[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.

[fauigerzigerk]

A company that's been declining for 8 quarters in a row and trades at 40 times earnings (before the Microsoft offer) is not undervalued.

[joeguilmette]

it's rare to see such simple, fundamental and spot on analysis in the tech world.

microsoft's bid on yahoo is a perfect illustration of why microsoft is doomed to failure.

how many startups could they fund with $45 billion? 100? 200? 1000? why exactly do they want to be at the helm of a slowly dying web portal left over from the first dot com boom?

i remember someone talking of microsoft and relating their situation to a victim in a horror film. we can all see the monster lurking behind them, slowly creeping in for the kill. when the sea change of personal computing really does come, whenever that may be, microsoft will not be there, they will be knee deep in shit, trying to claw themselves out of the hole that they've spent the last five years tirelessly digging.

[danielha]

  >> how many startups could they fund with $45 billion? 
  100? 200? 1000? why exactly do they want to be at the helm
  of a slowly dying web portal left over from the first dot com boom?

I understand the "startups are king" mentality around here, but come on. Regardless of their quarterly performance, Yahoo! is one of the biggest brand names on the web. Microsoft won't establish a bigger web presence by "funding startups."

[davidw]

Exactly. When companies get as big as MS, they need big wins. Big companies never seem to be interested in or capable of managing and dealing with lots of small deals - perhaps it would be too much of a hassle chasing a lot of small fry even though a few will eventually take off.

[joeguilmette]

my point is that they could get a lot more bang for their buck elsewhere. yahoo is a dying brand.

if they invested that $45 billion in 45 one billion dollar projects, if at least one of them had an annual net of more than $700 million/year, they are doing better than buying Yahoo.

[Xichekolas]

Microsoft buying Yahoo is like Microsoft(1) buying Microsoft(2). Both companies are huge, with dying net brands, and both are being cut to pieces by Google (and probably soon enough Facebook). I don't see the great synergy, and they definitely not paying that for a great product pipeline. My only guess is they want the search/ad system. That seems to be the only thing that makes Microsoft(2) != Yahoo.

[cstejerean]

First Yahoo messenger and MSN messenger joined networks. This was a reasona next step. yahoo is not completely worthless. In many parts of the world Yahoo dominates the IM market and in email Yahoo and Microsoft have a much bigger market share worldwide. yahoo also owns sites like Flickr and Delicious, both of which are better than their Google counterparts.

yahoo also has deals to provide email for many ISPs in the US.

I think Microsoft could benefit from the increased market share in many areas.

[huherto]

shit! I am going to have to move a way from deli.cio.us, I already had lot of links!

[patrickg-zill]

Sure they could fund a lot of startups. But how would you manage 1000 startups - hire 50 in-house VCs?

Better to let former MS employees bet their own cash on startups, which MS then gets to pick and choose and buy the ones they find most interesting.

And don't write off Yahoo's presence in the Third World, like China, Philipppines, India, etc. As those economies grow Yahoo's user base there will be more valuable.

[joeguilmette]

haha yea it'd be expensive. maybe $50 billion expensive.

[michaelneale]

62% seems very generous, and with the wobbly market, I guess this is calculated on MS part to make sure it happens (no indecision from anyone).