Computer Daily NewsSteve Ballmer’s deadline for the devalued $45 billion deal to take over Yahoo! passed yesterday, our time. But at the time of hitting the CDN “send” button last night, nothing had emerged from either camp. Ballmer was suggesting Microsoft will act this week with some insiders saying that Microsoft may well give the deal a miss.
As Associated Press puts it: “The tense mating dance is at a standstill because Yahoo’s board has repeatedly said it won’t sell to Microsoft for less than $45 billion.”
Ballmer’s ultimatum, setting yesterday as a deadline, presented three
options: either Yahoo! begins talking; Microsoft will make a hostile bid, going direct to shareholders; or even call it all off if Yahoo! maintains “unrealistic expectations”.
A spokesman reiterated the threat that Microsoft will consider cutting its bid, now worth about $44 billion, if a deal wasn’t in the bag over the weekend. Some analysts think Microsoft would be smart to walk away now.
Microsoft could position itself to return with another bid without the pain if it were to try to oust Yahoo’s board in a risky proxy contest. “Sometimes the best deals are the ones that aren’t done,” one analyst advised.
The issue of price has been the sticking point, with Microsoft’s cash-and-stock offer valued at $29.68 a share as of Friday’s market close.
Yahoo!’s directors have rejected that offer as undervaluing the company. Major Yahoo! shareholders signal they want closer to $35 a share.
“Our bid is quite generous, roughly 80 times earnings,” Ballmer said.
Microsoft took another hit in Nasdaq trading on Friday. Its shares were down 6.2 percent after it revealed Windows sales slumped 24 percent in the latest quarter, casting doubt on whether PC demand can hold up in a slowing economy. (See separate report, page 3)
“The risk is that Linux gets a foothold and then affects their long-term revenue,” said Gartner analyst Neil MacDonald.
ZDNews editor Larry Dignan, who took part in Microsoft’s results conference call, says the company cited three reasons for its Q3 result: a tough comparison from year-ago levels, OEM inventory build and piracy. “But,” he adds, “the elephant on that conference call may have been Apple and its Mac.
“Let’s be real: Apple isn’t taking over operating system dominance, but it is growing fast enough to take away a few incremental dollars from Microsoft.”
Bit of a far fetch, according to some. Apple shipped 2.29 million Macs in its March quarter. That was a big deal for Apple, given that it shipped 1.5 million Macs in the same quarter last year, but Apple’s global market share is still only 3.3 percent of the 69.5 million PCs shipped in the quarter, according to IDC. But that market share tally is up from 2.5 a year ago and in the US it is now well over 6 per cent.