purchased at 60% over stock price today, but in 5 years MS will own a serious chunk of online commerce by it. Value then may be 8x current stock price.

Still. If Yahoo's board doesn't accept a 60% over stock price, the shareholders will and the deal will go through anyway.
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How many large internet companies remain?
 
I think Cramer nailed this one. We're seeing Netscape all over again.

Yahoo; take the money and run!
 
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