Microsoft's $44.6 billion bid for Yahoo is nothing but a strategic fake, according to Global Equities Research analyst Trip Chowdhry.
Consider this: Yahoo is rumored to have rebuffed an offer from Microsoft last year for $40 per share (that's $9 above the current $31 per share offer). Assuming that's true, Microsoft must expect its current offer will be rejected.
These are the implications: Either Microsoft is just starting with an insultingly low bid, or it doesn't plan to go through with the acquisition. The advantage of submitting a $44.6 billion bid is that there aren't many players who can match it, let alone beat it.
"I think [Microsoft] just wanted to put a high bid in place to prevent somebody else from buying Yahoo," Chowdhry says. "The true value of Yahoo is probably $10 billion."
Chowdhry further argues that Microsoft's $240 million, 1.6 percent stake in Facebook was a similar move. The investment placed a $15 billion valuation on Facebook, which prevented other potentially interested parties (Yahoo, Google) from swooping in and buying the company.
"It's not that Facebook is worth $15 billion," Chowdhry says. "It was a completely strategic disruption. But the Facebook kids are so naïve, they think they're really worth $15 billion."
We're not totally convinced, but then again, this is Microsoft we're talking about, so you can't rule his theory out.
Photo: Flickr/pbo31
See Also:
- Running the Numbers on a Possible Yahoo/Microsoft Merger
- Terry Semel Steps Down From Yahoo Board
- What the Yahoo-Microsoft Merger Could Mean for Startups
- Shock and Awe: Microsoft Bids $44.6B for Yahoo
- Microsoft CEO: Facebook's Valuation is Their Concern, Not Ours
- Facebook's Real Worth? $15 Billion, According to VCs
- Report: Facebook Gets New Billionaire Investor
$44.6 billion is an astronomical amount of money to be paid for a company like Yahoo. Although, the bidding offer make sense if we also think from the Microsoft's perspective and approach, always trying to monopolize the markets it touches. http://www.takeoffzone.com
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I guess, Trip Chowdhry is correct. MicroSoft's Yahoo! bid is a fake offer so that Yahoo! does not dare to merge with Google! --Deb
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I think Chowdhry is just being contrary so as to get publicity. What he says makes zero sense to me.
I think Ballmer is sincere about this, and the merger is a very good idea.
It will revitalise Microsoft, and help it transition as an organisation (this is about much more than the MSFT stock price!).
Microsoft has some great marketing skills in the aQuantive camp, and seems to have avoided destroying aQuantive or looking all its people. It does not have great relationship with consumers though. This is Yahoo!'s strength, as is its now very high-quality search and content matching algorithms.
Yahoo! is proving that it cannot handle the operational side as well as it should, and here it may have something to learn from Microsoft.
I think the combined group would make a very potent contribution to both advertiser choice and experience and to keeping Microsoft relevant to the world today and tomorrow.
Analysis "YaSoft Good / MicroHoo! Bad" at: Digital Marketing blog: www.digitalmarketing.us/blog/