Filed under: Deals, Microsoft (MSFT), Yahoo! (YHOO)

Several media outlets are reporting that Yahoo! (NASDAQ:YHOO) will this day reject Microsoft’s (NASDAQ:MSFT) offer for the firm as being too low. According to The New York Times “Yahoo’s response is expected to reject negotiations and explain why Yahoo’s board believes the current offer price is too low.”

The Yahoo! board certainly has guts, but does it have brains? Based on the company’s performance last year and the likelihood that it will have only a modest Q1 performance, it is hard to imagine on what basis it can make its valuation case. While the firm may hope it can get a deal with another world wide web firm, that is far from certain.

Microsoft has indicated that it will lower the price on the deal, but that might give the Yahoo! board more ammunition to make its valuation case. While the company might not be worth more than the $31 offer, a lower offer of, state, $27 might grant Yahoo! to argue that the price is, indeed, too cheap.

Yahoo!’s biggest problem now is the huge distraction that the deal makes for the company’s board and senior management at a time when they cannot afford to grant any missteps in the firm’s performance.

Douglas A. McIntyre is an editor at 247wallst.com.

Share This

Share This

This entry was posted on Monday, April 7th, 2008 at 8:45 am and is filed under Latest News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.