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Posted by unregistered user at 2/9/08 7:55 p.m.

That was a great question but an even better answer.

I feel Yahoo is making a big mistake rejecting the bid from Microsoft. It is true that Yahoo is undervalued right now but that is because of the people onboard. After Microsoft teams with Yahoo and takes battestations agaist Google only then will we see the real value of Yahoo. Together Microsoft will destroy Google I cannot imagine why Yahoo would reject this bid as it is the boost they needed. I can only imagine that the shareholders are furious.

Posted by unregistered user at 2/9/08 10:38 p.m.

You can't understand why they'd reject?

I would guess that Y! is trying to build a good company, not wreck it for a price. I cannot see the two companies merging without taking a toll on the personnel and productivity. In the end, a few years after acuisition, Y! would be taken apart by MS. How does a company like MS, who fights tooth and nail (and FUD) against open source (OS) software merge with a company that exclusively is built on Linux, BSD, PHP, Python, etc? They can't do that and still claim that OS sucks. MS would attempt to pitch the OS technology, and drop all OS initiatives (in particular Zimbra), and would demoralize all the employees that are used to working with those tools. Not to mention alienating users of Flickr, Del.icio.us, and many other social network sites that most people use because they are NOT MS sites.

MS acquisition of Y! would only benefit shareholders who are able to capitalize on the sale. It would not be good long term business for either company. So I think that the Y! shareholders would do better in the long run to keep working on Y! and watch MS wither on the vine in the next few years.

What's that? Do I hear a chair being thrown somewhere in the vicinity of Redmond?

Posted by unregistered user at 2/10/08 3:08 a.m.

...MS acquisition of Y! would only benefit shareholders who are able to capitalize on the sale.

Sorry, but what benefits the shareholders is all that really matters. Yahoo is owned by its shareholders and they can do what they would like with it. Those shareholders are split into two camps right now. Those with short-term interests, and those with long-term interests.

Those with short-term interests would do well to simply liquidate their positions on the open market right now (where Y! is currently trading higher that the pledged $27.16*).

(Another group to consider here, are those with not-yet-exercisable employee stock-options. This group won't actually have any real voting-power, since these options aren't yet stock. Also, those people with these options are *supposed* to be working towards the long-term interests of the company, not the short-term.)

This largely leaves those with long-term interests and it would seem, based on Y!s response to MSFT, that they believe they can do better with Y! in the longer-term than $27.19*/share. Of course they can! Y!'s currently low spot price is largely due to the whole-market's conditions and only in part due to Y!'s under-performance.

Even if the two parties walk away from one-another (which I doubt will happen), Y! will be under a lot of pressure by the shareholders to realise this potential quickly to prove that they made the right decision. This very pressure may shake up the whole industry just as much as the MSFT-YHOO merger would have.

* At the time of this writing, MSFT was trading down at ~86.7% since the offer was made which, since the £31/share offer was tied to MSFTs then share-price, leaves about $27.16

Posted by brubber at 2/10/08 8:30 p.m.

MSFT is scared of:

1) the internet becoming a utility where people connect to the internet for all of their software...no pc or os needed. How will they make money in the future?

2) they haven't figured out how to beat google at search, ad revenue, etc...now they are making a desparate attempt to "buy" search marketshare by acquiring YHOO. Yes it is expensive, but they are desparate.

3) their own shareholders...their stock has been stagnet for the last 3 years, they are hoping that acquiring YHOO will make Wall Street happy.

Good Luck...

Posted by unregistered user at 2/11/08 1:09 a.m.

Yahoo will regret that rejection since MS integration with Sony Ericson. Microsoft, Yahoo & even Google owe it to the people to have better communications systems than what existing cellular, phone & cable service contracts are doing in the way of exhorbitant connection fees & bad business with the people.

Posted by unregistered user at 2/11/08 8:02 a.m.

Haha, Isnt it sweet how MSFT panics.

They kept alienating and disrespecting their own customers and the whole IT community for years thinking their position as a leader wont ever be challenged!

Go Google! KILL KILL KILL!

Posted by unregistered user at 2/18/08 6:06 p.m.

When considering hostile takeovers (which this apparently is since it has been unilaterally proposed to Yahoo's shareholders), rarely does the company being acquired accept the initial bid. The basic job of the board of directors is a fiduciary responsibility to the shareholders to hold out to obtain the highest possible price. In general, there are provisions in the corporate charter that enable this - such as 'poison pills' and similar devices that eliminate an easy takeover. Lastly, rejecting the initial offer is just the start of the negotiation process. MSFT will be back with a new offer, bigger and better than before - or it will change the terms of the offer to make it more acceptable. Unless MSFT doesn't really want to purchase the company, the two firms will continue back and forth until the corporate value estimated by Yahoo's board of directors is acceptable (measured by future value of Yahoo and typically includes some sort of compensation and release of the existing management and board in conjunction with other items) Yahoo's board is doing the right thing by holding out for the best price it can achieve. Just a matter of time before this deal closes. Just as a sidenote, the acquiring company will typically be seen as losing immediate value and in almost all cases you see a drop of a few percent in share price. The acquired company will see the reverse with an increase in the share price to the level of the offer. There are exceptions, but they're rare.