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Microsoft Still Not Decided on Yahoo
2008-05-03
Microsoft still hasn’t publicly made a decision over the possible bid for
Yahoo.
A meeting of the Microsoft board on Wednesday ended without any decision,
according to the Wall Street Journal.
Microsoft had given its rival until 26 April to accept its bid, which Yahoo has
said is inadequate.
Buying Yahoo would be the biggest acquisition in Microsoft's history and would
give it a big boost in its battle with market leader Google. Microsoft, which is
still expected to make an announcement on the deal by the end of this week, has
three options.
Steve Ballmer, the software giant's chief executive has threatened to take the
bid hostile and nominate directors to replace Yahoo's board. Alternatively, it
could walk away from the deal but hints that this may happen have been dismissed
by most analysts as negotiating tactics.
Withdrawing the bid could send Yahoo shares lower. The stock has jumped from
$19.18 before the bid was announced in February to $27.41. The value of the cash
and stock offer has dropped from $31 per share or $44.6bn to $29.06 or $41.8bn,
as Microsoft shares have fallen.
Microsoft may up its bid from $31 to $33 per share, but Yahoo shareholders are
hoping for $35 to $37 per share. Analysts have mixed feelings about the impact a
tie-up with Yahoo might have. They say that while it makes strategic sense,
Yahoo comes with a high price tag.
Last week, Microsoft reported an 11% fall in quarterly profits to $4.39bn in the
three months to 31 March, from $4.93bn a year earlier. The results were in line
with expectations.
Microsoft's online services saw a 40% rise in sales to $843m in the quarter, but
its online sales still fall far behind Google.
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