microsoft withdraws offer for yahoo

After speaking with a dozen of Microsoft employees that go to my church couple months ago, most thought well of Microsoft’s bid for Yahoo.  I’m not sure if they actually thought well of MSFT acquiring Yahoo or if it was the idea of doing something BIG to go toe-to-toe with Google.  Morale didn’t seem all that great when I visited one of their gazillion cafeterias at the Redmond campus.  Getting free soft drinks is one thing but getting pummelled by Google is another. 

Well, Microsoft formally withdrew its offer from Yahoo tonight.  47.5 billion dollars just didn’t cut it.  I’ve been following the story since it broke on January 31 and it really is fascinating to watch companies go at it.  Brutal.

Monday morning will not be pleasant for Yahoo’s stock price and in a strange way, I think this will work itself out for Microsoft…Yahoo was not the answer.  Sorry Jerry Yang.  Microsoft still has 40+ billion dollars to fight Google’s emerging dominance but I don’t know if their upper brass has the creativity to know what to do with it.  Tim S.,you reading this? Help us Obi-wan Kenobi; you’re our only hope.

So, for those who are Tech Experts or Tech Expert Posers:  What do did you think about Microsoft’s bid for Yahoo?  Is the withdrawal a good move?  Who is the next Google and/or Who will challenge them?

I’d like to really know so I can buy a few shares that could potentially become $582/share someday. I need to find a way to get my kids through college just in case my master plan of Division I sports scholarships don’t pan out.

Here’s the story from NY Times:

Microsoft said Saturday that it was abandoning its blockbuster bid to acquire Yahoo after the two companies could not agree on a price.

The breakdown in the talks followed a meeting on Saturday morning in Seattle between Microsoft’s chief executive, Steven A. Ballmer, and Yahoo’s chief and co-founder, Jerry Yang, according to a person briefed on the discussions.

At the meeting, which also included Yahoo’s other co-founder, David Filo, and Kevin Johnson of Microsoft, Mr. Ballmer increased Microsoft’s offer to $33 a share, but Mr. Yang said Yahoo would not sell for less than $37 a share, this person said.

Microsoft’s decision to walk away is the latest chapter in a three-month-old standoff that began when Microsoft made an unsolicited offer to acquire Yahoo in an effort to compete more effectively with Google in Web search, advertising and services.

Yahoo rejected Microsoft’s offer repeatedly, saying it undervalued the company. Microsoft at times threatened to lower its offer, originally valued at $44.6 billion, or $31 a share.

In a letter to Mr. Yang that Microsoft released Saturday evening, Mr. Ballmer said that it would not make sense for Microsoft to pursue a lengthy proxy fight. “Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo undesirable as an acquisition for Microsoft,” he wrote.

Mr. Ballmer said in a separate statement that Microsoft would continue to pursue its online efforts on its own.

“We have a talented team in place and a compelling plan to grow our business through innovative new services and strategic transactions with other business partners,” he said. “While Yahoo would have accelerated our strategy, I am confident that we can continue to move forward toward our goals.”

A Yahoo spokesman said the company had no immediate comment on Microsoft’s move.

Microsoft’s decision to abandon its bid is likely to raise questions among investors about the judgment of both Microsoft and Yahoo.

When Microsoft first made its bid, it said Yahoo was an important part of its strategy to take on Google. Its choice to withdraw, after threatening a proxy contest if a friendly deal could not be reached, may prompt its shareholders to doubt its resolve. At the same time, some Microsoft shareholders, many of whom felt that Microsoft should never have bid for Yahoo, may be relieved, and Microsoft’s shares could rise on Monday.

But the breakdown in the talks is likely to send Yahoo’s shares plunging and generate uncertainty among investors about the company’s management. Yahoo has been exploring alternatives to Microsoft’s bid, including a search advertising partnership with Google, which could lift its profits and perhaps its stock price, analysts say.