MS officially mulls withdrawing Yahoo bid

MS May Withdraw Yahoo Bid

Microsoft is more seriously considering the possibility of withdrawing its bid for Yahoo if it can't come to a mutual agreement by this weekend, the company's finance chief Chris Liddell said late yesterday during a conference call discussing the company's latest quarterly results. Liddell reiterates that Microsoft will change its plans by this weekend but echoes recent statements by CEO Steve Ballmer that a proxy war to oust anti-takeover members of Yahoo's board is no longer the only option. Microsoft is ready to retract its bid and "focus on other opportunities," Liddell explains, including either acquisitions of other companies or else building up Microsoft's existing web ad and search businesses.

The financial executive also hints that the company has considered lowering its bid for Yahoo, rebutting Yahoo assertions that the $31 per share offer undervalues the search engine developer's worth. "In fact, we see the opposite," he says.

The statements nonetheless reveal a softening of Microsoft's stance. The company has often portrayed its takeover of Yahoo as necessary for defeating Google in the web ad space, where both Microsoft and Yahoo command only a small amount of marketshare. Yahoo has meanwhile denied such claims and recently conducted a Google AdSense trial both to deter Microsoft and to explore the effect of siding with Google rather than a direct competition.

  1. climacs 04/25, 10:00am

    ha. ha. ha.

    I guess Ballmer was right about one thing, though; he's not going to raise the bid for Yahoo. He still has egg on his face, though. Or rather, egg on the egg on the egg on his face.

    I wonder how far apart Microsoft's bid was, from what would likely have been an acceptable amount for shareholders?

  1. climacs 04/25, 10:27am

    on further thought, this was sure a bizarrely-run takeover bid. Usually how it works is the takeover company offers a bid which is low but not insultingly so. The takeover target sez, "We're not interested," or, "Too low!" Takeover company sez, "So's yer mother!" Eventually bidding company 'grudgingly' raises their bid until either they win or circumstances change such that the expected asking price is beyond what they think the company is worth.

    Here, it seems that Ballmer had one 'take it or leave it' offer. Yahoo fought back - not very well because they are in a poor position - but they fought back nonetheless. Ballmer says, "FU, we're gonna lower our bid if you don't take $31!" Yahoo comes in with better-than-expected results and now Microsoft throws in the towel (it seems).

    So, did Ballmer just not game this out very well or very far? Or did he just see Yahoo in a weak position and try to bully Yahoo into selling themselves for a song? If I were a MSFT shareholder, I would hope it's the latter and not the former.

    Either way, I get this feeling that Ballmer is a tactics guy and pretty weak on strategy.

  1. ZinkDifferent 04/25, 11:09am

    ...on strategy, or anything that requires forethought.

    As it stands, while Yahoo may think they have dodged that bullet, all it takes is a couple of quarters not showing any further growth, and Ballmer will succeed with a direct appeal to the shareholders.

    Which, if someone were playing this out strategically, is what would happen. Yahoo won't be able to show another succession of quarters of rising profits, and at most shareholders will give them 1-2 more quarters of patience. I mean, let's face it - the only thing that raised Yahoo's stock price from the low $20s to the current to an in-between $28 was the MSFT takeover bid.

    To wit, the stock is back down in the $26s, and dropping, indicating that the surge was only temporary - and I personally don't have the confidence in Yahoo to be able to bring it up, and maintain.

  1. UberFu 04/25, 11:09am going to drop the ball on Yahoo only to turn around and try for a hostile buyout of Google_

  1. jnicholas 04/25, 11:49am

    I really don't understand why so many people are on MS's side on this. I don't see how anything good can come out of this merger. Some bizarre stitching together of two "not google" ad networks is supposed to change how anyone runs ads? If you buy ads, why would you care or change anything you are doing? if you don't buy ads, why do you care where ads come from? For $40B, MS can't come up with some way to make their ad platform more compelling to advertisers?

    There's no mention of Yahoo's myriad other properties like Flickr so I don't see anything happening other than MS ends up with an ad platform bigger than they had but likely smaller than the previous combination size of the two and all of Yahoo's other properties dead or in decline.

    So as a regular web user, all this means to me is that I have a less diverse web and some of my ads come from a different domain. Why should anyone be for this?

  1. climacs 04/25, 11:51am

    yeah, Ballmer may succeed in the long run, perhaps he just waits Yahoo out and suddenly his $31/share looks pretty good. I don't see Yahoo staying independent in the long run either, unless there is a sudden and unexpected transfusion of brains and creative vision at the top.

    In other words, 'a miracle happens'.

  1. climacs 04/25, 11:53am

    at least around these parts, you'll be hard pressed to find anybody favorable towards the MS-Yahoo merger... except for the hope that MS will just piss away their investment in Yahoo and completely ruin it once it's absorbed into the borg collective.

    I think the people favorable towards MS' takeover bid are likely Yahoo stockholders who are stuck with an investment unlikely to grow anytime soon, while other high-tech stocks like Google and Apple keep heading towards the stratosphere.

  1. nat 04/25, 12:18pm

    did they want to buy Yahoo!? to build a better web experience? to advance technology for the end user and to really create something unique for all concerned?

    no. they wanted it to defeat google. they just want to bury the competition even if that means buying the competition. same ol' ms. no vision, they just want to dominate by any means necessary.

  1. jnicholas 04/25, 12:34pm

    I don't see Yahoo staying independent in the long run either

    Why not? They are a massive company, they are profitable (something everyone seems to forget in the rush to label them losers) Frankly they look like a better bet than Apple did in the mid-90s. They have failed on some initiatives and have other properties that are major brands on their own like Flickr. As far as I can tell, their only failing is not being bigger than Google, which basically makes the whole internet a failure.

    I still think that an independent Yahoo is the best scenario. MS has nothing to offer Yahoo and will likely destroy it. Even without "a sudden and unexpected transfusion of brains and creative vision" Yahoo will still have sites and applications I find useful and I still think that for every Yahoo 360 they launch they will also launch something pretty cool. I think some of the things they've been talking over the last few days have great potential.

  1. r00b69 04/25, 01:53pm

    s**** Microsoft and the OS their running on. No good ever comes from them taking over a company. Connectix, anyone?

    Anyway, even Yahoo ends up as someone else's aquisition, as long as its not Microsux it will be OK.

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