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 Send to email | If Icahn Wins And MSFT Buys Yahoo, YHOO Goes to $30. Big Whoop in YHOO |  By Silicon
el 14-May-2008 |
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 As traders wait on the edge of their seats for the latest crumbs of info about the "leanings" of the great Carl Icahn--this morning, it was "leaning toward Yahoo (YHOO) proxy fight"--it's worth stepping back and looking at the risk/reward here.
Scenario 1: Icahn files board slate, gets Yahoo board fired, and gets Microsoft to agree to buy Yahoo for $33. If this happens, Yahoo's stock goes to $30-$31 (to await a year of deal purgatory, regulatory clearance, nail-biting Yahoo quarters, nail-biting Microsoft quarters, etc.).
Scenario 2: Icahn doesn't file board slate but says he's going to agitate for a merger anyway. If this happens, Yahoo's stock sinks to $25-ish where it sits until traders figure out whether Icahn generate enough shareholder pressure on Jerry Yang that he sells the company to Microsoft (see Scenario 1).
Scenario 3: Icahn throws up hands in disgust, dumps stock, and walks away. If this happens, stock gradually sinks to low $20s as investors give up hope on quick deal and worry about Yahoo's performance for the balance of the year.
Most likely? In our opinion, Scenario 2 (with, perhaps, the deke of filing a slate just to get Jerry's attention).
And if Carl instead rams the deal home? A disappointing amount of upside. If Microsoft agreed to buy Yahoo today for $33, the stock would go to about $30-$31. That would be a nice 10%-15% reward, but not, in our opinion, one that offsets at least that much risk to the downside.
See Also: Icahn May Go After Yahoo; Will Decide Today
Disclosure: Henry Blodget owns long-term positions in Yahoo and Microsoft.
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| Former Fed Regulator: Google-Yahoo Deal A Tough Sell To Feds (MSFT, YHOO, GOOG) | | Stifel Nicolaus analyst Blair Levin has broken down the odds that Washington approves one of multiple tie-ups in play right now: Microsoft (MSFT) buys all of Yahoo (YHOO) ; Microsoft buys Yahoo search; Yahoo hands over some of search to Google (GOOG).
Blair's bio makes him worth listening to: He was chief of staff to former FCC chair Reed Hundt for a good stretch of the Clinton administr [..] Read complete article | | Published 19-May-2008 by Silicon in GOOGYHOOMSFT
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| Yahoo: We Will Slay Hedge Fund Wolf Pack in Proxy Fight |  A secret Yahoo (YHOO) source tells the WSJ that Yahoo thinks its shareholders will reject the Icahn proxy fight. Unless Icahn delivers a Microsoft (MSFT) transaction before the July 3 shareholder meeting, we agree.
Moreover, as we've said, we think voting against the Icahn slate in the absence of a deal is the right move: Steve Ballmer is not a moron, and if Icahn decapitates Yahoo's boa [..] Read complete article | | Published 21-May-2008 by Silicon in MSFTYHOO
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