Microsoft and Yahoo Meet Again: No Deal

Henry Blodget | April 4, 2008 5:38 AM

Microsoft (MSFT) and Yahoo (YHOO) execs had their second meeting, the WSJ says, and made no progress. Yahoo is insisting that Microsoft raise its bid before the companies enter formal negotiations, Microsoft is refusing to budge:

The meeting, which took place near Yahoo headquarters in Sunnyvale, Calif., was the second between top executives from the two companies in recent weeks. Neither meeting included bankers.

The Microsoft executives showed no willingness to raise their cash-and-stock offer, and the Yahoo camp continued to refuse to enter formal negotiations without a sweetened bid, people familiar with the matter say.

Both positions are understandable, but time is working against both companies. One imagines that this standoff could quickly be ended by the companies' $300 million investment bankers: A quick phone call and a verbal agreement that, if Yahoo comes to the table, Microsoft will likely raise its bid at the 11th hour (as we still expect it will) should suffice.

Meanwhile... Yahoo, when are you going to schedule that shareholder meeting?

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15 Comments

joeblow said:

Apr. 04, 7:29 AM

Quoting you, Henry:

"A quick phone call and a verbal agreement that, if Yahoo comes to the table, Microsoft will likely raise its bid at the 11th hour (as we still expect it will) should suffice."
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No, Henry... there's no philosophical difference between doing what you suggest and MSFT just initiating it with a raised bid to begin with. See my comments one notch back.

If they raise the bid now, they would likely free Yahoo to negotiate in good faith, at least from the higher face-saving value of a known (not just promised) higher price.

Were I MSFT, I would realize this is the time to strike, now while the iron is hot (an old term from the days of fire-heated clothing irons) and likely gain the advantage needed to move the process along to a definitive agreement. Otherwise the iron cools down and must be reheated.

See, either they are going to be willing to raise the bid or not. If they would ('if' is a big word), then doing it first (in numbers, not just supposition) privately may unlock Yahoo's reluctance to negotiate, and MSFT would be no worse off than if Yahoo did initiate with some higher price only to have MSFT counter it with what would have been their newly raised bid to begin with.

If they wouldn't raise it under any circumstances, then they themselves should realize the negotiations are over, even now, and their only alternative now is to file the slate and begin the task of negotiating directly with the shareholders.

joeblow said:

Apr. 04, 8:04 AM

**Don't mistake what I am about to say for any assumption of fact**

**It is merely suppositional and metaphorical and is only my own opinion**

You know, we've been discussing this whole process of viewing negotiations as formal versus informal, and I've already stated my opinion that there really is no difference.

Now, it has occurred to me that we've really been silly about thinking there haven't been any financial negotiations.

Baloney... that's all it's been from the start. MSFT offered 31 and within about 10 days Yahoo countered with 40.

As it stands right now, Yahoo is more-or-less telling MSFT "We said no to 31 and countered with 40, so you can either raise your bid or bite our asses."

Well, MSFT?... You gonna raise, or bite?

Henry Blodget said:

Apr. 04, 8:10 AM

Agree, Joe. There's no difference.

joeblow said:

Apr. 04, 8:30 AM

http://www.youtube.com/watch?v=V92OBNsQgxU
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So, what gives on the Google?

scottjohnson said:

Apr. 04, 2:48 PM

Henry, what do you think the chances are this thing goes hostile?

Henry Blodget said:

Apr. 04, 4:18 PM

I think if there's no movement soon, Microsoft and Yahoo's shareholders will start agitating. Yahoo will have to schedule the shareholder meeting soon (I think).

As soon as they do, if there's no movement, I think Microsoft will file the directors slate. Then they'll play chicken for as long as it takes one side to cave.

joeblow said:

Apr. 04, 5:28 PM

**My personal opinions, no basis in known fact**

The after hours is just smash mouth (in my personal opinion), even if it's sourced to somebody with the authority to officially speak for Microsoft.

Jim Goldman is the best possible person to leak a story to if it's effect you're after. You could leak a turnip root and it'd be an oak tree by the time he got finished with it. All his sets, regardless of the company discussed, are way more dramatic than needed for accurate and objective reporting. That's just my personal opinion. I'm not attacking his integrity... just his showmanship compared to his journalism.

So, Jim... if you want to back up the story, tell us who leaked it.

I tell'ya, it's so scary... I may not get any sleep tonight.

Woo-Hoo, Microsoft!... You're scary guys! But, you need to look at the calendar. It's way too early for Halloween.