Microsoft offers to buy Yahoo for $44.6 billion
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Technology giant Microsoft Corp said  on Friday that it had offered to acquire Internet media company  Yahoo Inc for $44.6 billion in cash and stock.
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Microsoft made an unsolicited $44.6 billion cash and stock bid for Internet portal Yahoo Friday.
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Microsoft said&#160;its $44.6 billion offer to purchase Yahoo&#160;is &quot;fair&quot; and hinted that it may pursue a hostile takeover of the Internet company, according to a statement Microsoft made Monday in response to&#160;Yahoo&#39;s formal rejection of its buyout offer.
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Software giant makes $44.6 billion offer for the search engine.
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Microsoft offers to buy the search engine company Yahoo for $44.6bn in cash and shares.
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Software giant goes public with $44.6 billion bid for the Net pioneer. Will Yahoo succumb to the advances or rebuff Microsoft as it has before?
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Microsoft Corp  has made an  unsolicited offer to buy Yahoo Inc  for $44.6 billion  in cash and stock, seeking to join forces against Google Inc   in what would be the biggest Internet deal since the  Time Warner-AOL merger.
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BOSTON/SEATTLE  - Yahoo Inc's  second-biggest shareholder urged Microsoft Corp  to raise its $42 billion bid for the Web pioneer and warned Yahoo it has few options other than to accept, raising pressure for them to seal a deal.
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Microsoft Corp.'s proposed $42 billion purchase of Yahoo Inc. would establish the world's largest software maker as a "strong No. 2 competitor" against online search leader Google Inc., Microsoft CEO Steve Ballmer said Monday.
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Microsoft Corp. offered to buy search engine operator Yahoo Inc. for $44.6 billion in cash and stock in a move to boost its competitive edge in the online services market.
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Yahoo Inc's board believes Microsoft Corp's unsolicited bid of $44.6 billion to acquire Yahoo "massively undervalues" the company and directors are set to reject the offer, the Wall Street Journal reported on Saturday, citing an unnamed source.
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Confirming weekend rumors, Yahoo rejected on Monday Microsoft's US$44.6 billion cash-and-stock offer, saying th...
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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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Yahoo's board is planning to reject Microsoft's $44.6 billion offer, arguing that it "massively undervalues" the company, according to a Wall Street Journal report.
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BOSTON/SEATTLE  - Yahoo Inc's   second-biggest shareholder urged Microsoft Corp  to  raise its $42 billion bid for the Web pioneer and warned Yahoo  it has few options other than to accept, raising pressure for  them to seal a deal.
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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.
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A combined Yahoo and Microsoft would still be the underdog in the increasingly important business of Web search if Microsoft's unsolicited $44.6 billion bid to buy Yahoo is approved by regulators and Yahoo shareholders.