Microsoft's Johnson On The Yahoo Bid

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C|Net columnist Ina Fried took the initiative to call Microsoft and get as many details as she could about the company’s $44.6 billion offer for Yahoo. When asked how committed Microsoft was to making this deal happen, this is the response she got:

Well, look, I'll just say, we believe in this combination now more than ever, and that's why we made it public so that both sets of shareholders and employees are aware of the opportunity inherent in this combination. We've got great respect for Yahoo and their employees, and we think this combination makes not only strategic sense, but it makes good financial sense.
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High price for a company that's losing market share and laying off workers.
 
What a great article title! But why not just change it to:

Microsoft's Penis On The Yahoo Bid

:p:D
 
GTA3mobster said:
If the deal falls apart soooo many people who bought stock are going to get reamed.
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That is why anyone who bought stock, especially yesterday after the drop, should sell ASAP. It doesn't matter whether or not the deal goes through, the investment thesis behind the company has changed with this takeover even being considered. I would GTFO with my profits and move on, too much uncertainty is in the cards with them now.
 
Fooshnik said:
High price for a company that's losing market share and laying off workers.
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There is a big reason why Microsoft is doing this in public. They don't even have 45 billion in cash, they have 20 billion. At that price they are expecting many shareholders to trade stock for stock instead of cash.

Yahoo being in a position of weakness is exactly why this is happening. Two days ago on their earnings call they report weak forward guidance not just for the next quarter but for all of 2008, after which they also report that they will be laying off 3000 employees so they can make it through what will by their admission be a challenging year. Investors were spooked and either bailed or were left holding stock that dropped 10% in a day to hit a four year low. Now Microsoft comes in and says it will pay $31 a share while YHOO is trading at $19. I expect that many Yahoo shareholders will be pissed if the company doesn't take the offer.

The thing to note is that it is trading at $28, not $31 right now due to uncertainty on Wall Street if the deal is even going to happen. Nevertheless, just the possibility of it has it in this range for now.

Leverage like that over what is actually still a leading company that has been beaten up among the worst in the tech sector, a sector which overall has been absolutely pummeled in the last month, yeah, that's a pretty good move on Microsoft's part.
 
Does Microsoft REALLY think that it won't be a disaster?

That half and half wipes out their cash reserves, so unless they plan on outright replacing their current online division with Yahoo (in which case they would be lucky to make their investment back by 2050) I don't see how this won't just hurt them.

Microsoft at this rate is going to end up like the Soviet Union and bankrupt itself.
 
Runningflame570 said:
Does Microsoft REALLY think that it won't be a disaster?

That half and half wipes out their cash reserves, so unless they plan on outright replacing their current online division with Yahoo (in which case they would be lucky to make their investment back by 2050) I don't see how this won't just hurt them.

Microsoft at this rate is going to end up like the Soviet Union and bankrupt itself.
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Like I said, they would be counting on large number of Yahoo investors trading their YHOO stock for MSFT in the deal. This sort of thing with hostile takeovers happens all the time.

Now the wisdom behind such a decision is a completely different issue. Yes Microsoft is in a position to do so, but will adding another corporate behemoth make them better? I generally believe that the tighter the focus of any business, the better. It is generally better for the products and for the bottom line, so I'm not so sure about this.
 
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