Dear Visitor,

Our system has found that you are using an ad-blocking browser add-on.

We just wanted to let you know that our site content is, of course, available to you absolutely free of charge.

Our ads are the only way we have to be able to bring you the latest high-quality content, which is written by professional journalists, with the help of editors, graphic designers, and our site production and I.T. staff, as well as many other talented people who work around the clock for this site.

So, we ask you to add this site to your Ad Blocker’s "white list" or to simply disable your Ad Blocker while visiting this site.

Continue on this site freely
You are here: Home / Microsoft/Windows / Yahoo Won't Gain From Microsoft Dip
Stock Dip for Microsoft Does Not Mean a Yahoo Victory
Stock Dip for Microsoft Does Not Mean a Yahoo Victory
By Jennifer LeClaire / CRM Daily Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
Microsoft's stock was down Friday, but Yahoo may not have much reason to hope for a higher price in the acquisition drama. Despite lower-than-expected revenues, analysts said Microsoft isn't likely to raise its takeover bid.

Microsoft on Thursday announced third-quarter revenue of $14.45 billion, operating income of $4.41 billion and diluted earnings per share of 47 cents. Operating income and earnings per share results included a charge of $1.42 billion, or 15 cents per share, for a European Commission fine.

"Our third-quarter results demonstrate the benefit of our diversified business model," said Chris Liddell, Microsoft's chief financial officer. "Our broad span across geographies, product categories and customer segments is a tremendous asset and supports our outlook for double-digit revenue, operating income and earnings per share growth for this fiscal year and also for fiscal year 2009."

What Does this Mean for Yahoo?

Yahoo has rejected Microsoft's $44.6 billion takeover bid -- twice. Microsoft CEO Steve Ballmer sent what amounts to an ultimatum letter to Yahoo's board in early April. The letter made clear that Microsoft's goal in making "such a generous offer" was to create the basis for a speedy and ultimately friendly transaction.

Ballmer wanted Yahoo to authorize a team to negotiate and come to a definitive agreement. He then threw down the gauntlet: a three-week deadline to come to a conclusive agreement -- or else. That three weeks ends on Saturday. Yahoo is still not budging, and neither is Microsoft.

In the earnings call, Liddell offered an update on Microsoft's plans: "Speed is of the essence for the deal to make sense. Unfortunately, the transaction has been anything but speedy and has been characterized by what would appear to be unrealistic expectations of value."

Beefing Up Microsoft's Weak Spot

The Internet has always been Microsoft's weak spot, according to Marc Pado, a securities analyst with Cantor Fitzgerald. As he sees it, Microsoft needs Yahoo, and Yahoo isn't in much of a position to demand more money, given its own mixed earnings report.

"Microsoft's profit number was good, but the revenue numbers were a little short. But Microsoft always downplays its earnings expectations," Pado said. "I don't think Microsoft's earnings changes the company's vision for what it would like from Yahoo. They are playing hardball."

Liddell said if a deal is not reached by next week, Microsoft will reconsider its alternatives. That may mean taking the offer straight to Yahoo shareholders or withdrawing its proposal and focusing on other opportunities.

Yahoo maintains it is open to all alternatives that maximize stockholder value and will not allow anyone to acquire the company for less than its full value. Microsoft takes exception to that stance.

"We have yet to see tangible evidence that our bid substantially undervalues the company," Liddell said. "In fact, we see the opposite."

Tell Us What You Think


Like Us on FacebookFollow Us on Twitter
© Copyright 2018 NewsFactor Network. All rights reserved. Member of Accuserve Ad Network.