Marketing Ninja

Over the weekend there were rumors that Yahoo! would reject Microsoft’s $44.6 billion dollar offer, claiming that Microsoft’s offer “substantially undervalues the company.” Well, Yahoo’s shareholder relations office confirmed that rumor this morning, and it didn’t take Microsoft very long to respond with it’s own press release decrying how “unfortunate” this move is for Yahoo!.

And that’s when the stupid began.

Yahoo’s Bold Whimper Hasn’t Fooled the Market

TechCrunch’s Mike Arrington was the one who coined the term “Yahoo’s Bold Whimper” so props to him. It’s only natural that Yahoo! would ask for more money, but as every other blogger on Earth has been quick to point out:

• Yahoo! was trading at $18/share on January 31st, before Microsoft offered to buy all of the shares at $31/share;
• Yahoo’s trading at almost $30/share now and it’s value rose by another 2.29% today despite the news that Yahoo! was going to reject the bid;
• Yahoo doesn’t have a lot of other options;
• and it’s unlikely that Yahoo will get a better offer; ever.

What interests me so much is that despite Yahoo’s board saying “no,” its shareholders are saying “yes.” This is the same genius board that has mismanaged the company into the ground, sitting idly by while Yahoo got its ass kicked by Google.

Microsoft’s Stock Value is Now Less than Yahoo’s

I think it’s interesting that Yahoo’s stock is actually worth more than Microsoft’s stock is after today’s trades closed. This, again, indicates that the market still thinks the deal is going to happen. Microsoft’s shareholders are worried that Yahoo is a bad investment, and Yahoo shareholders want to cash out while they can and rid themselves of the foul taste left in their mouths by years of mismanagement.

For the Last Time, Google Cannot Acquire Yahoo!

Point by point, here is why Google cannot acquire Yahoo:

Google Does Not Have the Capital to Match Microsoft’s Offer

From last time I went over this:

Google doesn’t have a magic money factory behind the employee parking complex at Mountain View; they simply can’t finance a takeover at a higher premium than Microsoft.

and

Google doesn’t have the capital to match Microsoft’s $44.6 billion offer. Microsoft doesn’t need to rely solely on debt to finance their acquisition: they have $22 billion in cash assets and are financing at least half of the acquisition with Microsoft stock. In addition Microsoft’s projected profits are over four times what Google earns, and Google is still tangled up in Europe with its $3.2 billion acquisition of DoubleClick, Google’s largest acquisition to date.

Even if Google Did Have the Capital, It Would Get Blocked by the SEC

Again, from the last time:

The S.E.C would block Google from acquiring Yahoo!; even if Google had the capital it wouldn’t be able to as this move would be considered monopolistic on Google’s behalf. Google already has a 58.4% U.S. search engine market share, while Microsoft + Yahoo! would have a 32.7% market share combined.

Microsoft is Still Going to Get Yahoo

End of story. Microsoft is going to be able to get Yahoo regardless of what the board of directors says. Later this week I’ll have more thoughts up on how MSFT-YHOO won’t be anything like AOL-Time Warner.

Technorati Tags: Yahoo,Microsoft,Acquisitions

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