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Microsoft Threatens To Walk Out on Yahoo

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Microsoft Threatens To Walk Out on Yahoo

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Time is running out on Microsoft’s deal-or-else ultimatum to Yahoo.  

Yahoo has to move off the dime by Saturday or else Microsoft could try taking the place by force, lowering its rejected $31-a-share bid in the process – or scarier still for Yahoo – Microsoft could walk away completely, a move that will send Yahoo stock back to the teens and could be the undoing of Yahoo’s desperate CEO Jerry Yang.

Microsoft was unmoved by the slightly better-than-expected results Yahoo posted Tuesday – and Yang’s claim that the numbers prove Yahoo is worth more – to offer more money. It said it would stick by its price.

  “We know what Yahoo’s worth; $44 billion is a lot of money,” Microsoft CEO Steve Ballmer said at a conference in Milan on Wednesday.  

He also said that Microsoft “is prepared to move forward alone without Yahoo.”  

“Time is money,” he said later. “We made [that] clear in the last letter we sent,” meaning his ultimatum.  

Analysts think Ballmer is merely posturing. They also tend to think that Yahoo is unlikely to get much of a sweetener out of Redmond , maybe a dollar or two a share.  

In its ultimatum three weeks ago, Ballmer told Yahoo that he was prepared to wage a proxy fight to unseat its board, an effort that could take a long time and give Google the liberty to forge ahead.  

Yahoo’s earnings were flat with last year except for a windfall one-time non-cash gain of $401 million stemming its stake in the parent company of Alibaba.com, the big Chinese e-commerce site that went public late last year.  

Revenues in the quarter were up 9% to $1.82 billion, $1.35 billion, if you subtract the commissions it pays to partners. Funny number that. Google earned $1.3 billion in Q1.  

Yahoo left its disappointing 2008 revenue prediction unchanged at $7.2 billion-$8 billion.



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