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Microsoft bids $44.6 billion for Yahoo

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Re: Microsoft bids $44.6 billion for Yahoo

#4

Post by tlrobinson »

DXL wrote: post #2

The market is reacting very positively: Yahoo is up almost 60% in pre-market trading, at a market cap of $40B (up from $26B at yesterday's close). Microsoft is down 4% however.

The stock market continues to baffle me.

Microsoft is offering $31 per share of Yahoo. YHOO is now trading at nearly $31, up from $19 at the close yesterday.

Why would anyone pay $31 for a share of Yahoo right now? There are two possible outcomes: 1) the deal goes through, and you get your $31 back either in Microsoft stock or cash. No net gain. 2) The deal doesn't go through and YHOO drops back to around $19, losing you about 30%.

Am I missing something?

Re: Microsoft bids $44.6 billion for Yahoo

#5

Post by drusenko »

One thing quite a few people are failing to notice when describing the "huge" premium of 62%: look at Yahoo's historical stock price charts for the last few months or so. Yahoo's taken a real big hit, likely for several reasons that are beyond its control, and it might very well be undervalued. This could be a great chance for MS to give an offer price that Yahoo was trading at a month ago but now seems generous.

Re: Microsoft bids $44.6 billion for Yahoo

#7

Post by whacked_new »

tlrobinson wrote: post #4
DXL wrote: post #2

The market is reacting very positively: Yahoo is up almost 60% in pre-market trading, at a market cap of $40B (up from $26B at yesterday's close). Microsoft is down 4% however.

The stock market continues to baffle me. Microsoft is offering $31 per share of Yahoo. YHOO is now trading at nearly $31, up from $19 at the close yesterday. Why would anyone pay $31 for a share of Yahoo right now? There are two possible outcomes: 1) the deal goes through, and you get your $31 back either in Microsoft stock or cash. No net gain. 2) The deal doesn't go through and YHOO drops back to around $19, losing…

The speculation and exuberance.

This rumor is over a year old; it was also first floated around Q1 last year and YHOO's stock price surged that time too. I seriously thought Yahoo was going to sell that time but they didn't. Perhaps this time is different?

Re: Microsoft bids $44.6 billion for Yahoo

#9

Post by jmzachary »

Interesting move especially in the context of a recent Garner report predicting bad times for Microsoft (http://www.news.com/8301-13860_3-9862322-56.html?tag=nefd.to...). Obviously, this acquisition doesn't help Microsoft improve Vista or Office, Microsoft's cash machines. Also, does this offer imply Microsoft is less confident about their Live initiative? Will Ray Ozzie be replaced by Jerry Yang?

Re: Microsoft bids $44.6 billion for Yahoo

#10

Post by mhb »

tlrobinson wrote: post #4
DXL wrote: post #2

The market is reacting very positively: Yahoo is up almost 60% in pre-market trading, at a market cap of $40B (up from $26B at yesterday's close). Microsoft is down 4% however.

The stock market continues to baffle me. Microsoft is offering $31 per share of Yahoo. YHOO is now trading at nearly $31, up from $19 at the close yesterday. Why would anyone pay $31 for a share of Yahoo right now? There are two possible outcomes: 1) the deal goes through, and you get your $31 back either in Microsoft stock or cash. No net gain. 2) The deal doesn't go through and YHOO drops back to around $19, losing…

You're missing a third outcome where Yahoo shareholders effectively haggle over the price and Microsoft offers $40.
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