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RSS FeedWhat is Microsoft’s play on Yahoo?
After Yahoo lost the partnership with Google, the buzz has it that Microsoft will now return to reclaim Yahoo. MS has denied the rumors. So, what is Microsoft’s play on Yahoo!?
Firstly, the deal that was good for Microsoft a year ago, cannot be suddenly bad for it, especially since its coffers are still bursting (as of June 30, 2008, Microsoft has about 23 B$ in cash and short term inventory), and Yahoo is much lower in value now (market cap 15.74 B$ as of Nov 11, 2008). When Microsoft earlier tried to buy Y!, the price tag was a whopping 43.6 B$, which was a 20% premium over the stock price. If at all Microsoft were to buy Y! right now, price would be no more than 17B$, especially since Jerry Yang has himself said he is interested in Yahoo being acquired.
This represents a handsome 62% discount on the same product. Consider this the Fall sale.
Steve Ballmer is known to be a tough negotiator. He does not think what percent discount he has already gotten. He thinks about what percent discount he can get from here. So, if he denies all reports, Y! may soon be trading at sub 10 $, and perhaps even around 8$. That would make the price tag about 12B$. That represents a 73% price drop. Consider this as the black Friday sale.