The press caught early wind of more talks between the #2 and #3 players in search, Yahoo and Microsoft/MSN, respectively.
As a result, Yahoo shares surged 18% from $28 to $33 at the opening bell. It was the big news story on CNBC this morning. $50 billion has been thrown out there as a purchase price which to me sounds a bit rich based on today's current valuation and based on Yahoo management's most recent performance outlook.
I am guessing this deal will not happen ... setting financing aside, I think there's pretty huge integration risk. Yahoo is not the dinky startup with 10-15 employees that Microsoft typically absorbs into its amoeba-ish structure. The consumption of Yahoo seems simply way too big for Microsoft's stomach.
A key question ... do the potential synergies (likelihood of increased market share) created from the combined search orgs overcome the integration risk? What I am saying is that after you risk-adjust those synergies, are they still there?
I'm no post merger integration expert by any means but the task just seems too daunting. Too many things can go wrong - talent exodus, differing technology platforms, culture, misaligned strategies, et al.
Will be interesting to see what falls out in the next few weeks.
Update: 4 pm PST 4/4/07. It appears the WSJ has confirmed no substantial talks are taking place regarding the takeover.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment