Microsoft's price for Yahoo loses value
693996
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.
383890
Microsoft Corp on Friday said it had offered to acquire Yahoo Inc in a proposed cash and stock deal valued at $44.6 billion.
263624
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.
185112
Microsoft's potential acquisition of Yahoo has many pitfalls but also some benefits, and such a huge deal will be hard to pull off, analysts say.
253160
Presentations from Yahooâs management and its bankers argued that the company was worth more than what Microsoft has offered.
556967
Microsoft Corp  said on Monday  that Yahoo Inc's  rejection of its initial offer to buy  the company was "unfortunate," but it does not change its  belief in the merits of its proposal.
156514
From Yahoo!'s perspective, the deal needs to be done, but Microsoft could have done better.
650058
Microsoft Corp.  may need  to cut prices or pursue a deal similar to Yahoo Inc.&#039;s   and online auctioneer eBay Inc.&#039;s  partnership to gain  ground in the lucrative Internet advertising market, analysts  said on Thursday.
486239
NEW YORK/SEATTLE  - Yahoo Inc on Monday rejected  Microsoft Corp's unsolicited $41.6 billion takeover offer as  too low, forcing the software maker to either sweeten its bid  or adopt a hostile approach to clinch a deal.
666926
Microsoft said Friday it had offered to buy struggling Internet firm Yahoo for 44.6 billion dollars (30.0 billion euros) in a bid to take on Google in the crucial battle for online revenues.
376477
Yahoo&#39;s rejection of Microsoft&#39;s acquisition bid&#160;is likely a negotiating strategy to elicit a higher offer and shouldn&#39;t be seen as an attempt to resist a deal at all costs, according to analysts.Neither Microsoft nor Yahoo has many options to improve their position in online services and advertising, and combining forces is their best bet against common rival Google, analysts said.&quot;It&#39;s part of a larger negotiation that&#39;s occurring. Clearly, Yahoo should be and is seeking a higher bid, and this is part of that process,&quot; said Clayton Moran, a financial analyst with Stanford Group.Yahoo is unlikely to find a company willing to bid as much as Microsoft for it, while Microsoft will not be able to attain its Internet goals by acquiring a company other than Yahoo. &quot;While they need to negotiate and go through the process, at the end of the day this deal will happen,&quot; Moran said.On Monday, Yahoo rejected Microsoft&#39;s bid, saying it undervalues the company. Microsoft offered to pay $31 for half of Yahoo&#39;s outstanding shares and 0.9509 of a Microsoft share for the other half. At the time of the offer, Microsoft&#39;s stock stood at $32.60 and the bid was valued at $44.6 billion, a 62 percent premium over Yahoo&#39;s stock price at the time. However, the bid&#39;s value has dropped with Microsoft&#39;s sliding stock price, which at press time was $28.10. At the same time, Yahoo&#39;s stock price has risen from a close of $19.18 on the day before the bid to $29.75 at press time.Moran predicted that Microsoft will adjust its offer so that it ends up at $35 per share, probably increasing the fixed cash portion and reducing the variable stock portion so that value is less vulnerable to Microsoft stock fluctuations. A $35-per-share offer would be a midpoint between the original bid and the $40 per share Yahoo is reportedly seeking.&quot;We continue to view a Yahoo sale to Microsoft as the most likely outcome,&quot; Citigroup financial analysts wrote in a note published Sunday after press reports over the weekend that Yahoo would reject the Microsoft bid. The rejection isn&#39;t surprising but rather is consistent with Yahoo&#39;s board job to &quot;extract maximum value&quot; for shareholders, the Citigroup analysts wrote.Yahoo has reportedly held talks with Google and AOL to explore alternatives to a Microsoft acquisition. One scenario being floated would be for Yahoo to outsource its search advertising business to Google, while another, reported Monday by The Times of London, has Yahoo and Time Warner&#39;s AOL discussing a possible merger.However, neither option would match the potential benefits of an acquisition by Microsoft, Moran said. &quot;A combined Yahoo-AOL wouldn&#39;t be particularly strong, and Yahoo&#39;s stock wouldn&#39;t react favorably to that deal,&quot; Moran said. A search partnership with Google would boost Yahoo&#39;s revenue, but it wouldn&#39;t address larger problems within the company, he said.For Moran, if Yahoo has approached AOL, it has done so probably to send a message to Microsoft that it has other options and that Microsoft has to sweeten its offer. Meanwhile, Google&#39;s intervention is probably directed at complicating and lengthening the negotiation process between Microsoft and Yahoo and thus delaying the formation of a stronger rival, Moran said.While merging with AOL is unlikely to give Yahoo the boost it needs, such a deal would probably be more palatable to Yahoo&#39;s management because Yahoo would be the strongest party in the fusion, according to industry analyst Greg Sterling of Sterling Market Intelligence.&quot;Yahoo sees its own demise in a Microsoft acquisition. My sense is that Yahoo&#39;s management believes that Yahoo&#39;s soul wouldn&#39;t survive as part of Microsoft,&quot; Sterling said.At this point, the situation is very complicated for both Microsoft and Yahoo. If Yahoo is intent on fending off Microsoft&#39;s advances at all costs, Microsoft could opt to walk away empty-handed and face a public embarrassment, or attempt a hostile takeover, which could alienate and scare away Yahoo employees it would want to retain, Sterling said.At the same time, Yahoo can&#39;t simply wave away a generous Microsoft offer if it doesn&#39;t have an alternative to it, Sterling said. &quot;There is a great deal at stake for both sides, and it&#39;s very complicated,&quot; he said.Microsoft declined to comment about Yahoo&#39;s rejection. AOL didn&#39;t immediately reply to a request for comment about its reported merger talks with Yahoo.
627856
Yahooâs board decided that Microsoftâs $44.6 billion hostile bid undervalues Yahoo, a person involved in the discussions said.
622223
A chorus of Wall Street analysts are urging Yahoo to take the deal, now that it's clear no other buyers are really emerging. But they're also saying it's time for Microsoft to raise its original offer for Yahoo in order to make it happen.
223049
If Yahoo accepts Microsoft's big buyout offer, will some of the Yahoo services you like be discontinued or, perhaps worse, Redmond-ized?
641855
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.
662909
InfoWorld - Microsoft may end up having to raise the amount it is willing to pay for Yahoo if the software company's stock continues to drop while Yahoo's continues to rise.
409347
Yahoo! must consider the Microsoft deal on the table.