Microsoft: Outlook Is for PC Unit Growth; No Evidence Yahoo Bid Is Too Low - CFO

On a post-earnings conference call with investors this afternoon, Microsoft (MSFT) CFO Chris Liddell said the company expects 9%-11% PC unit growth in its fiscal Q4 ending June.

On the call, Liddell gave the following Q4 growth expectations by business unit:

• Client: 7%-11%.
• Server and tools: 18%-205
• Online services: 37%-41%
• Microsoft Business Division: 15%-16%
• Entertainment and devices: 32-34%

Liddell also said the company believes its offer to buy Yahoo (YHOO) is “extremely generous,” and that the company has seen “no tangible evidence” that the bid undervalues Yahoo. “In fact, we see the opposite.” He notes that Yahoo’s recent Q1 earnings report was in line with previous guidance, and he says Yahoo continues to lose market share in search.

Microsoft, of course, has offered to buy Yahoo for $31 a share in cash and stock.

Liddell says Microsoft is focused on the online advertising market, with or without Yahoo.

Liddell says that unless there is progress by this weekend, the company will reconsider its alternatives, which include taking the Yahoo bid directly to the company’s shareholders or to withdraw its offer.

In after hours trading, MSFT is down $1.55, to $30.25; Yahoo is off 30 cents, at $27.00.

Comments

[chen]

will msft stock go up if it drops the yhoo takeover . and if it goes hostile what will happen to msft stock and also yhoo stock thanks for ur opinion

[learningfromthebest]

if drops -> i think the share prices will go up
if goes hostile -> less certain, but perhaps a small gain

personally i don't like the uncertainty/risk of a hanging-in-the-air deal, and while YHOO fits into some of the weak areas of MSFT, I think $31/share is still on the high side of the offer given YHOO's lukewarm performance.