Yahoo rejects Microsoft buyout offer as undervalued
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Yahoo's board of directors on Monday rejected Microsoft's buyout offer, saying the 44.6-billion-dollar bid is too low and not what's best for shareholders of the veteran Internet company.
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Many Yahoo shareholders are waiting for a higher bid than that offered by Microsoft, but analysts say it is increasingly unlikely.
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NEW YORK/SAN FRANCISCO  - Yahoo Inc  is in  talks on a possible deal with News Corp , but analysts  said an alternative was unlikely to emerge to rival Microsoft  Corp's  bid for Yahoo, now valued at $42.1 billion.
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News that Microsoft was making a $44.6 billion bid to buy Yahoo was greeted with skepticism by many CNN.com users on Friday.
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SEATTLE/NEW YORK  - Yahoo Inc rejected Microsoft  Corp's unsolicited $41.6 billion takeover offer as too low on  Monday, forcing the software maker to either sweeten the bid or  adopt a hostile approach to clinch a deal.
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Yahoo called Microsoftâs $44.6 billion takeover offer too low, and said it would continue to evaluate all its options.
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Yahoo Inc. is set to reject Microsoft  Corp.'s offer, initially worth $44.6 billion, as undervaluing  the business, a source familiar with the situation said on  Saturday.
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Microsoft may end up having to raise the amount it is willing to pay for Yahoo if the software company&#39;s stock continues to drop while Yahoo&#39;s continues to rise.In the week since&#160;Microsoft made its surprise bid for Yahoo, the price Microsoft is willing to offer the Internet company has dropped by nearly 7 percent as Microsoft&#39;s share price has fallen. In the meantime, Yahoo&#39;s shares have risen in value, trading at nearly the $31 per share Microsoft was willing to pay, making the company potentially worth a higher asking price and the offer vulnerable to higher bids.Microsoft announced its offer to acquire Yahoo on Feb. 1, saying it would pay $31 for half of Yahoo&#39;s outstanding shares and 0.9509 of a Microsoft share for the other half. Microsoft&#39;s half-cash/half-stock offer to Yahoo was valued at about $44.6 billion at the time it was made.The stock half was based on the $32.60 Microsoft share price at the end of Thursday, the day before the deal was announced last Friday. Yahoo&#39;s share price at the close of market on Jan. 31 was $19.18. The cash half of the deal was $22.3 billion, which, when considering Microsoft agreed to pay $31 per share, is based on half of Yahoo&#39;s outstanding shares being 719,354,838.Microsoft has not publicly said what number of outstanding shares it has based its offer price on. In its form 10-Q filed Nov. 9, 2007, Yahoo&#39;s outstanding shares as of Oct. 31, 2007, were 1,336,444,034. However, cutting that number in half and multiplying it by Microsoft&#39;s $31 per-share offer adds up to $20.7 billion, not the $22.3 billion in cash Microsoft is offering.By Friday afternoon, Microsoft&#39;s share price was down about 12 percent at $28.40. Based on that price and assuming that 719,354,838 is the other half of Yahoo&#39;s outstanding shares -- and then factoring in the $22.3 billion cash offer -- the amount of the bid stands at $41.7 billion.Microsoft&#39;s stock is likely down due to its offer for a number of reasons, said a financial analyst who was interviewed Friday and asked not to be named. Investors may not be happy with the money Microsoft is willing to pay for Yahoo, and&#160;strategic questions surrounding how the companies will pull off a merger&#160;successfully also are driving the stock down.Moreover, the deal is expected to dilute Microsoft&#39;s earnings in fiscal 2009 and perhaps even in fiscal 2010, so the company&#39;s earnings predictions likely will come down, the analyst said.On the other hand, Yahoo&#39;s stock has been buoyed by speculation there could be other, higher bidders for the company now that Microsoft has shown its hand. Yahoo stock has risen nearly 34 percent since the deal was announced; on Friday afternoon it was trading at nearly $29, which is only slightly lower than the current per-share for the stock half of Microsoft&#39;s offer.Microsoft has declined to comment about whether it will adjust its offer so that the final amount of the deal will be the original $44.6 billion offered. The cash half for the time being remains the same, sources close to the company said Friday. However, this could change in last-minute dealings if Microsoft&#39;s stock continues to lose value while Yahoo&#39;s rises, and other companies offer competitive bids for Yahoo in the meantime.
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Yahoo Inc. spurned Microsoft Corp.'s $44.6 billion takeover bid as inadequate Monday without explaining how its management will match the payoff that the slumping Internet icon's shareholders would have received had the unsolicited offer been accepted.
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Skeptical investors are trading  Yahoo Inc  shares at a 6.5 percent discount to  Microsoft Corp's  unofficial offer price, but some Wall  Streeters expect the software giant to raise its bid.
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Yahoo&#39;s board of directors plans to reject&#160;Microsoft&#39;s unsolicited $44.6 billion takeover bid,&#160;The Wall Street Journal reported Saturday, citing as its source &quot;a person familiar with the situation.&quot;According to the report, the source said the Yahoo board has determined that the $31-per-share offer &quot;massively&#160;undervalues&quot; the online services company. In addition, Microsoft&#39;s buyout bid doesn&#39;t take into consideration the business risks that Yahoo would be taking if it entered into an agreement that in the end might not be approved by government regulators, the source told the Journal.According to the Journal, Yahoo&#39;s board intends to send Microsoft a letter on Monday, detailing its position.A Yahoo spokeswoman declined to comment on the report today. &quot;We are not providing details on the board&#39;s review process,&quot; she wrote. &quot;Yahoo&#39;s board is carefully and thoroughly evaluating the Microsoft proposal in the context of all of the company&#39;s strategic alternatives, and will pursue the best course of action to maximize long-term value for shareholders.&quot;Microsoft, which announced its offer for Yahoo on Feb. 1, couldn&#39;t be reached for comment today. The offer is a combined cash-and-stock deal; in announcing the bid, Microsoft said Yahoo shareholders could choose to receive either cash or Microsoft stock, although it added that the total consideration would be equally split between the two forms of payment.Yesterday, published reports said that Yahoo&#39;s board was meeting to discuss the offer.Yahoo is still evaluating other options,&#160;including a search advertising partnership with Google, according to today&#39;s report by the Journal. It also may still be open to a longer negotiation with Microsoft: The Journal said it was told by the source that Yahoo would be unlikely to consider any offers below $40 per share.If so, that would require Microsoft to raise its original offer by at least 29 percent, or about $13 billion. In other words, the cost for Microsoft to become a more credible rival to Google in the search and online advertising markets could start at about $57.6 billion.Google has been doing what it can to scuttle the Microsoft takeover bid, including playing the antitrust card by asking, in a blog post by one of its executives last Monday, whether Microsoft might &quot;attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC?&quot;Microsoft quickly shot back, issuing a statement saying that a combination of it and Yahoo merger would &quot;create a more competitive marketplace.&quot;(Eric Lai contributed to this story.)Computerworld is an InfoWorld affiliate.
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Yahoo rejects a takeover bid of more than $40bn from computer software giant Microsoft saying it is too low.
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Most of Yahoo Inc's  top  institutional shareholders may be more interested in making  sure Microsoft Corp  does not overpay for the Web  pioneer, because they have more money invested in the bigger  software maker, a research report said on Friday.
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Microsoft&#39;s offer Friday to buy Yahoo&#160;for $44.6 billion in cash and shares put a turbulent end to a heavy earnings week in which forecasts from Internet leaders worried IT investors.Internet leaders Google, Yahoo, and Amazon and a host of high-profile technology vendors this week reported fourth-quarter sales and generally muted forecasts for the next few quarters.Microsoft CEO Steve Ballmer&#39;s offer letter to Yahoo&#39;s board of directors&#160;on Thursday went public Friday morning, having an immediate effect on company share prices. The offer represents a 62 percent premium over Yahoo&#39;s closing price on Thursday. In premarket trading, Yahoo shares skyrocketed. Shares closed at $28.38, up by $9.20, or 47.97 percent.Though most analysts said the deal would not likely hurt Google in the short term, Google shares closed down by $48.40, at $515.90. Shares of Microsoft, which has never done a deal this size, were down by $2.15, closing at $30.45.Considering Yahoo&#39;s likely earnings and share price increases without an acquisition, for the price Microsoft is willing to pay, the offer &quot;seems like a great deal,&quot; said Citigroup analyst Mark Mahaney in a research note.The proposal capped off a heavy earnings-report week. Though sales for the fourth quarter generally were strong, key companies, including Google and high-flying virtualization technology vendor VMware, fell short of analyst expectations.In the current economic climate in the United States, where many analysts are predicting a recession, market watchers pounce on bad news.Yahoo&#39;s fourth-quarter revenue increased, but profit fell to $206 million&#160;from $269 million one year earlier. During its financial conference call Wednesday, CEO Jerry Yang announced that the company would be laying off about 1,000 workers and talked about the U.S. economy hitting the company with &quot;headwinds.&quot;Analysts worry that the company&#39;s Panama search engine ad system, rolled out last year, has not had the positive effect that was expected. They also note that the company is vague about expected investments and that it is appearing to lose further ground to Google in the search market.In a research note, Citigroup Global Markets Equity Research downgraded its opinion on Yahoo from &quot;buy&quot; to &quot;hold.&quot; But after the Microsoft offer went public, Citigroup called the move &quot;a good fit to fix an ongoing issue.&quot;Though&#160;Google on Thursday reported a 51 percent year-on-year revenue increase&#160;to $4.83 billion for the quarter, earnings per share excluding certain items were $4.43, just below the $4.44 consensus analyst forecast. While most companies would be ecstatic to report such strong growth, the market had gotten used to Google continuing to blow past all expectations.Many market watchers take Google&#39;s miss as a sign that the faltering economy is braking the search giant. If consumers cut back spending, Google may experience a slackening in consumers&#39; desire to click on advertising. The company&#39;s continuing reliance on search revenue is bothering investors. That issue may be worrying investors more than potential competition with a merged Microsoft-Yahoo.One bright note for the week in the Internet sector was Amazon&#39;s earnings announcement on Wednesday. Amazon revenue grew 42 percent, to $5.67 billion, as income more than doubled, to $207 million. While the company&#39;s forecast for operating margins was lower than expected, its revenue forecast was higher than expected -- welcome news in a climate of worry.Then on Thursday,&#160;Amazon announced it would buy Audible.com , which sparked interest as the acquisition may help its battle against Apple in the market for spoken-word books, magazines, and radio programs. Amazon shares jumped by $3.49 to close at $77.70 Thursday, though they then drifted back down Friday.Outside the Internet arena, companies in a variety of sectors, including Lenovo, SAP, Verizon, and TSMC, reported strong fourth-quarter sales (though in SAP&#39;s case, profit was brought down by its acquisition of Business Objects). However, as usual in these times of economic uncertainty, it was&#160;VMware&#39;s disappointing quarter and weak forecast &#160;that captured the most attention.The company share price lost 34 percent of its value after VMware said Monday that revenue was $412.5 million, compared to analyst expectations of $417.4 million. Even though profit doubled, it was the revenue miss that had everyone nervous as hopes for the company were high after its red-hot IPO in December.&quot;The company&#39;s 2008 outlook suggests that low hanging fruit may have been picked and new customer signings could be slowing down,&quot; according to a UBS research note. This comment is probably right on the money. Most big-company CIOs consider server virtualization an obvious tactical move and have already implemented the technology.By market close Friday, excitement over the Microsoft offer for Yahoo may have helped push the tech-heavy Nasdaq Composite Index into positive territory. It closed at 2413.36, up by 23.50. As economic uncertainty rules, however, IT investors are bracing for a bumpy ride over the next few quarters.
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InfoWorld - Microsoft has offered to buy Yahoo for $44.6 billion -- but how did a company that started so small come to be worth so much? That's a story that began in the early days of the World Wide Web, when people were struggling to keep track of the new world of multimedia it offered them.
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Skeptical investors are trading Yahoo Inc  shares at a 6.5 percent discount to Microsoft Corp's  unofficial offer price, but some Wall Streeters expect the software giant to raise its bid.
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SAN FRANCISCO/NEW YORK  - Microsoft Corp   offered to buy Yahoo Inc  for $44.6 billion, in a bold  bid to transform two ailing Internet businesses into a worthy  competitor for market leader Google Inc .