Yahoo good outlook enough reason to resist Microsoft bid
Yahoo Inc. has released a rosy outlook for the next two years, hoping to give investors a better understanding of why the slumping Internet pioneer isn’t willing to sell to Microsoft Corp. for less than $45 billion.
Analysts interpreted the company’s unscheduled disclosure yesterday as a sign that Yahoo’s attempts to find an alternative deal to Microsoft’s 6 1/2 -week-old offer aren’t bearing fruit.
The company has been exploring alliances with Google Inc., News Corp.’s MySpace.com and Time Warner Inc.’s AOL.
With its options apparently narrowing, Yahoo is under pressure to justify its board’s decision last month to rebuff a takeover offer that was 62 percent higher than the company’s market value when the courtship began.
By sharing internal projections drawn up in December, Yahoo appears to be making a case for either its independence or a higher offer from Microsoft.
The forecasts predict Yahoo’s revenue - minus advertising commissions - will climb more than 70 percent during the next three years to reach $8.8 billion in 2010.
Microsoft so far hasn’t wavered from its original offer, which it has described as fair. What’s more, the software maker has indicated it will try to oust Yahoo’s board if the resistance continues.
But the two sides signaled that they might be ready to negotiate when senior executives held their first face-to-face meeting last week.
Stanford Group analyst Clayton Moran described Yahoo’s decision to release its projections as “another step in the public negotiation between these two companies. We believe this deal is turning friendly.”
Echoing previous remarks, Yahoo Chairman Roy Bostock said the company’s board and management “will continue to work closely together to ensure that any strategic path we pursue … maximizes the benefit to our stockholders.”
A Microsoft spokesman didn’t immediately respond to requests for comment.
Yahoo’s maneuver appeared to hearten investors as the company’s shares surged $1.81 to finish yesterday at $27.66, a gain of 7 percent. Microsoft shares rose $1.12, or 4 percent, to $29.42.
Because half of Microsoft’s proposed purchase would be financed with stock, the deal’s value has fluctuated since the bid was announced Feb. 1. The offer is currently worth about $41 billion, or $29.49 per share.
Many analysts have predicted Microsoft would be willing to pay as much as $35 per share, or about $50 billion, for Yahoo to avoid a bitter fight that could alienate employees.
But Moran said the chances of Microsoft raising the stakes that high are fading with most economic indicators now pointing to a recession in the United States. He thinks Microsoft will hold firm at $31 per share but may try to placate Yahoo by agreeing to pay entirely in cash.
Please don’t sell out to Microsoft, we do need at least three major search engines we need some kind of competition in the market.
Yes I so agree with Jack we need the competition let Google, Yahoo and MSN battle make the net a better place, more inovation and new technology. No MSN Yahoo merger please.