Microsoft abandons Yahoo offer

[GILSAN]

Looks like Microsoft has given up on Yahoo. I pity those Yahoo shareholders on Monday. They are gonna get clobbered really hard.

Here's an article on it: http://articles.moneycentral.msn.com/Investing/Dispatch/080503MicrosoftAbandonsYahooOffer.aspx

I wonder what Microsoft's next move will be.

GIL

 

[bmugford]

This is good news if you are a Microsoft shareholder. They will get a nice bump, and the deal at that price makes no sense either.

Not to mention after institutions dump Yahoo, MSFT can make a new lower offer if they really want to play hardball.

 

[GILSAN]

This is good news if you are a Microsoft shareholder. They will get a nice bump, and the deal at that price makes no sense either.

Not to mention after institutions dump Yahoo, MSFT can make a new lower offer if they really want to play hardball.

A year ago M$ had made an even better offer than this one, which was also rejected by Yahoo.

I would'nt be surprised if M$ waits another six months or so, for the YHOO stock price go down even further and come in for the kill with another even lower offer.

GIL

 

[nicholas]

Yahoo was asking too much, and asking for it.

Theirs is a company in inexorable decline (because of Google no less), and continues to do, with anemic management at best.

Going for $35 or higher per share would have been a form of capitulation from MS, and at least now they show they've got enough cajones to walk away. Now Yahoo! can start expecting the lawsuits to start raining down on them.

Then again, this could just be a ruse and Microsoft will come back and pick them up, at the same offer or even for a lesser price.

 

[[email protected]]

I think Microsoft will keep a price tag between $30-$35, same as what it was initially.

Offering too low will / may have a reverse impact !

 

[exponent]

Don't you see whats happening? Yahoo waited for $35, Microsoft offered $33. Yahoo is going to get clobbered and then Microsoft will launch its hostile takeover. Shareholders will go with Microsoft's offer because Yahoo is clearly not looking out for the best interests of its shareholders.

Jerry Yang is stupid. He has ran Yahoo into the ground twice. Founder or not, he needs removed from any board or supervisory position he holds.

 

[bmugford]

You are dead on. Basically Yahoo was a company rescued from the trash can by Microsoft's offer to start with.

$31 offer was a total gift for a dying company. Yahoo is heavily institutionally owned right now and even at $31 the big holders were pushing for the deal to get done. Now, Microsoft even made a good faith gesture to raise their offer to $33, and Yahoo got greedy. Yahoo is not even worth close to $31, never mind $37.

If the deal falls apart Microsoft will be fine. Their stock has been suffering since the offer was made. However, Yahoo needs this deal. Without it they are company whose stock should be priced in the sub $20 range.

If the deal falls apart Yahoo will also have to fight off many lawsuits from big shareholders.

Don't you see whats happening? Yahoo waited for $35, Microsoft offered $33. Yahoo is going to get clobbered and then Microsoft will launch its hostile takeover. Shareholders will go with Microsoft's offer because Yahoo is clearly not looking out for the best interests of its shareholders.

Jerry Yang is stupid. He has ran Yahoo into the ground twice. Founder or not, he needs removed from any board or supervisory position he holds.

 

[exponent]

Yahoo is heavily institutionally owned right now and even at $31 the big holders were pushing for the deal to get done.

Yeah, here are the institutional ownership records. The top 50 institutional owners hold 56.37% of the shares. Add in the top 50 mutual fund owners and you've just accounted for another 23.45% of the company. At this point, we haven't even started addressing individual stock holders and yet we've already accounted for 79.82% of the company.

http://finance.aol.com/company/yahoo-inc/yhoo/nas/institutional-ownership

"But what about the founders?"

David Filo owns 78.2M shares = 5.85% of the company
Jerry Yang owns 52.81M shares = 3.95% of the company

Even if both of the founders hold out, its not going to make any difference. Jerry Yang doesn't seem to understand that he gave up his right to bicker about a take-over price once he took Yahoo public. His first and foremost obligation is to the shareholders in general. Since those shareholders collectively own a lot more of the company than him, he's making it apparent that he's looking for a "golden parachute".

Fortunately, Microsoft is smarter than that.

Here is the forward P/E for Yahoo: 48.43 (ouch! that means that each share of yahoo is already trading for 48.42 times its estimated annual earnings) The Microsoft offer was more than fair even if you look at the current P/E which is still extremely high at 37.8 times annual earnings. Higher forward (future) P/E ratios indicate deteriorating conditions for the company.

 

[tdm300]

Monday is going to be a tough day for yahoo stock. How much you guys think it is going to dip?

 

[bmugford]

It depends on many factors. If the market in general thinks this deal is off the table for good Yahoo is a sub $20 stock. However, I think many market analysts will expect MSFT to jump back in with another offer down the road that could keep it slightly higher. If i had to put a guess on it I bet at open the dumping would put it into the low 20's then it would stabilize and close about $22.50 - $23

If there are any options traders here. I am considering a $22.50 straddle.
Basically MSFT comes in with another offer and it goes back up, or the deal is done for good and Yahoo slips down even more. As long as the stock moves big one way or the other you win.

Monday is going to be a tough day for yahoo stock. How much you guys think it is going to dip?

 

[Cicero]

The Yahoo shareholders were happy.. But the (GREEDY) management wanted much more.. and some compensasion.

I doubt if it will affect Microsoft shareholders..