Yahoo Board To Reject Microsoft Offer • Hacker News Board

Re: Yahoo Board To Reject Microsoft Offer

#31

Post by drusenko » Sun, Feb 10, 2008, 7:52 AM UTC

bp001 wrote: post #16

"Massively Undervalues" huh... Let's see, a stock price of under $20/share previous to the $31/share offer being made. A greater than 50% premium is massively undervaluing the company? Granted the market is not a perfect indicator of true value of a company. Google was a good example of this when they were valued at around $100/share and then proceeded to quadruple in value over the next 2 years. However, Yahoo is no…

maybe the market was accurately valuing Google, though? of all the startups out there, how many deliver on a Google scale?

Re: Yahoo Board To Reject Microsoft Offer

#32

Post by cstejerean » Sun, Feb 10, 2008, 8:34 AM UTC

aston wrote: post #30

__ wrote: post #29

If $29 per share massively undervalues Yahoo, wouldn't Yahoo have spent the last two years buying back huge amounts of its own stock?

Requires cash :(

Perhaps a private equity firm would have stepped in if this was really the case. And if Yahoo knows something its shareholders don't (as to why it is massively undervalued) it better speak up soon.

Re: Yahoo Board To Reject Microsoft Offer

#33

Post by aston » Sun, Feb 10, 2008, 8:56 AM UTC

kajecounterhack wrote: post #21

pg wrote: post #12

Earlier quoted context omitted.

What this stock price says to me is that investors are betting that this story, even if it's correct, is not the last word, and that Microsoft (or someone) will eventually get them.

Is it possible though, that the stock prices went up as a sign of investor relief? I'm not sure all stockholders were too happy with the deal.

If Yahoo! does reject the offer, their stock price should, were the market completely rational, fall a lot. Back to what it was before Microsoft made the offer in the first place.

Yahoo's the same company it was two weeks ago; the stock was just worth more since MS was offering a premium.

Re: Yahoo Board To Reject Microsoft Offer

#34

Post by corentin » Sun, Feb 10, 2008, 9:47 AM UTC

neilc wrote: post #23

corentin wrote: post #10

Yahoo stock is trading around $29 a share, yet Yahoo's board say that Microsoft's offer of $31 a share "massively undervalues" the company?

Sure, that is quite plausible. The current market capitalization / stock price of a company is not the final word on a company's value. Whether it is true or not is another question, but it is certainly possible that Yahoo is undervalued by the MSFT offer.

Value is in the eye of the shareholder ;)

Re: Yahoo Board To Reject Microsoft Offer

#35

Post by davidw » Sun, Feb 10, 2008, 9:54 AM UTC

rms wrote: post #27

ivan wrote: post #2

I hope this definitively kills Micro$oft.

It's kind of scary to think that corporations existing today are likely to be around for hundreds of years. All hail our corporate overlords.

I wouldn't count on it. Look how many of 1908's giants are still big today. A few, but most are dead and gone. This book talks about some of the reasons why:

http://www.squeezedbooks.com/book/show/2/why-most-things-fai...

Re: Yahoo Board To Reject Microsoft Offer

#36

Post by rms » Sun, Feb 10, 2008, 10:36 AM UTC

davidw wrote: post #35

rms wrote: post #27

Earlier quoted context omitted.

It's kind of scary to think that corporations existing today are likely to be around for hundreds of years. All hail our corporate overlords.

I wouldn't count on it. Look how many of 1908's giants are still big today. A few, but most are dead and gone. This book talks about some of the reasons why: http://www.squeezedbooks.com/book/show/2/why-most-things-fai...

OK. I doubt that Microsoft and Yahoo will be around in 2108. It seems inconceivable that Google could fall though, especially if Google.org's energy research pays off.

Re: Yahoo Board To Reject Microsoft Offer

#37

Post by davidw » Sun, Feb 10, 2008, 11:03 AM UTC

rms wrote: post #36

davidw wrote: post #35

Earlier quoted context omitted.

I wouldn't count on it. Look how many of 1908's giants are still big today. A few, but most are dead and gone. This book talks about some of the reasons why: http://www.squeezedbooks.com/book/show/2/why-most-things-fai...

OK. I doubt that Microsoft and Yahoo will be around in 2108. It seems inconceivable that Google could fall though, especially if Google.org's energy research pays off.

Here's the paper:

http://links.jstor.org/sici?sici=0002-8282(199805)88%3A2%3C62%3ASASMAT%3E2.0.CO%3B2-8

Unfortunately it's not free. The stats cited in the book are that only 20% of the top 100 from 1915 were still there in 1995. Think about the technology landscape 100 years ago, and how much it's changed. I think there's every chance that Google will either not be around, or be radically smaller or different than it is now. It could be even larger, too. It's simply not possible to know. What is evident though, is that with time, companies grow and die.

Bonus fact - this is one of the oldest companies in the world:

http://en.wikipedia.org/wiki/Zildjian

Re: Yahoo Board To Reject Microsoft Offer

#38

Post by iamelgringo » Sun, Feb 10, 2008, 12:12 PM UTC

Xichekolas wrote: post #14

From the reason they quoted ("the $31 per share offer massively undervalues Yahoo!"), my guess is that this 'rejection' is just the first play in a dance over the price, which I'm sure Microsoft was prepared for, even if it bid high initially in an attempt to appear the White Knight. If Yahoo!'s board really did not want to sell, it would have cited lack of benefits to the merger, culture differences, or technology p…

Husband of a friend works in management over at Yahoo. She says the word is around the water cooler, that Yahoo's looking for around $36 a share, and then will sell.

Sounds like morale is pretty low, and sound like there's going to be a lot of engineers looking for new jobs soon. Or, a lot more startups rising for Yahoo's ashes.

Re: Yahoo Board To Reject Microsoft Offer

#39

Post by bp001 » Sun, Feb 10, 2008, 5:14 PM UTC

dkokelley wrote: post #28

bp001 wrote: post #16

"Massively Undervalues" huh... Let's see, a stock price of under $20/share previous to the $31/share offer being made. A greater than 50% premium is massively undervaluing the company? Granted the market is not a perfect indicator of true value of a company. Google was a good example of this when they were valued at around $100/share and then proceeded to quadruple in value over the next 2 years. However, Yahoo is no…

"Massively undervalues" is a way of Yahoo saying "We think our share price should be higher than A: what it is, and B: what you're offering." Yahoo is undoubtedly going through a rough time in terms of their share price, but what's being forgotten is past performance. Since the beginning of 2007 Yahoo's share price has averaged around $25 or so, with a low of $22.73 and a high of $33.63. The pre-bid low this year was…

Average share price over the last year is meaningless. Yes, the economy in general was taking a beating, but Yahoo had also come out with disappointing earning and outlook. At any given time, the market does a pretty good job at pricing in all factors to a stock's price.

If the economy as a whole is having problems and a company is at risk of lower earnings, the stock is clearly worth less. Over the longer term, if a company is able to get over those hurdles and achieve the earnings they desire, their value will again rise.

Would you argue that if a company tried to buy Citibank at $40/share that they were trying to take advantage of things? Its current price is $26/share but it was above $45 for the majority of the year. Citi, similar to Yahoo has had significant difficulties that reflect on the potential future earnings of the company. Therefore, these companies are likely fairly valued.

As a result, the Yahoo line that they are "massively undervalued" rings false to me. They have turned down a tremendous premium over their value...Unless they have other courses of action to raise their earnings significantly or they have other offers. My best guess is they are just negotiating and trying to get Microsoft to offer a few more $/share.

Re: Yahoo Board To Reject Microsoft Offer

#40

Post by bp001 » Sun, Feb 10, 2008, 5:22 PM UTC

drusenko wrote: post #31

bp001 wrote: post #16

"Massively Undervalues" huh... Let's see, a stock price of under $20/share previous to the $31/share offer being made. A greater than 50% premium is massively undervaluing the company? Granted the market is not a perfect indicator of true value of a company. Google was a good example of this when they were valued at around $100/share and then proceeded to quadruple in value over the next 2 years. However, Yahoo is no…

maybe the market was accurately valuing Google, though? of all the startups out there, how many deliver on a Google scale?

That is true, not many companies can deliver on a Google scale, and there was a good amount of risk that Google wouldn't have been able to deliver.

Maybe the risks that Google would not have been able to deliver on the scale that they have warrants a return of 400% over two years. However, I tend to believe that the market didn't perfectly understand Google's technology/market placing/placing/potential/strength of executive team/etc and low-balled the upside potential.