Microsoft Gives Up on Yahoo Takeover Bid - Reactions on the Street
(Page 3 of 4 )
In the face of Microsoft's decision to drop its bid, Yahoo shares fell twenty percent within a few minutes after the market opened in New York. At $23.31 per share, it seems certain that Yang will have some pretty angry shareholders on his hands - and quite possibly demanding his head, or at least his job. The stock recovered some by market close on Monday, but $24.64 is still a lot less than even Microsoft's original bid, let alone the final one. Is this how Yang maximizes value for his company's shareholders?
A number of analysts have revised their ratings downward for Yahoo's stock. ThinkPanmure analyst William Morrison expressed a particularly damning opinion: he lowered his rating from "Accumulate" to "Sell" and thought that Yahoo's rejection of Microsoft's bid may "go down as one of the more destructive decisions for shareholder value in the history of Internet stocks."
So was walking away from the deal a good move for Microsoft and a bad move for Yahoo? It's hard to say. Remember, despite all the figures being tossed around, this deal was never all about price. It was also about Microsoft trying to quickly gain some kind of competitive advantage in a field in which it has been floundering. But Ballmer thinks the company can afford to be patient if necessary. In an interview with the Wall Street Journal shortly before the walkout, he noted that "It could just take more time [to get that scale]...we're just taking longer to build the scale [on our own]." On the other hand, it often seems as if Microsoft has never really "got" the Internet and the web; does Ballmer really have as much time as he thinks?
And price may not have been the biggest stumbling block. It's been mentioned repeatedly that the two companies have wildly different cultures; a merger would have been challenging at best, especially when it's widely known that Yang hates all things Microsoft and refuses to use their software. Also, the Times cited a source close to Yahoo as saying the search engine was also concerned about regulatory blocks to the deal, and wanted the higher offer to help hedge against that risk.
Next: Is it Really Over? >>
More Search Engine News Articles
More By Terri Wells
/ 2 
