Microsoft and Yahoo meet again, then walk away

By Yi-Wyn Yen

Yahoo and Microsoft executives have reached an impasse. Executives from both sides met this week near Yahoo’s headquarters in Sunnyvale, Calif., but failed to reach an agreement, according to a Wall Street Journal report.

This is just the second time the two have met since Yahoo (YHOO) rejected Microsoft’s $45 billion cash-and-stock offer in February. Microsoft’s dropping share price has pushed the value of its original offer of $31 a share to roughly $29. Yahoo thinks that’s too low, and Microsoft (MSFT) thinks the deal’s fair. Yahoo’s stock traded at $27.89 in mid-day trading Friday.

Some industry watchers believe the magic number in order for the deal to get done quickly is $34 a share. Citigroup analyst Mark Mahaney has repeatedly stated that a merger is likely at that offer. “We believe buying Yahoo shares here provides an attractive return,” Mahaney wrote in a recent report.

More talks between the two companies are unlikely before Yahoo reports its first-quarter earnings on April 22. Last month Yahoo executives including CEO Jerry Yang and president Sue Decker went on a weeklong roadshow to present to major investors on the company’s 2008 outlook. All Things D’s Kara Swisher reported that Yahoo’s institutional investors weren’t impressed.

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Filed under Microsoft-Yahoo, Yahoo, microsoft

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AOL went to CRAP after Time Warner bought them. Now YAHOO will go to CRAP after MS buys them using Nazi-like tactics. Let’s just turn the entire world over to GATES and get it over with. We can’t afford gas, homes, food nor can we begin to afford to live any longer. And when the banks get us ALL enslaved to debt, and we’re all homeless, and when GATES and a few media giants end up buying every single media outlet, and after everything we do is monitored by GATES and his empire of lawyers we might as well slit our own throats and bleed to death. Because we’ll NEVER have ONE AREA of our lives that is REAL and under our own control. They’ve RUINED the music industry. With HD-blueray discs, they’re about to turn the HD MOVIE industry into DRAMA CATALOGS with product placement and online purchasing integration within the HD disc. Good bye Meyer… hello film producers: Dillards, JC Penny and Home Depot, Target, Walmart & in the bitter end, movie mogul, Bill Gates! So… what the hell. Bring the troops home now while we still have a country and cancel the election, and just let Bill Gates and ALL THREE CANDIDATES BE PRESIDENT TOGETHER… because this country is OVER WITH.

Posted By Thomas Jefferson, DC : April 5, 2008 8:32 pm

The deal may end up being completed, but that would only be bad news for the combined company. MSFT has been trying to grow its MSN/Live division for more than ten years without success. Putting them in charge of YHOO is only going to speed up the decline.

Sad, because even at #2, YHOO is profitable and has the most total traffic through its site. Folding it into MSN/Live will end that.

One can guarantee that there will be a protracted integration process (including converting YHOO’s open-source powered sites to MSFT technology, which was problematic at Hotmail). During that time, GOOG will continue to increase its lead in search and in online advertising.

In other words, YHOO stockholders had better take the offer in cash instead of stock, or they may have reason to regret it.

Posted By Walt, Apple Valley, CA : April 4, 2008 7:22 pm

I am a Yahoo stockholder.

The only thing I have seen in the press is that Google’s ad market will continue to grow, while Yahoo’s market will continue to shrink.

However, I have not see anything of substance to indicate that Yahoo management has a plan to counter that trend or increase other revenue models.

Anyone see anything different?

Posted By Darwin, Dallas tx : April 4, 2008 6:26 pm

I agree Yahoo is on the decline, the only thing to protect shareholders is selling at $45 billion. But I think Yahoo has already failed in capturing the deal thinking they are still in pre-2000 era when they can ask for whatever ridicious price they want. I think the boat is sinking.

Posted By Houston, Texas : April 4, 2008 5:39 pm

My thoughts are that the share is probably going to go up by 7 or 10 percent giving Yahoo at little more leverage and goushening the blow for potential blow outs later. Mr Bronaugh

Posted By Mr Bronaugh : April 4, 2008 4:47 pm

I agree with Michael. Yahoo isn’t going to get a better price. Actually, with the current environment, they’ll be lucky if Microsoft doesn’t decide to revise their offer downward. Who else would/could buy Yahoo anyway? I think Yang and company have already figured out the answer is no one…

Posted By Mark, Jacksonville, FL : April 4, 2008 2:53 pm

Yahoo needs to sell itself, there’s nothing to argue about here. What little its trying to do to compete with Google is not enough, its the only way to save the share holders from losing their money through declining stock prices.

Posted By Michael Brown, Baltimore, MD : April 4, 2008 2:23 pm

Houyhuhnms said the search engine ain’t for sale!

Posted By madmilker, Possum Hollow, USA : April 4, 2008 1:22 pm

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