Monday, May 5, 2008

Update: Yahoo's Yardstick Yelps

The New York stock exchange dealt Yahoo a heavy blow this morning with a near 20% free fall at $23.92 in the internet company's share value, substantially reducing a huge chunk of the 50% increase since Microsoft's initial offer was made 3 months ago. Its benchmark price of $37 per share seemed like it was crying for help at the boards with no visible support coming from the field. In Frankfurt, Yahoo's shares went down 20.2 % at $23.17.

This is by no means the worst of Yahoo's problems. Shareholders are up in arms against the perceived mishandling of the Microsoft tender,
and expect Yahoo to buy back the shares being disposed of in the market to shore up the company. Several lawsuits are also expected to be filed against Yahoo management and the Board for their failed tactics that caused the software giant's pull-out from the negotiations. Threats to withhold backing to directors, and major shareholders expressing an intent to replace the board with new blood have been aired by irate investors.

Yahoo is currently bleeding profusely, but not gasping for breath. Jerry Yang needs to pull a rabbit out of the hat to stop the hemorrhage, and prove to shareholders that the failed merger was in Yahoo's best interest. The management and directors also need to prove that the company is indeed worth $37 per share. Shareholders can put pressure on directors to reconsider Microsoft's offer, but the software company may simply sit it out, watch the plunge and offer a lower price than $33. Sentiments of the founders may have played a role in the failed negotiations. Their hearts might be in the right place, but the shareholders want it in their pockets and bank accounts. Perhaps they need to Google search a solution for this predicament, the explorer is out of commission.



Kim said...

I suppose that's what happens when you get too greedy ... :0
very informative post Durano !!

durano lawayan a.k.a. brad spit said...

Hello Kim,

It's a mind game and power play among these moguls of industry. I think it's both greed and pride, since the founders refuse to sell a company they put up and nurtured - to a predatory entity that merely gobbles up smaller companies to build its resource base.

But Microsoft is also facing a future of uncertainty if they continue with only the PC market. This market will be replaced by the mobile internet market, of which Google has prior presence and has initiated build-ups. It could make the PC obsolete, as well as Microsoft.:-)

By the way, I didn't realize you have joined entrecard. I was surprised to see your widget on my dashboard. Thanks. I have cued up to advertise on your site.:-)

I hope all's well with you and your arm. Take care. :-) --Durano, done!