Yahoo Postpones Microsoft’s Bid

MoreVisibility - March 7, 2008

I’m sure everyone heard the news a few weeks ago that Microsoft made an offer to buy Yahoo for $44.6 billion. Here’s a quick recap. Soon after the announcement, Yahoo’s stock went up, then Yahoo declined Microsoft’s offer, saying that they would like to hold out for better suitors. Is Yahoo holding out for more money, or do they just not want to sell to Microsoft? Yahoo said they would decide by March 14, but time is ticking.

Other suitors have expressed interest during Yahoo’s delay, including Time Warner Inc.’s AOL and News Corp.’s MySpace.com. Yahoo claims that they are not delaying the Microsoft deal in hopes they will come to a deal with either AOL or MySpace, but that they are trying to elect board members to the Yahoo committee to decide on the impending deal. They could also be waiting for a better offer from Microsoft, which some analysts say will probably happen.

Another issue has arisen since the delay in the deal, the U.S. economy. There are concerns about how well the online advertising market will fare in this lackluster economy. The economic worries have contributed to a twenty-one percent decline in Internet search and advertising leader Google Inc.’s stock price since Microsoft pounced on Yahoo. An alliance with MySpace.com looked like Yahoo’s most likely escape route a couple weeks ago, but talks with AOL have recently heated up. Hopefully a conclusion to this deal will happen soon, but it does look probable to me that Microsoft will purchase Yahoo.