February 09, 2008

Yahoo! Calls Microsoft Cheap, Will Reject Offer

The Wall Street Journal is reporting today that Yahoo!'s board will rightfully tell Microsoft to go pound sand on their offer, unless the total value of that offer is increased, more than 30 percent ahead of their initial approach, making the value of the deal not $44.6 billion, as originally planned, but now, nearly $60 billion.

As I mentioned last week, Microsoft came after Yahoo! at a time when the company's stock was depressed, and tried to "get the company on the cheap", offering, instead of a massive cash outlay, exchange for fractions of Microsoft shares, which at the time amounted to $31 apiece. But in the ensuing market downturn, the offer became less and less substantial, as Microsoft stock eroded, as repeatedly noted by Henry Blodget of Silicon Alley Insider.

Typical in things of this nature, the conflict isn't over technology leadership or how the products and people would overlap, but instead, simply dollars. As Jason Calacanis tweeted this morning, "(translation: $5 bucks more please!)"

I believe that in the face of innovation by Google, Apple, Facebook and many others, Microsoft and Yahoo! don't represent technology leadership and forward-thinking the way they once did. Regardless of the price, Yahoo! should say no to Redmond, and take a new approach to their business to make themselves relevant once again.


  1. "Yahoo! should say no to Redmond, and take a new approach to their business to make themselves relevant once again."

    But that's just it... They've been trying exactly what you say for years now. They're out of options. And Microsoft's offer is pretty good, at a 62% premium.

    But when Yahoo's board is already run by people who've made their billions (i.e., money is not an issue for them), this becomes more of a pride issue than anything.

  2. I'm trying to amuse myself until these guys form a decision...


  3. I don't want to put my foot in my mouth, but I believe that the deal is dead.

    I am currently trying to get attribution on an overheard conversation at Microsoft, to the effect that, "...the offer precipitated an exodus of key managers that may have materially harmed the Yahoo long term agenda for integration of it's advanced properties'...