Yahoo To Reject Microsoft Bid

Many outlets are echoing a subscribers-only report in the Wall Street Journal that Yahoo's board has decided to reject Microsoft's takeover offer. The NYTimes offers the only other independent reporting so far confirming this claim. The report says that Yahoo will formally reject the offer in a letter on Monday, since they believe it "massively undervalues" the company. Microsoft offered $31 per share, a 62% premium on the stock price at the time, for Yahoo; but the latter believes that no offer below $40 per share is tenable. The AP has some background on Yahoo's options in responding to the bid.

Comments

Re:Excuse me?

[Dr Kool, PhD]

That's simply wrong. The offer was $31 in cash OR 0.9509 of a share of Microsoft common stock.

Re:Good for them!

[jt2377]

You do know MS business software (Office) along generate as much revenues as Google, right? For at least the next ten years, i don't see how Online (Cloud Computing) Office suite from Google going to beat MS Office.

Ballmer: "Google's not a real company..."

[Futurepower(R)]

There may be some Slashdot readers who don't know the story about the chair: Ballmer Throws A Chair At "F*ing Google".

Quotes:

At that point, Mr. Ballmer picked up a chair and threw it across the room hitting a table in his office. Mr. Ballmer then said: "Fucking Eric Schmidt is a fucking pussy. I'm going to fucking bury that guy, I have done it before, and I will do it again. I'm going to fucking kill Google." ....

Thereafter, Mr. Ballmer resumed trying to persuade me to stay... Among other things, Mr. Ballmer told me that "Google's not a real company. It's a house of cards."

Quoted from legal papers in a court case brought by Microsoft.

Re:Ballmer: "Google's not a real company..."

[Anonymous Coward]

Microsoft weren't going to be 'run into debt'. Half of the offer was cash and the other half was stock - no borrowing whatsoever.

There was talk of them borrowing, but only so they didn't run down nearly all of their cash reserve - they still would have been in positive equity.

Re:Ballmer: "Google's not a real company..."

[Viceroy Potatohead]

I totally agree with that. And we're still in the Wild West days of the Internet. Look at Google's purchase of YouTube. That was a fsck load of money for what was basically a minor entity. They bought a popular saloon at the centre of things, without knowing whether the development on the other side of town will become the actual town, or if gold will be discovered fifty miles away, or if the local one will dry up. So many big players rise from nothing (such as Google itself), and without any predictable pattern, that it's kind of ridiculous to spend that much on a company that you can't recoup a decent amount of your investment by stripping its assets if the market tanks. (Since there really wouldn't be any assets worth stripping.)

It wasn't very long ago that the dot-com bubble burst, I kind of wonder if we're due for another one. I guess if the purchase is profitable enough in the short term, then it would be worth it, but that seems like a pretty unstable strategy to me, and I doubt it's the case for most of these acquisitions.

Re:Excuse me?

[Pendersempai]

There's an equilibrium, though. When a large block of stock is sold, the price of the stock may drop momentarily, but then it is undervalued and hedge funds and mutual funds snap it up until it is back to where it was. This effect is born out empirically. The demand curve for a stock is extremely steep: if it drops even a dollar, everyone and his mother wants to buy, which pushes it back up to its equilibrium price.

The one exception is when insiders sell large blocks of stock -- then the market assumes there must be bad news coming, and the price does drop and remain low. But this effect is informational, and the magnitude of the drop has much less to do with how many shares are dumped onto the market than it does with what the dump says about the insider's opinions (e.g. what proportion of his stock he dumps, and how many other insiders do the same simultaneously).

In any case, the fact that there are "loose shares" dumped onto the market does not by itself affect the price.

Re:Idiots

[Tanman]

Long-term benefit? Excuse me?

We are talking about a deal that instantly infuses into the Yahoo shareholders' bank accounts more money than the company would earn in 20 years. It IS long-term benefit, and they ARE idiots to reject it.

Insiders think it is worth $40? Who the hell are they fooling? Themselves, obviously.

Re:Frankly, my dear, I don't give a damn.

[Daniel Phillips]

"There may be some Slashdot readers who don't know the story about the chair"

--- and a good many more who wish the joke could be retired along with the other long-since-gone-stale running gags that pass for humor on Slashdot. Trouble with your theory is, it is not a joke, it actually happened.