Martinas B.

Yahoo! Slaps Microsoft

by Martinas B. February 11, 2008
no_msft_yhoo.jpgFans of Yahoo! could have a glass of champagne today, as we’ve finally heard some news from Yahoo's camp. In a formal statement the gods of Yahoo! said that Microsoft has under-valued Yahoo! with its $44.6 billion takeover bid.

"The board of directors is continually evaluating all of its strategic options in the context of the rapidly evolving industry environment and we remain committed to pursuing initiatives that maximize value for all stockholders," Yahoo said in a statement.

Yahoo shares rose 62 cents, or 2 percent, to $29.82 in early trading Monday while Microsoft shares lost 24 cents to $28.32.

Is this the end of Microhoo!?

At the moment the most intriguing question is: what will be the next Microsoft's step? It is believed that Microsoft could take its original offer by approaching Yahoo's stockholders directly. I believe, Microsoft was already prepared to hear for this desicion from Yahoo's board; otherwise, why did they begin preparing for that possibility last week by meeting with some of Yahoo's major shareholders to rally support for this offer?msft_today_copy.jpg
Ultimately, Microsoft could try to overrule Yahoo's board by trying to throw out the current directors later this year. However, this route would involve a great amount of risk, and it would be more difficult to make two web-giants work together if a deal were successful.

Meanwhile, Yahoo is considering outsourcing its searchtoday_yhoo_copy.jpg engine advertising business to Google, which would allow Yahoo to cut costs and increase revenues. It isn't clear, however, whether antitrust regulators would approve a partnership with Google, given Google's dominance in Internet search advertising.

Yahoo has reportedly been exploring an advertising partnership with Google as one way to boost its profits and remain independent. The company also has been looking for other suitors that might be interested in countering Microsoft's bid, but so far no one has stepped forward.

Yahoo's board is expected to meet again this week.

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