Microsoft and Yahoo: Waiting, Watching and Wondering

In early April, Microsoft (MSFT) issued Yahoo (YHOO) an ultimatum. By April 26th, one way or another, Microsoft pledged, there’d be a decision. Either Yahoo would accept, Microsoft would take their buyout offer to the shareholders, or they’d walk. Something would happen. April 26th, along with earnings announcements from all relevant players, came and went. The ultimatum deadline rang out with all the import of a fire drill in an empty building.

Thursday was five days since the deadline’s expiration and we’re still waiting. When I searched for Yahoo with a Google News Search, I found 498 articles linked to the first hit. That’s a lot of baited breath.

MicroHoo: Decision Time at 1 p.m. PDT Today? …

Yahoo and Microsoft give each other the silent treatment….

Microsoft To Announce Something At Some Point; Maybe Tomorrow, Maybe Monday …

One after another, reports offer commentary, speculation, but little real news. The best we’ve gotten are leaks and the companies using the press to posture with each other.

One report first run on Silicon Alley Insider, and since confirmed, quoted comments Steve Ballmer made to a staff town meeting.

On the subject of options, he said: “We’ve got basically the three big options in front of us. There’s the friendly deal, there’s an unfriendly deal, and the third path is simply to walk away.”

On the subject of price: “I know exactly what I think Yahoo is worth to me. I won’t go a dime above and I will go to what I think it’s worth if that gets the deal done.”

Regarding strategy: “Yahoo is not a strategy, it’s a part of a strategy. We’re interested to pay for it at some level and beyond that level we’re not willing to pay for it. “ Also, in other comments - “We need to gain scale.” “Look at all the properties on the Internet – everything on the Internet. There’s really only five or six that really have any scale. Worldwide, you’d maybe get seven or eight.”

Beyond the soundbytes, which add little themselves, the factual information is limited. We know Microsoft’s board met. Reportedly, they empowered Steve Ballmer to use his best judgment. We know a slate of directors to be named for a proxy fight, if it happens, was leaked last week. We know from shareholder lawsuit papers that Microsoft has up to $1.5b earmarked for employee retention packages, all part of an effort to keep Yahoo staff from bolting, if things progress. We know Yahoo is holding still and not likely to budge for less than $35 a share, or by some accounts, more than $37. Last, we know something will happen…eventually.

In Thursday morning's remarks, Ballmer promised something in “Short Order.” What that means isn’t clear. It’s vague to begin with, but moreover, he already promised that we would know where things were as of this past Saturday. That didn’t happen either.

Between the lines, is there anything more to infer? Doesn’t seem to be much. There have long been three options: sweeten the deal, take it to the shareholders, or walk away. There has long been a battle over price. There has long been shareholder pressure on both sides.

Microsoft remains in the same position they were before the ultimatum expired. So to is Yahoo. It could be a sign of complex shareholder issues. It could be the result of ongoing last minute negotiations. It could be resulting from back channel consensus building among institutional investors. Could be anything, or nothing. At best, the lack of decisive action hints only of lack of decisiveness.

Eventually, we’ll find out which. Maybe tomorrow, maybe Monday?

Ballmer probably put it best in his own words “[we] missed the deadline but we’re in the process.” As he told the Wall Street Journal, “With the right circumstances it’ll happen. Without the right circumstances, it won’t.”

Comments

[WAKEUP]

What a damned fool adventure this entire Yahoo takeover mess has been. I said it was ill-advised, from the beginning, because even if Microsoft got Yahoo, Microsoft would have nothing but an empty bag, as most of the best Yahoo talent WILL leave. Ballmer is an incompetent, fratboy, blowhard.

[bill d]

well he is certainly working for the right company !

[Questioner]

I know that this deal is predicated on the perceived value of Yahoo -- so everyone keeps talking about the price of its shares. But frankly -- who cares. What I want to know is -- how much will Microsoft's shares move (up or down) if the deal goes through? Conversely -- what happens if to Microsoft's shares if they walk away?

[investmaui]

Wonder no more!
Softy shoots up on Monday!!