YHOO has a lot of potential value which hasn't been realized by current management. Its like a diamond in the rough, which can be quite expensive after it has been properly polished. MSFT is not stupid to have offered $33/share if they really believed that YHOO was worth $19. You have to remember that when MSFT made the offer YHOO had just come out of a bad quarter and all tech stocks were crashing. So 70% premium in that context is meaningless. Hell, by that logic, AAPL is trading at a 65% premium over its $118 price just a couple of months back and this is without any offer.
You really have to look at YHOO price within last couple of years. Its been mostly in the $25-30 range. Also, in last couple of years WEB2.0 has caused a price inflation in internet companies. Youtube today would at least be worth 5-7B$ as a stand alone property. Facebook is close to 10B$.
Considering all this and the fact that MSFT needs YHOO more than the other way round (scarcity value), I think the Yahoo board - (Yang included) did indulge is sincere negotiation, at least in the last couple of weeks before the deal fell through. I think the reason for deal failure is lack of commitment from MSFT side and also potential concerns about integration issues with a hostile Yahoo.
YHOO has a lot of potential value which hasn't been realized by current management. Its like a diamond in the rough, which can be quite expensive after it has been properly polished. MSFT is not stupid to have offered $33/share if they really believed that YHOO was worth $19. You have to remember that when MSFT made the offer YHOO had just come out of a bad quarter and all tech stocks were crashing. So 70% premium in that context is meaningless. Hell, by that logic, AAPL is trading at a 65% premium over its $118 price just a couple of months back and this is without any offer.
You really have to look at YHOO price within last couple of years. Its been mostly in the $25-30 range. Also, in last couple of years WEB2.0 has caused a price inflation in internet companies. Youtube today would at least be worth 5-7B$ as a stand alone property. Facebook is close to 10B$.
Considering all this and the fact that MSFT needs YHOO more than the other way round (scarcity value), I think the Yahoo board - (Yang included) did indulge is sincere negotiation, at least in the last couple of weeks before the deal fell through. I think the reason for deal failure is lack of commitment from MSFT side and also potential concerns about integration issues with a hostile Yahoo.