backtop


Print 68 comment(s) - last by kontorotsui.. on Feb 2 at 10:34 PM

Microsoft offers to buy Yahoo--again

In the world of Internet search there are three main players: Microsoft, Yahoo and Google. While Google excels, the other two members of the big three are seeing their market share drop and Yahoo is having serious financial woes.

According to MSNBC, Microsoft sees this as the perfect chance to buy the floundering Yahoo property and gain some ground on the 600-pound search gorilla Google. Microsoft made an offer to purchase Yahoo for $44.6 billion and according to some the purchase could be a boon for the entire technology market. The Microsoft offer raised Yahoo stock prices by 54%.

The Microsoft offer places a 62% premium on the Yahoo stock closing price from Tuesday and the 52 week high for Yahoo stock was $34.08 in October. MSNBC reports that Microsoft offered to buy Yahoo last year and CEO Ballmer sent a letter to the Yahoo board. The Yahoo board at the time declined the offer. Ballmer told MSNBC, “According to that letter, the principal reason for this view was the Yahoo board's confidence in the "potential upside" if management successfully executed on a reformulated strategy based on certain operational initiatives, such as Project Panama, and a significant organizational realignment.”

According to sources, shareholders of Yahoo could choose cash or stock in the form of Microsoft common shares. The total purchase of Yahoo would be made with 50% cash and 50% stock. Microsoft is reported to expect a $1 billion cost savings from the merger and says it will offer significant retention packages to key Yahoo employees, engineers and managers.

Yahoo is in the process of restructuring its online business and announced earlier this month that it would be making big changes to gain market share. Part of the big changes Yahoo made was to cut jobs in an effort to cut expenses.

DailyTech reported that rumors were circulating that Yahoo could potentially lay off as many as 2,000 workers -- a figure an insider denied saying the actual number of jobs likely to be lost was more in the hundreds. A few days after the company insider said job cuts in the hundreds, Yahoo cut 1,000 jobs and announced its profits had fell by 23%.



Comments     Threshold


This article is over a month old, voting and posting comments is disabled

way to high of a price
By RamarC on 2/1/2008 10:33:45 AM , Rating: 2
62% premium for a stock that's heading down and company that's pruning staff. They should have waited til May/June after Yahoo stabilizes.




RE: way to high of a price
By Zoomer on 2/1/2008 10:38:03 AM , Rating: 2
Well, they do have the cash to throw around.


RE: way to high of a price
By omnicronx on 2/1/2008 10:39:00 AM , Rating: 2
Its no coincidence that Microsoft made this move now, hit them while they are down. I would imagine they would also have to pay a lot more money for a company that is no longer in distress.


RE: way to high of a price
By TomZ on 2/1/2008 11:13:34 AM , Rating: 3
No, as the article explained, the timing is more related to Yahoo board and management wanting some time to turn the company around, after Microsoft's offer last year. Clearly their plan isn't working, so this is the right time for a strategic acquisition.

Yahoo's board and shareholders would be stupid to reject this offer - it's probably the best offer that will ever come around.


RE: way to high of a price
By omnicronx on 2/1/2008 11:56:49 AM , Rating: 1
quote:
No, as the article explained, the timing is more related to Yahoo board and management wanting some time to turn the company around, after Microsoft's offer last year.
You say this as though one is not directly linked to the other. Microsoft initiated the move in the first place because yahoo was floundering, Yahoo thought they could turn it around, and would have probably not accepted any offer. Now that things have changed, here we are. Still doesn't change the fact that Microsoft is going after yahoo because they are currently in a weak position.


RE: way to high of a price
By Ringold on 2/1/2008 1:30:43 PM , Rating: 2
Going back to your original post, the contributers to CNBC have suggested Yahoo, without the offer, was on a likely one way street to a single-digit share price after a few more lousy quarters. Therefore, seems only logical the way the article, TomZ, and CNBC has been reporting it; more to do with the board and management changes than it currently being down. If they waited, it could've gone down more, and if they'd talked and asked Yahoo nicely and had a full range of negotiations all sorts of things could've leaked out or gone wrong.

A hostile bid now to get it over and done with, with management turning over and particularly before this year is out and we have an unpredictable political climate for business, was the objective. Not much to do with Yahoo currently being down.


RE: way to high of a price
By Netscorer on 2/1/2008 11:03:37 AM , Rating: 2
Microsoft made the right choice. Their agenda N.1 is to catch up with Google on Internet properties, not swallowing Yahoo at the lowest possible price. They do not know what the future will bring and once they saw a great opportunity (Yahoo stock in doldrums, disastrous Q4 results, restructuring plans) they pounced on it.
This is a capitalism at its best.


RE: way to high of a price
By masher2 (blog) on 2/1/2008 11:42:25 AM , Rating: 2
> "62% premium for a stock that's heading down and company that's pruning staff. They should have waited "

Companies rarely get bought out once they've turned the corner and are doing well. It's when they're performing poorly that they're not only most vulnerable, but most ripe to the potential that new management and new financial resources can bring.


RE: way to high of a price
By RamarC on 2/1/2008 12:18:24 PM , Rating: 2
i'm just saying a 62% premium is high for something still heading downward. closing price + 25% would have been good. or wait till it levels off and then offer current price + 50%.

but i don't have billions to throw around so what the hell do i know. ;-)


"Mac OS X is like living in a farmhouse in the country with no locks, and Windows is living in a house with bars on the windows in the bad part of town." -- Charlie Miller

Related Articles
Yahoo Trades Pink Slips for Greenbacks
January 22, 2008, 4:24 PM
Yahoo to Make Big Changes
January 16, 2008, 12:16 PM













botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki