I think Microsoft is bluffing

My friend Kara Swisher at All Things D seems convinced that Microsoft has shelved its offer for Yahoo for the last time, since a number of senior Microsoft executives “close to the dealmaking” told her they have walked away from the table for good, and have no interest in acquiring the troubled Internet giant — not even if Jerry Yang is ousted as CEO, or the stock drops below $20. I have no doubt that sources told Kara that, since her contacts are usually impeccable. But I think they (even this guy) are still bluffing, and are ready to pull the trigger on a Yahoo deal.

Why do I think that? Unlike Kara, I have no inside sources at Microsoft with knowledge of a deal. But I can’t help but think that if an acquisition of Yahoo made any sense whatsoever at $33 a share, how could it not make even more sense at $23 a share? (I’m not the only one who thinks so) Presumably Microsoft saw synergies between Yahoo’s search business and its own that made a takeover look worthwhile, or it wouldn’t have pressed so hard to get a deal done. So what has changed? Not much — except that Yahoo’s stock has tanked and the company needs Microsoft more than ever.

Yes, Yahoo has cozied up to Google and sold the soul of its search business. But the Google search deal isn’t exclusive, and there isn’t even a “kill fee” if Microsoft acquires Yahoo and then tells Google to take a hike. And I have to think that seeing Google get its hooks into Yahoo has to make Microsoft want the company even more.

11 thoughts on “I think Microsoft is bluffing

  1. I'd say quite a bit has changed. A lot of Yahoo's top talent as left. The morale in the company has got to be ridiculously low, and those who haven't left yet are certainly looking for greener pastures. Yahoo still has their marketshare and position in the same segments as before, but there's no doubt in my mind that the company inside is a vastly different place now than it was just a few months ago.

  2. After spending a bunch of time at Microsoft in the past few days I seriously doubt they'll make another offer at any price.

    • But why, Robert? What has changed to make it look like a bad idea now
      — at a cheaper price — when it looked like such a good idea at $33 a
      share? Either it was a dumb idea then and Microsoft has only just
      realized it now (which is possible) or it's still a good idea and they
      are being stubborn. Or they're bluffing.

  3. Microsoft are finished with Yahoo. Good thing to. I say both companies need to now focus on there own stuff now.

  4. I agree with omarismail, YAHOO still has it's market share. Perhaps what Carl Icahn needs to do is take control and shed some of the bloat that YAHOO has taken on over the years.

    On another unrelated note, Matthew, I've tagged you in a meme on my blog.

  5. After this results… I think Microsoft will be happy to try to negociate again… Yahoo is cheaper now… and why not?

  6. After this results… I think Microsoft will be happy to try to negociate again… Yahoo is cheaper now… and why not?

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