Microsoft-Yahoo Talks Intensifying. What a Surprise.

Posted by: Rob Hof on May 2, 2008

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Forgive me if I feel like I’m coming down with a case of whiplash. First, Microsoft CEO Steve Ballmer says he might walk away from his company’s unsolicited bid to buy Yahoo, then Microsoft hints it’s going to go hostile (soon!), then today, the company leaks that talks with Yahoo are intensifying—and I hear from a source close to the matter that indeed they have, both in recent days and especially today. And this is all in the last 24 hours!

From what I gather, talks have been going on constantly, but it’s not at all surprising that they’re heating up, as I said yesterday. On the other hand, it also wouldn’t be at all surprising if they broke down once again, because these are real talks, a deal hasn’t been reached yet, and probably won’t today.

Three months of rhetoric aside, the main hangup all this time has been how far up from $31 a share (now a little over $29 a share thanks to Microsoft’s sinking stock price) Microsoft will go, and how far down from $40 a share Yahoo will go. In recent days, it has seemed they were closing in. Today, the New York Times’ Dealbook and the Journal noted that Microsoft might be upping its bid by “several” dollars, which would be quite a move given Ballmer’s recent trash-talk. So for all this ping-pong, I’m still betting on the deal getting done in the mid-30s.

And while I originally said “Eventually,” I now get the distinct feeling it could come soon, maybe even by Monday.

Reader Comments

Marlon Zuniga

May 2, 2008 10:52 PM

I think that Yahoo needs to remian resilient in denying Microsofts buyout bid for the sake of maintaining fair competition on the internet. Google is the largest search engine on the web and has significantly outshined Yahoo, but it should not require two companies to compete with Google.

braindancer

May 3, 2008 1:27 AM

If Yahoo management will continue to be too stubborn, their asses get kicked by shareholders. I think "low 30's" is a realistic ballpark.

Karan

May 3, 2008 4:00 AM

It's fair for Yahoo's management to push Microsoft to up it's bid. Yahoo is fairly correct when it says that MSFT has undervalued it's business.

Frank C

May 3, 2008 8:52 AM

Jerry Yang, needs to take his hands off the steering wheel and let Microsoft do what they're good. That's buying a number 2 in its space and turning into number 1.

DON

May 3, 2008 10:10 AM

WONDERFUL MOVE FOR COMPETITION. WILL GIVE ADVERTISERS A SOLID OPTION TO GOOGLE - WHO HAS GOTTEN QUITE FULL OF THEMSELVES.

dsv

May 3, 2008 12:40 PM

DON's remark is rather curious. I thought Microsoft and competition couldn't be used in the same sentence given their history of monopolistic behavior.

jeremyb

May 3, 2008 1:24 PM

@Dsv: I thought Google couldnt be used in the same sentence with competition for the same reason.

Microsoft has the strangle grip on OEM software, but Google owns the internet.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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