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Will Microsoft get rough with Yahoo?

Alisa Roth Apr 25, 2008
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Will Microsoft get rough with Yahoo?

Alisa Roth Apr 25, 2008
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TEXT OF STORY

KAI RYSSDAL: Microsoft CEO Steve Ballmer’s got a big decision to make this weekend — exactly how hostile he wants his bid for Yahoo to be. Microsoft set tomorrow as a deadline for Yahoo to accept its $44 billion offer . . . or else. Or else what? Marketplace’s Alisa Roth reports.


ALISA ROTH: When Microsoft first offered $31 a share, Yahoo said, “No way.” Because, it said, it’s worth more than that. Even though the offer was more than 60 percent over Yahoo’s share price at the time.

Then almost three weeks ago, Microsoft gave Yahoo an ultimatum: “Take our money. On our terms. Or we’ll do this the hard way.”

Laura Didio: It’s a deadline that was imposed by Steve Ballmer, so it means whatever Steve Ballmer wants it to mean.

Laura Didio is an analyst with the Yankee Group. She says all this is part of the courtship ritual. Including Microsoft’s threat yesterday to walk away.

DIDIO: You’ve got Yahoo playing hard-to-get and now Microsoft saying, “OK, well, maybe we don’t want you that much anyway.”

Nobody really believes that. Microsoft made the offer because it needs help competing against Google.

Steve Ballmer’s already promised the next step will be a hostile takeover, likely in the form of a proxy fight to force the deal through. That could be expensive. And worse, it could send key Yahoo employees running. Something Microsoft clearly wouldn’t want.

Matt Rosoff is an analyst with IT consultant Directions on Microsoft. He thinks there’s another alternative. Microsoft could walk away. Temporarily.

Matt Rosoff: See what happens to the Yahoo share price. Maybe the stock will go back down again and Microsoft will come back with a lower bid in a few months.

But, he points out, Microsoft has already said time is of the essence. If it’s in a real hurry, it might just go through with that hostile takeover.

In New York, I’m Alisa Roth for Marketplace.

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