[rbanffy]

Why?

They should have dumped their stock when the offer was first floated (and stocks reached about the same premium MS was offering). Yahoo's management never said it would accept that first offer and all shareholders who "lost" money are those who expected a reversal of the initial positions ("we won't pay a penny more" and "we will not sell at this price").

Things like these happens all the time.

And I would not rule out an evil plan where all MS intended was to keep Yahoo's management buried in zillions of frivolous lawsuits (that would have to prove Yahoo's management somehow knew this offer was in Yahoo's shareholders' best interest and resisted despite of that)

IIRC, MS was buying back stock. By making this offer they got a nice discount.

[rms]

>They should have dumped their stock when the offer was first floated

It is not their responsibility as shareholders to do that, but it is the responsibility of the company to offer the best value to its shareholders.

[raganwald]

I beg your pardon? It absolutely is their responsibility as shareholders to do that _if they want the best price for their shares_. Example: Tonight after the markets close, I offer $35 a share for Microsoft, in cash, conditional on obtaining 51% of the company.

The market thinks about this, and MSFT's price when the markets open tomorrow morning reflects their guess as to whether I will get 51% of the company or not, whether Ballmer will have me killed^H^H^H^H^H^H tied up in litigation to prevent me buying the company and firing him, whether Yahoo will raise some money from Google to buy MSFT as a white knight, whatever.

The point is, the market price when a company is "in play" reflects a bunch of people making wild-assed guesses about the possible outcomes and the relative likelihood of each outcome.

If you are strictly in it for the money, it's your responsibility to make your own guess. If you guess is higher than the market value, you hang on to the stock. If your guess is less than the market value, you sell.

Lawyers will do anything, but IMHO, the only time you sue management is if they make a promise they do not deliver.

But what if Ballmer stands up and says, "Do not sell to Reg for $35, we are $28 today but I am going to buy Yahoo and our stock will be worth substantially more than $35 as a result of the transaction." I don't get my 51%, and then Ballmer doesn't buy yahoo. Now shareholders should sue, they hung on to their stock because of what Ballmer promised.

Consider what happens if MSFT's stock trades at $33 and Ballmer blocks me from buying MSFT in court, then the stock drops back to $28. I can see a lawsuit. But what really happened? Shareholders culd have had a sure $33 in cash by calling or emailing their broker and saying "sell."

They _chose_ to hang on. Why? because they gambled on getting $35 if I got 51% of the stock? or hoping for $40 if I had to raise my bid? That's their gamble, why should Ballmer be on the hook for their wagering?

Hanging on to your stock because you guess that the stock will be worth more is entirely your problem. Hanging on to your stock because management make vague promises about the long term value of the stock is also your problem. You certainly can't sue the week after the offer.