Smart Move: Microsoft Withdrew Offer for Yahoo!

May 3, 2008 by TFB

News came that Microsoft withdrew its takeover offer for Yahoo! Microsoft originally offered $31 a share. They were willing to raise to $33, but Yahoo! was looking for $37. What's another $4 a share? You'd think Microsoft can shake loose another $4 a share from somewhere given its size and its desire to compete with Google. But Microsoft called it quit. It's a smart move for Microsoft. Yahoo! is like those people who list their houses at unrealistic prices. They wouldn't budge on price. Their houses just sit on the market. When they finally become motivated, the prices have gone even lower. Now Microsoft withdraws its offer and lets Yahoo! shares fall into the teens. Let Yahoo! shareholders put pressure on its management. Wait a couple of quarters and see if they will change their mind. By that time, Yahoo! shareholders will beg for maybe even $25 a share. Microsoft's money is better spent on acquiring some smaller, more innovative companies, like Zoho, which I started using lately. I think Zoho's products are much better than Google Docs.

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