Yahoo’s Results Not Enough to Keep the Wolf from the Door
Yahoo’s’ solid first quarter results were not good enough to fend off Microsoft’s hostile takeover bid, but may deliver a better deal for shareholders.
Henry Blodget at Silicon Alley Insider says Yahoo (NASDAQ: YHOO), “has done what it needed to do: report a solid quarter in the high end of the range.”
The results were not a blow-out and certainly could have been higher. However, they should be enough to allow Yahoo to maintain its current Microsoft stance: no deal unless you raise price. Yahoo has not decided whether to pursue Google outsourcing deal, but clearly still on table.
All Things Digital’s John Paczkowski says the results are “a nice story on the face of things–one certain to give Yahoo CEO Jerry Yang and Co. the material they need to blather out more justifications for continued independence. But it doesn’t exactly prove Yahoo’s significantly accelerating its revenue growth as the company claimed in a recent investor presentation.”
So the truth of the matter is this: Yahoo continues to struggle with profitability, and though the company’s strategy and investments are perhaps beginning to pay off, as Yang said during a conference call today, they’re clearly not paying off enough to thwart Microsoft’s takeover bid.
All Things D’s Kara Swisher says that now the Yahoo-Microsoft takeover soap opera moves to a true ground battle.
But unless Microsoft steps up and pays more right now, this is not going to end quickly, and will be more a Sisyphean slog than anything else.
Swisher says sources close to Microsoft said it is likely the company hopes to make some sort of move–starting truly significant negotiations with Yahoo, perhaps–before CEO Steve Ballmer’s self imposed deadline of thsi Saturday. “Nonetheless, several added, it will probably not include raising the price of its unsolicited bid for the troubled Internet portal quite yet.”
But PaidContent says market reaction indicates Microsoft’s bid will not be raised.
Despite a modest “beat and raise”, the initial Microsoft offer still looks more like a ceiling than a floor.
Analysts from Bernstein, Citi, RBC and UBS, quoted by PaidContent indicate the results may be enough to squeeze a slightly higher offer, but not enough to fend off Microsoft.
Lex in the Financial Times says “it is difficult, however, to imagine Steve Ballmer, Microsoft’s chief executive, feeling compelled to up the price significantly on the back of these numbers. The discount at which Yahoo’s stock trades relative to the offer actually widened slightly in after-market trading last night.”
Yahoo’s shareholders may be feeling disappointed. But they can comfort themselves with one thought. At least the company’s decent results ought to make Mr Ballmer think twice about making good on his recent threat to actually cut his bid.
Ballmer today vowed not to increase the offer, saying Microsoft (NASDAQ: MSFT) could walk away from the deal, Bloomberg reports.
We are offering a lot of money. If Yahoo’s shareholders like it, that’s great. We are prepared to go forward without a merger. – Steve Ballmer, Microsoft
Thomson StreetEvents provides details of the Yahoo conference call and Charlie Rose tries to make sense of it all by interviewing himself.
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