The Morning After the No-Deal

The biggest tech story of the year so far is the acquisition of Yahoo by Microsoft, and the biggest current tech story is that the deal didn’t happen.

Let’s review, from a few different perspectives, starting with Yahoo itself. CEO Jerry Yang poses the question Ok, so now what?.

With Microsoft’s withdrawal, we’ll be better able to focus our energy on growing our industry leadership and maximizing value for stockholders. We’ll continue to execute on our plan — making your Internet experience as personal, relevant, open and social as possible, serving advertisers so well they insist on working with us, and opening up Yahoo! in a way that developers dream of.

Meanwhile, one of the leads at Yahoo News is: Yahoo shares fall 17 pct after Microsoft withdraws bid. The story tells that Yahoo shares fell to $23.73 in early trading, while Microsoft’s rose 2.3 percent to $29.30. Yahoo is up slightly to $24 right now, which is $9 less than Microsoft’s last offer.

I found via Fred Wilson, a poll on where Yahoo will close today . Yesterday, his prediction was $26, and mine was $18. I’ll actually be happy if he is still closer than me at the end of the day. But I fear that a further slide is only a shareholder lawsuit or two away.

There’s another poll related to the non-deal over at TechCrunch: Does Ballmer Need to Go? Currently “too soon to tell” has a comfortable lead, with “yes” and “no” tied for second place. Those are the only three candidates: I couldn’t find “Ballmer should go, but not for Microhoo-related reasons.”

So the deal, even thought it didn’t happen, continues to create distractions for both Microsoft and Yahoo. Google is the winner.

Microsoft Won’t Acquire Yahoo!

To put it in a few other ways:

  • Ballmer backs off, writes to Yang that “clearly a deal in not to be.”
  • Yahoo can stop worrying about Microsoft, and start worrying about shareholder lawsuits. As Om puts it:

    They said no to $31-a-share bid. (Apparently, Microsoft raised it to $33 a share… ) If the stock skids to say $21 a share, the shareholders are going to be might pissed… In other words, at a time when Yahoo, its management and its board of directors need to be focused on rebooting the company, they are going to be distracted by these nagging problems.

  • Of course, if Y! stock falls that low, Microsoft might be back.

I was wrong. I thought that the deal would happen, because it seemed by far the best that Y! shareholders were going to do. I still don’t how Y! stock does anything but plummet next week, and I don’t see how it gets up to Microsoft’s offer price in the forseeable future.

MicroHoosDay

The saga of Microsoft’s bid for Yahoo goes,as does the coverage. On Friday, Greene and Hof of Business Week described the game of chicken. Will Microsoft increase its offer or initiate a hostile takeover. Since I loves me some deadpan, I’ll share the following quote.

Pushing Microsoft is Bill Miller, a legendary fund manager whose Legg Mason (LM) firm owns 9% of Yahoo’s stock. Miller recently told his investors that he estimates Yahoo’s value at $40 a share. He encouraged Microsoft to sweeten its offer.

Yesterday, Kara Swisher had a very good piece on Yahoo’s board, and how each director seems to view Microsoft’s offer. The directors themselves might not share my opinion, given Kara’s use of phrases like “wake Yahoo’s directors from their persistent narcoleptic state” and “most directors… are pretty clueless and hands-off when it comes to the companies they are supposed to be overseeing.”

Then Mashable Stan interpreted some remarks by Bill Gates to mean that Microsoft will not raise the bid, and is quite prepared to spend its money elsewhere. His colleagues Adam and Kristen looked east, remarking on the possible involvement of Alibaba (China) and Yahoo! Japan respectively.

I still think that the deal with go through. I don’t think that Bill Miller’s fund is going to get a (Chinese) new year gift in the form of a better offer from Microsoft.

Yahoo, Not Acquired Yet

Takeover bid? What takeover bid? We’re just doing business as usual here at Yahoo!. Thus Stan refers to a couple of musical moves.

One is the closing of Yahoo Music Unlimited. YMU users will be able to migrate their libraries over to Rhapsody. However, as Duncan points out: The move itself may be short term with Yahoo users likely to be forwarded to the Zune marketplace if Microsoft’s acquisition of Yahoo is successful.

Y!’s other musical move is the acquisition to Foxytunes. Hence Y! isn’t changing its mind about the importance of online music; what it’s changing is emphasis. By the way, I like the Foxytunes plugin. I trust Yahoo not to mess it up, but I’m not so sure about Microsoft.

That’s similar to how I feel about Flickr. I am not alone in my fears for Flickr, although I have yet to join the group stridently named MICROSOFT: KEEP YOUR EVlL GRUBBY HANDS OFF OF OUR FLICKR.

I’ve seen several arguments that Yahoo will be able to fight off the Microsoft offer. Fred Wilson’s argument is one of the better supported.

But I just bet that Y! will accept Microsoft’s bid by February 8. I did so at the new Industry Standard, which includes a prediction market. I’m already annoyed with the Standard over niggling user interface details. For example, it took me multiple attempts to get through the signup screen. Once signed up, I spent some of my “$100,000” by entering “10,000.” I was told that my bid couldn’t include letters.