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Microsoft bids $45 billion for Yahoo!
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| rabbitjoker |
http://money.cnn.com/2008/02/01/tec...sion=2008020109
Microsoft bids $45 billion for Yahoo
Software giant makes cash and stock offer of $31 a share, a 62% premium from Yahoo's closing price on Thursday.
By Chris Isidore of CNNMoney.com and Michal Lev-Ram of Fortune
February 1 2008: 10:16 AM EST
NEW YORK (CNNMoney.com) -- Microsoft Corp. made an unsolicited $44.6 billion cash and stock bid for Yahoo on Friday, a deal that could shake up the competitive and lucrative market for Internet search.
The deal would pay Yahoo shareholders $31 a share, which represents a 62% premium from where Yahoo stock closed on Thursday.
Steve Ballmer, Microsoft's chief executive, called the move the "next major milestone" for the software giant.
"We are very, very confident this is the right path for Microsoft and for Yahoo," he said.
Microsoft hopes to close the deal by the end of the year. Ballmer said that Microsoft has been in "off and on" talks with Yahoo for 18 months and said he called Yahoo CEO Jerry Yang Thursday night to tell him the bid was coming.
Microsoft made the bid early Friday. In a statement, the company said the offer allows Yahoo shareholders to elect to receive cash or a fixed number of shares of Microsoft common stock, with the software giant's offer consisting of one-half cash and one-half Microsoft common stock.
Shares of Yahoo (YHOO, Fortune 500) shot up 50% at the start of trading Friday, while shares of Dow component Microsoft (MSFT, Fortune 500) tumbled 4.5%.
In a statement, Yahoo acknowledged receipt of the offer and said its board would evaluate the proposal "carefully and promptly."
Both Microsoft and Yahoo have fallen far behind rival Google (GOOG, Fortune 500) in the lucrative field of Internet search. Yahoo's earnings and share of the online search market have badly trailed Google.
In a letter it sent to Yahoo's board of directors, Microsoft disclosed it had explored a Microsoft-Yahoo deal a year earlier, only to be rebuffed by Yahoo, which said at that time it was confident of the "potential upside" for Yahoo from operational changes it planned.
"A year has gone by, and the competitive situation has not improved," Ballmer.
On Thursday, former Yahoo CEO and current Chairman Terry Semel, who opposed an earlier approach Microsoft made last year, resigned from the Yahoo board.
Yahoo announced Tuesday it would lay off 1,000 employees by mid-February, citing what CEO Yang described as "headwinds" facing the company. It also reported lower fourth-quarter earnings that still beat Wall Street's now modest expectations for the firm, but it gave a 2008 revenue forecast that disappointed analysts.
But even Google has run into recent problems. After the bell Thursday it reported earnings that fell a penny a share short of forecasts. The company reported a slowdown in its fourth-quarter revenue growth, attributed partly to difficulty selling ads on social networking sites.
Google shares have fallen 24% since hitting a record high $747.24 in early November. But Yahoo shares have lost more than a third of their value over the same period.
Still, online advertising, particularly ads tied to Internet search, is by far the fastest growing part of ad spending. That's caused problems for traditional media, which have seen ad spending fall.
Microsoft said it projects the online advertising market to grow from over $40 billion in 2007 to nearly $80 billion by 2010.
In the letter to Yahoo's board, Microsoft said a tie-up would achieve economics of scale while allowing combined research and development efforts to achieve breakthrough products, particularly in the growing areas of online video and mobile Internet connections.
Microsoft said it intends to offer significant retention packages to Yahoo engineers, key leaders and employees across the firm. It said it believes the proposed combination would receive all necessary regulatory approvals and expects that the proposed transaction would be completed in the second half of calendar year 2008.
"We have great respect for Yahoo, and together we can offer an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market," Ballmer said in the company's statement.
http://money.cnn.com/2008/02/01/tec...sion=2008020109 |
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| Jem_hadar |
Just heard abt this release last hour on the news.
Crazytown |
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| Pett |
| not good, less search options is less search options |
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| jon jon |
| ps. this is crazytown indeed |
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| Orko |
I'm not exactly sure what MS hopes to accomplish by going a head with this. Granted Yahoo's web development team is more capable than MS', they are just going to be buying so many redundant systems.
Sure they would be buying the most popular search engine on the planet, but I just see so much waste being created. |
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| Dave Akermanis |
| ..... i wish i had yahoo! stocks, thats a huge increase. |
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| patpicos |
| quote: | Originally posted by Orko
I'm not exactly sure what MS hopes to accomplish by going a head with this. Granted Yahoo's web development team is more capable than MS', they are just going to be buying so many redundant systems.
Sure they would be buying the most popular search engine on the planet, but I just see so much waste being created. |
they are not buying them for their servers! they are buying them for they advertising base, Intellectual property, R&D, etc
if they are spending 40billion, you bet they are getting something for it. I think its a good thing for yahoo as they are having troubles.
I dont think yahoo will approve at that price, it will go up! |
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| patpicos |
| quote: | Originally posted by Dave Akermanis
..... i wish i had yahoo! stocks, thats a huge increase. |
true, and you wish you dont have google stocks!!! they are down $40 today.
That news and Q3 earnings missing marks does hurt!! |
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| Cosmic Fur |
| quote: | Originally posted by Orko
Granted Yahoo's web development team is more capable than MS' |
Granted? I don't think that's granted at all. What makes you say that? |
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| Orko |
| quote: | Originally posted by devnull
they are not buying them for their servers! they are buying them for they advertising base, Intellectual property, R&D, etc
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I'm not talking about servers, you can never have too many servers. I am specifically talking about development teams, and research facilities. They are both working on a lot of similar products, so i think there will be redundant systems.
| quote: | Originally posted by Cosmic Fur
Granted? I don't think that's granted at all. What makes you say that? |
Just from what I have used on both sides of the fence. From the services I've used from Yahoo, they seem to work better than the services I have used from MS. So much so, that I do not use any more of MS's online products.
MS's entire MSN network, and Live networks have been a disaster. So much so that the lead architecht left the Live project weeks before it was set to launch (went to Google). |
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| Prometheus Xex |
| It could also be he left 'cause Google too has deep pockets and really liked when that dude can do. |
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| The Highroller |
| Wow. This certainly changes things. |
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