Citigroup Analyst: Microsoft Still Committed to Yahoo

Yahoo! Inc.'s (YHOO) aggressive 2009 and 2010 financial forecasts won't pull the plug on Microsoft Corp.'s (MSFT) plans to purchase the internet company, says Citigroup analyst Mark Mahaney.

He told clients that Yahoo's revenue and operating income targets – 13% and 24% above his expectations – are "possible, but not probable" given the level of execution, market share gains, operating leverage and new business development that is needed to achieve these goals.

However, the forecasts are another aggressive negotiating move on Yahoo!'s part, he added, the result of which will likely be an increased bid for Yahoo from a still very committed Microsoft.

In a note Mr. Mahaney wrote:

We continue to view Yahoo!'s strategic value to Microsoft as substantial and that buying Yahoo! may be Microsoft's only game changing option in the Internet sector. After a multi-year struggle to produce an organic online initiative with critical scale, we believe Microsoft is very committed to acquiring Yahoo! sooner, rather than later.

Comments

[waters96:]

If MSFT really wants YHOO then they should pay up and get off the lowball offer - splitting the difference between 31 and 40 gets the deal done - the rest is BS

2008 Mar 20 01:58 PM

[Mittal_911:]

I fully agree witht the assessment. It is a done deal! I think Microsoft may pay about +/- 10% above the current bid, and that is about it.

2008 Mar 20 07:11 PM

[Gordon54838:]

If Microsoft hadnt bid on Yahoo, Yahoos share price would be about 16 right now. A 66% bid premium was a generous offer. If Microsoft wants Yahoo they should take it in a proxy battle. Either that or pull their bid and see yahoo slide to 16 and Yahoo shareholders will revolt, demanding to be bought.

2008 Mar 21 01:01 PM