MSFT needs to drop the bid and in 6 months bid half
If they drop the bid yahoo will continue to flounder and they can offer less than half of what they are now and yahoo will think that is a deal they cannot refuse at that point.
Yahoo should have taken the offer and ran. 40 times earnings was way too generous. What the hell was Balmer thinking? Now is the time to take their ball and go home. I'm sure they could put that cash into development and hire away the yahoo employees for 2x what they all make now and still pay less then 1/4 of what their bid came to.
Time to walk from this deal so MSFT stock can go back to 36 and they can put their 20 billion in cash to work to take on google. The door is open now to just walk from this very bad deal.
BTW...09 estimates are at .55/share for yhoo. I think that is high and most are now thinking the same. If you put a 20x multiple on this which is more then generous considering their growth rate is at this or under you can $11/share.
If you were buying this as a business for yourself why would you pay more then $20/share? It would take you a decade or more to earn your money back. The returns on a US treasury right now would be more lucrative. MSFT should drop the bid and look to lop off at least $9 to $12 off their bid in a couple months.
I like yahoo but the only one out there that can squeeze the juice from this fruit is google. They are the only ones who could justify anything north of $20 to buy yahoo really.
Problem here is Balmer can make a 40 billion dollar mistake and it won't affect his life nor will msft go out of business. It may suck a ton of shareholder value for the holding base but ultimately it won't affect how balmer or gates live so there is no downside for them to overpay here.
"Time to walk from this deal so MSFT stock can go back to 36 and they can put their 20 billion in cash to work to take on google. The door is open now to just walk from this very bad deal."
LOL. Re-read what you wrote and laugh at your stupidity...
By buying Yahoo! they ARE taking on Google. That is the ONLY way they can take on Google, and that is exactlly why they're buying Yahoo...They've spend billions taking on Google by imporving their msn services, which for most part aren't that good, and it hasn't worked in the last decade..what makes you think it'll work now!?
Stop crying about short term decline of MSFT shares, with YHOO, in 3-4 years, this stock will be close to $100.
If you want to make money over night, in the end, you'll lose it all. Sit back and relax. This is a good deal. Yahoo website has so much more potential than Google, and MSFT will take advantage of that. They wouldn't be a 260billion company if they didn't know what they're doing.
PS. Short this market like there is no tomorrow. Because this thing is being manipulated higher. Once DOW hits 10,000...think about going long. MSFT is relativly safe, so I'd buy it here.
I don't argue the fact they should go after google but not by overpaying this much for yahoo. Yahoo is worth maybe 15/share and that is generous. April 15 the earnings will be very weak. If msft drops their bid now yahoo will crater under 19. If they time it a few days before April 15 earnings are announced (which will be weak) yahoo will head down under 15. At that point msft can come in and put a $23/share bid with a 5 day deadline to accept.
I would wait on the $23 offer though for a few weeks to let shareholders file suits and bake off yahoo management. THEN I would offer the generous (and still to rich) $23/share. I'd make it half stock and half cash too. Not worth it to take on any debt to pickup yahoo at this juncture.
Well said! I don't know if buying Yahoo! is a bad idea, but as far as bargaining and purchase price is concerned, MSFT should pull what ORCL did with the BEAS acquisition. Withdraw the bid, watch the stock price drop, allow disappointed shareholders to flamebroil management, after a bit of cooking, place the same bid or lowered bid back on the table again, and consummate the deal. MSFT is known for being like a rich kid in a toy store though, so I don't know if they will ultimately raise the bid. But Bill Gates himself said they would not, and if he isn't an influential figure in MSFT, no one is.