 By Silicon
el 02-May-2008 |
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 No doubt you have better things to do than check the WSJ obsessively to watch Microsoft (MSFT) and Yahoo (YHOO) negotiate with each other, but if so, you've missed some fun in the past 12 hours.
First, Microsoft confirmed our earlier report that Steve Ballmer was still deliberating between fighting, walking, and ponying up, that the Yahoo situation would be resolved in "very short order," and that Steve wouldn't pay a dime more than it was worth.
Then Yahoo responded to this jab by announcing that its Google search partnership would be announced within a week. Translation: If you don't want to become even more irrelevant in this business, better pony up.
Then, within a few hours, Microsoft responded to this Yahoo counter-punch by saying that it was leaning toward going hostile. Translation: Jerry, I'm going to get your ass fired if it's the last thing I do:
Microsoft late Thursday was leaning toward going hostile in its pursuit of Yahoo, according to people familiar with the matter, with an announcement likely Friday. But the people cautioned that the situation was fluid
as discussions continued and said the software company could change
tack before announcing its decision.
And there's something else in this latest WSJ rewrite that could be important. The price Microsoft is willing to pay has already gone up once this week: On Wednesday, Microsoft unofficially increased its bid to $33 (in the WSJ). And now, the WSJ talks about how, if Microsoft goes hostile, Yahoo's biggest shareholders will want $35-$37 and the "people familiar with the matter" do not reject this price out of hand.
True--you don't want to read too much into something that doesn't appear in a third-party story, but the WSJ's fine reporters Delaney, Guth, and Karnitschnig surely discussed this $35-$37 demand with the "people familiar with the matter." And if the "people familiar with the matter" had considered this to be a "dope-smoking" asking price, we expect that the WSJ would have played that up. (Just three weeks ago, don't forget, Microsoft was ranting about cutting the bid from the then $29ish).
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 So, in two days, we've gone from "$31, tops" to "$33" to a non-categorical rejection of a $35-$37 price range. And if Microsoft is willing to go hostile at $35-$37 (call it $35), why on earth wouldn't it just bid $35 and get this thing over and done with? Jerry's playing this brilliantly--brilliantly--but if he turns up his nose at $35 and then Steve rages off and pulls the bid, Yahoo shareholders are going to storm the Sunnyvale campus with torches and pitchforks.
But will Steve really pull the bid? In our opinion, Steve really has displayed some weakness this week. And that, combined with the threat of a Google search deal, may just give Yahoo the cojones to hold out for the "upper $30s" dope-smoking price it's always wanted.
See Also:
Yahoo Punches Back: Google Search Partnership Within Week
Ballmer to Microsofties: Yahoo Announcement in "Very Short Order"
Microsoft Raises Bid to $32-$33, Yahoo Holding Out for "Dope-Smoking" $37
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