Microsoft makes a bid for Yahoo for 44.6 BILLION

[djrajio]

Holy shit! Never in a million years would I have thought these Titans would collide.

I wonder which banks are in on the M&A of this. You could pocket a cool 30-40 million in M&A fees from this bitch. DAMN. I hope Goldman isn't on this.

http://online.wsj.com/article/SB120186587368234937.html?mod=hps_us_inside_today

[retrored]

Numbers are crazy. I was reading Techcrunch and they did a nice comparitive view of MS clout if they merger works in their favor. Google has crazy market share, but it definitely levels the playing field.

And my guess would be Goldman.

[sushijerk]

I still feel like Microsoft could have gotten away with a good deal less than $31 a share. Yahoo growth is completely stagnant and Google is eating their lunch. Stock price was going nowhere, and at this point absolutely nobody else would want to or has the cash to put in a bid. Well, google could but they already control like 70% of the search market so anti-trust laws would prevent the merger.

I heard something over the box about Morgan and some other firm advising the two parties on the buyout.

[sleazie ninja number 47]

I heard something over the box about Morgan and some other firm advising the two parties on the buyout.

this seems a likely scenario. But I agree, 60% over mrkt value seems a little ridiculous though considering the decline of YHOO stox.

I rly hope this happens so i can merge my msn and yahoo messenger buddies.

[Cue]

this seems a likely scenario. But I agree, 60% over mrkt value seems a little ridiculous though considering the decline of YHOO stox.

I rly hope this happens so i can merge my msn and yahoo messenger buddies.

I think you can merge the lists

http://www.microsoft.com/presspass/press/2005/oct05/10-12MSNYahooMessengerPR.mspx

however, I haven't tried myself

[ProfMonnitoff]

Someone I know bought $80,000 of Yahoo the day before the announcement without knowing. Sounds like a pretty good return.

[mike lowrey]

Someone I know bought $80,000 of Yahoo the day before the announcement without knowing. Sounds like a pretty good return.

a coincidental 50k overnight doesn't sound half bad

[MataLeao]

Someone I know bought $80,000 of Yahoo the day before the announcement without knowing. Sounds like a pretty good return.

Looks like SEC will be knocking on that person's door after he sells it.

[broneck]

people still use yahoo?

[fndmybetterhalf]

^ yahoos still the most visited site per day in the US, they actually beat google(#2). i think they might be #1 on alexa traffic rank too which pretty means its the most visited site in the world...with MSN at #3 or 4

[branespload]

Someone I know bought $80,000 of Yahoo the day before the announcement without knowing. Sounds like a pretty good return.

zomg insidertrading

Anyway, I'm currently participating in this "Stock Market Game" for school, and the winners get laptops/trips to NY (zomg no nede for darkanimal).. Right now I'm wondering if buying YHOO now would be smart. Some speculate that the deal at $31 is too cheap of a bid.. that leaves room for some profit if I buy long, right?

Also, I impulsively shorted ENOC.. but the damn thing decided to go up a few percent in past days. Should I cut my losses now or keep it in case of a freak crash or something?

Also, any tips/stocks to look into buying long would be appreciated. The game ends at the end of April. Suggestions are welcome. I bought ANF (abercrombie lol) and I'm looking at a 10% gain right now. lulz.

[djrajio]

Yeah, retail was oversold over the 3Q-4Q.

I like Lenovo, Apple, Japanese auto (Toyota, etc)., India outsourcing firms (Tata, Wipro, Infosys), Tiffany & Co., Staples, Coach, Home Depot, and Bed Bath & Beyond.

The later retail have been oversold due to the assumption that the credit crisis will slow consumer spending but they are currently selling near their historical P/E lows (high-13s low-14s vs. avg high-15s low-16s) have steady growth (especially in Asia), and turned a profit last quarters.

[ichapelle]

^^What you're talking about doing is called stock arbitrage. Buffett has been known to do it with great success and there are entire mutual funds that engage only is arbitrage trades. A pretty nifty way to make money actually.

[djrajio]

Actually the word 'arbitrage' presumes that there exists no risk; the trade is riskless. My recommendations are all un-hedged long positions, so by technical definition, no these aren't arbitrage positions. The correct term is statistical arbitrage and basically means taking long/short hedged positions on some securities/instruments to take advantage of the short-term mis-pricing with the idea that market will eventually 'correct' itself on both positions. Buffet is typical referred to as value/growth investor with very long-term long positions. His most famous bets have been on large-growth large-cap blue-chip stocks that he's held for decades (Coca-Cola, etc), so I wouldn't characterize him as a arbitrage investor.

[djrajio]

Looks like SEC will be knocking on that person's door after he sells it.

Yeah, seriously. Who takes a $80,000 dollar position on Yahoo the day right before they get a hostile-bod from Microsoft.:eek::eek::eek:

[Ichigo100%]

This is why i love the world of business..

[ouss]

morgan stanley & blackstone advises microsoft, they are about to split $100 million in fees if it gets done!

lehman and gs with yahoo

look for unusual options trading activity before deal announcement

refer=home"]http://www.bloomberg.com/apps/news [...] refer=home

RTUNE5.htm"]http://money.cnn.com/news/newsfeed [...] RTUNE5.htm

btw dirajio you got mail in your facebook inbox if you dont mind to answer

[sushijerk]

zomg insidertrading

Right now I'm wondering if buying YHOO now would be smart. Some speculate that the deal at $31 is too cheap of a bid.. that leaves room for some profit if I buy long, right?

I would advise against this. The morning after Yahoo posted earnings analysts were jumping over themselves to downgrade, and right after Microsoft makes a bid they're all saying a higher bid is likely...the lesson is that nobody knows anything.

Think about your risk/reward. At this point you'd be getting in from around $28. Imho $31 is a huge bid ceiling because it's already a 50% premium over the current stock price ($18-19) plus you have to take into account that MSFT is the only bidder as nobody else has the cash/desire to touch Yahoo. A year ago companies were M&Aing each other like trading cards but that is no longer the case. Your potential is upside is limited to $3 whereas if Yahoo decides to reject the bid or if SEC/DOJ decides against or delays the buyout the stock will be straight back to $20 and under in a hurry.

I happened to be at my desk pretty early on Friday and shorted Yhoo when it traded to mid 30s very early premarket and covered in the low 28s intraday for what in my mind was free monies.

And Buffet does very little arbitrage trading. He's more known for successful value investing, as well as going all the way down with the ship when he believes he is right. Dude took massive positions in the previous incarnation of US airways and held it to $0. Ballsy.

[6MT]

i honestly wouldn't think by merging with yahoo will make the whole package more competitive.

google has one of the most innovative thinking on the market right now, you could type "2 to the second power", google will give you the answer, and if you try that with yahoo, it only gives you links to all the key words in the phrase.

i dont think MCSFT needs yahoo, i think they need the creative team behind google. it's almost the same concept how apple won people's heart, by having a very smart operating system (as oppose to the boring windows). and if they could acquire the team that would be way cheaper than 44.6 billion.

[ouss]

I would advise against this. The morning after Yahoo posted earnings analysts were jumping over themselves to downgrade, and right after Microsoft makes a bid they're all saying a higher bid is likely...the lesson is that nobody knows anything.

Think about your risk/reward. At this point you'd be getting in from around $28. Imho $31 is a huge bid ceiling because it's already a 50% premium over the current stock price ($18-19) plus you have to take into account that MSFT is the only bidder as nobody else has the cash/desire to touch Yahoo. A year ago companies were M&Aing each other like trading cards but that is no longer the case. Your potential is upside is limited to $3 whereas if Yahoo decides to reject the bid or if SEC/DOJ decides against or delays the buyout the stock will be straight back to $20 and under in a hurry.

I happened to be at my desk pretty early on Friday and shorted Yhoo when it traded to mid 30s very early premarket and covered in the low 28s intraday for what in my mind was free monies.

And Buffet does very little arbitrage trading. He's more known for successful value investing, as well as going all the way down with the ship when he believes he is right. Dude took massive positions in the previous incarnation of US airways and held it to $0. Ballsy.

merger (risk) arbitrage is definitely the strategy not to play this year.

just look what happened to those who where long alliance data and short blackstone thinking it was heck of an opportunity

[branespload]

I would advise against this.

fuuuuuuuuuuuuuuuuuucccckkkkkkkkkkkkkkkk

I just bought 600 shares of it using my play money. I'm miles ahead of the competition at this point so I can make some sort of a risk. I'm ranked like 1 out of 450 by a difference of $6k in equity.. hopefully i can break even at least..

[Guest Pettibon]

man...people are saying we're in a recession...but there seems to me there's a lot of buying going on. i agree with rajio on the retailers (esp. the big box ones).

[djrajio]

To be fair, the bread-and-butter of Google's business is its ad-sense platform and its search platform as a distribution base, which rakes in 50%(?) of its revenue. So what Microsoft is really after is solidification in that platform where both firms have struggled.

Personally, I see the M&A really as an A with no M, largely because Yahoo has had very high-turnover and low morale, the cultures are so diseparate (Seattle vs. Silicon Valley), and aside from search & ads, yahoo really has no "block-buster" assets. A more modest expectation would be Microsoft keeps the store-front (Yahoo name and portal) but scraps all the rest.

[alterion]

one crappy company that can't compete with google buys another crappy company that can't compete with google, how does this produce anything except a large crappy company that can't compete with google?

[homi29]

wouldnt it be incredible if one day google buys out MS

[Magsåvningsreserven]

would be very incredible, it would blow minds but can't see it happening

ever

[poly800rock]

i wonder what MS will do with yahoo architecture. will they keep the existing search and mail on yahoo stuff? probably...

[constant struggle]

Another reason google has a commanding lead in the search & ads, is the verb "google"

People say they are going to google something, when they say they are going to look it up, it is synanmous.

Microsoft and Yahoo do not have that.

Microsoft and Yahoo email though has a much larger population base than google's email.

It will be interesting if it happens, but who knows if it will pass in both the us and eu

[herpsky]

i haven't used yahoo in years

[the_state]

i think yahoo does fantasy sports and the questions/answers thing pretty well. aside from that, i dont see its relevance in this day.