Yahoo's last chance
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| In six weeks, Yahoo will get one more chance to prove it can turn things around without Microsoft. Courtesy of Yahoo. |
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| Yahoo stock spiked after Microsoft's bid, reclaiming levels it last saw in November when investors were more optimistic. |
Six weeks ago, Microsoft CEO Steve Ballmer sent shockwaves through the tech world when he offered more than $40 billion to buy Yahoo. And about six weeks from now, Yahoo's unwilling executives may have their last, best chance to wiggle free of Ballmer's grip.
That's because late next month, Yahoo will present its latest earnings numbers to Wall Street. Investors will pick through the sales and profit numbers, ask incisive questions, and potentially bid its stock price up or down, effectively tipping the scales in favor of either Yahoo (YHOO) or Microsoft (MSFT).
It could be Yahoo's final opportunity to prove it can thrive on its own. For nearly a year, investors waited for CEO Jerry Yang to deliver his promised shakeup and begin taking market share from Google (GOOG). But Yang was slow to trim staff or make other changes, and the stock lost nearly a third of its value on his watch. That set the stage for Yahoo's annual meeting sometime this summer, where Microsoft is expected to try ousting Yahoo's board and installing directors who will bless its takeover plans.
Analysts don't expect much from Yahoo. On average, they expect revenue of $1.32 billion, which is at the low end of the range that executives gave in January.
Make no mistake, earnings results can play a role in acquisition talks. After all, it was Yahoo's last round of earnings numbers in January that made it easy prey. First Microsoft wowed Wall Street with outsize profits, then Yahoo disappointed, sinking its stock below $20. No doubt smelling blood, Microsoft pounced three days later with a buyout offer for Yahoo at $31 per share.
For a sense of how earnings reports can change the tone of an acquisition, consider Oracle's (ORCL) pursuit of BEA Systems (BEAS) late last year. When Oracle CEO Larry Ellison began stalking BEA in October, he offered $6.7 billion for the software maker, and declared it his final offer. But BEA argued that its earnings report would prove the company was worth more.
When the earnings report proved exactly that, investors were pleased, BEA management dug in, and Oracle ended up spending another $1 billion to capture its prize. (It's worth noting that despite its earnings coup, BEA didn't escape Oracle – it simply managed to hold out for more money.)
Such a scenario might be little more than a fairy tale for Yahoo at this stage. With online ad revenues generally sagging this year, there's little reason to expect the online company's results will exceed investor expectations. After all, Google, the king of online ads, has seen its stock decline by more than a third since the beginning of the year amid signs that its search-based ads are bringing in less money than they once did. If Google is feeling the heat, the reasoning goes, Yahoo can't be immune. (Of course, there's a chance that Yahoo could pull off a surprise by controlling costs and exceeding Wall Street's modest expectations.)
For now, there's little to do but guess what might happen next. Microsoft and Yahoo have been quiet for most of this week, with Yahoo reportedly in talks with Time Warner (TWX) about a possible matchup with its AOL unit. (Time Warner is the parent company of Fortune and CNNMoney.) And Yahoo is clearly trying to buy time; last week the company announced that it would delay its annual meeting, effectively giving Microsoft more time to formally begin its attempt to take over Yahoo's board.
A source on Microsoft's side of the negotiations says the software giant is patiently biding its time. Microsoft could still officially launch its hostile bid at any moment, beginning a battle for the hearts of shareholders.
And from where Microsoft sits, that's a battle it's likely to win; after all, it's offering $40 billion, and Yahoo so far hasn't come up with any other offers.
Microsoft is a bully – It's started out as a thief and is a thief – just as intel is; the two work hand and hand…
Microsoft stolen from Apple, has anyboby ever asked why their is always holes in their software – it's their to spy on their customers, as time gos by some geek that's has a mean side finds it,
If Mirosoft was the real inventor of their new add Idea – then why spent 40 plus billion to buy out yahoo?
The answer is they wish to cover up that it came from a yahoo client and the only way is to owen yahoo.
If they where the real inventor, they would be putting 40 plus billion in putting the system in the field and driving google and yahoo customer's to them buy being better!
Intel,the same – Yes, theives run in packs! Do you remember one laptop per. child?
Money buy's and lot of friends on the hill – I can say more and I will if the game that they are playing with my Idea that city hall put in their lap, I may be a poor nobody – but this nobody can put together a string of public information together.
I will say this – they have been led down this path by a city employee…
http://weneedworldpeace.blogspot.com/
Yahoo, Google, Apple, MS needs to do more for the humanity in general.
Yahoo is over. They need to sell to Microsoft. Done deal. Jerry Yang needs to do what he is good at and running a company is not it. Thanks Jason Berkes
It's a great offer that MS is giving for Yahoo' tools but I think is better that YAhoo and Aol link together and show them that Yahoo is takin the next step in the internet' business
Yahoo can no longer stand on its own, it lacks any audacious plans to try to increase revenues. Google is increasingly becoming a monopoly in the internet and the only way to possibly slow it down would be for Microsoft to buy out and utilize Yahoo's tools, Yahoo sure isn't utilizing them to their full potential right now.
google is going to fall all by itself
I think people still expect yahoo to improve it's product line
yahoo needs to hold off letting MS acquiring it
Yahoo needs to get over their (albeit understandable) desire to stay independent. They are losing significant ground on their own, and with the merger of Google and DoubleClick, the situation will only get worse. Microsoft's price might not be what Yahoo's shareholders envisioned, but it might well be much more than what they will ultimately realize if Yahoo doesn't merge.
Yahoo might be at the end of the line, with trying to find a way out of Microsofts grasp, but you have got to give them credit for holding out and trying to find a better offer. I think that being bought out by Microsoft might be the best solution afterall….
google is now joining double click.
with yahoo not doing well, google getting better…getting with dead weight AOL is not going to help.
should just join MS and fight google.
There ain nothing going on at Yahoo…. having been through a number of takeovers, the water cooler talk is a daily distraction… did you hear this… I hear that!
I dont mind the idea of Yahoo staying off a takeover and looking for alternative bids. But stocks have jumped at the idea of an MS buyout. It seems like most like the idea.
What I do not agree with is Yahoo trying to sabotage itself with early retirement packages that I've read about. There seems something illegal about this. Are Yahoo's final decisions in this manner frozen or are they still pulling these immature stunts at the expense of the stockholders?
Great article. The bottom line is that Yahoo rose to $29 after the Microsoft offer was made, but somehow a few members of the board feel it's worth is much greater. But as we all know, something is only worth as much as someone else is willing to pay for it. And at the end of April, hopefully Microsoft will still feel so inclined. Microsoft's offer looks like a bird in the hand to me.
Stop contributing toyour 401K plans now…. Save for your house mortgage…. Your home is more important than 401K plans, right?? Protect your home now.. Remember you cant touch 401K money until you are at ripe ol' age of 59 and half…… Your home will be lost before then, right?? First things first,, right?? Screw stock market for now and buy at cheaper prices much later…..
Thanks for presenting the article in such an objective manner.
As a shareholder of one of the companies, I have to congratulate the author for covering all the bases!
Patience is the watchword; then perhaps closure at a profit.
Yahoo! should do anything to stop getting acquired by MS. MS is a brutal company, and will kill Yahoo one day or another. MS wants Yahoo, so that it can take the 2nd place, which Yahoo! holds in online presence.
Yahoo! should consider these times are toughest times and emerge with some good innovative products. They should not get digressed by talks like competition with Google and all. Google no doubt is a good company and will be like that. What Yahoo! need is to be a better company than it is now.. It's competitor is not Google, but Yahoo's competitor is Yahoo! itself.