Wednesday, July 2, 2008

My comment yesterday

This so called "humiliating detail" indeed confirms that YHOO was engaged in serious negotiations with MSFT. It was MSFT who wasn't serious about its offer of ~$33 and also about offering any valuation guarantees, as has been obvious based on its recent behavior. Its quite well known that YHOO was negotiating for a deal between $31 and $37, but was more concerned about valuation guarantees and regulatory issue, which MSFT chose to ignore throughout the negotiation process. It was Ballmer who chose to walk, not YHOO.

Well my comment yesterday was prescient... YHOO is headed to ~$22 preopen. Here's the comment again:

Rav (URL) said:
Jul. 01, 12:23 PM
I guess, its time for another "partial" bid from MSFT. Perhaps this time they offer to buy 30% of YHOO at ~$32. The MSFT stock action seems to indicate that. $26+ is here and next stop $25? Ballmer has made a laughing stock of all the walksters.

YHOO's powerpoint did an excellent job of showing how ridiculous MSFT's so called partial bid was and don't forget that MSFT was raving about the deal in that leaked memo to its own employees.
Its clear from YHOO's SEC filing that MSFT has been a bad apple throughout this deal - no pun intended.

All you YHOO ranters, here's something to keep things in perspective. During all this hoopla about MSFT's on again and off again bid the end result so far is that YHOO has outperformed MSFT by about 25%. Numbers don't lie, people do.;range=20080130,20080701;compare=yhoo+goog;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

MSFT is in a no win situation. If they don't buy YHOO, GOOG will eat their lunch and dinner. If they buy YHOO (or whatever is left of YHOO) decline will be even more precipitous due to integration issues and all the merger related bad-blood. Vista is such a bummer that people prefer "upgrading" to XP. What's to stop them from switching to MACs pretty soon.

With YHOO stock already down to ~$19+, the expectations are set so low that even a modest boost from the GOOG deal will be enough to sustain the stock. Then there are MSFT put, PE put, AOL/Myspace put, asian assets etc... It may be good stock to own in this kind of recessionary environment because its correlated more to the deal action rather than the macro factors. "

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